How can I sell my deceased mother’s property and not have it seen as a capital gain if, prior to her death, she added me as a joint tenant?

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How can I sell my deceased mother’s property and not have it seen as a capital gain if, prior to her death, she added me as a joint tenant?

My mother listed me as a joint tenant in her coop prior to her death. It wasn’t my desire and I had no financial involvement. She passed away with the desire that proceeds be divided among her 3 children. Escrow says they need to file a 1099 for me. What can I do to have the sale seen as an inheritance, not pay capital gains, and be able to distribute the proceeds to my sisters as an vs. a gift from me? As I understand it, normally the property is valued based on the death of the owner’s death. Would that still be the case here?

Asked on December 6, 2011 under Estate Planning, California

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 12 years ago | Contributor

One option to solve your dilemma about being named as a joint tenant on this piece of property where under operation of law you inherit its entirety since you survived your mother is to sign a written "dislcaimer" of your joint tenancy rights and record it. By doing this, the property then gets transferred under the terms of the Will or trust and if none of the two, by intestate succession where the state per statute determines who closest in relation inherits. If the closest relations are the children then they should receive the property.

By doing this, the property should get a stepped up basis for tax purposes and the three children share equally. I see no reason why there should be a 1099 to you concerning the joint tenancy issue. I recommend that you first consult with a Wills and trust attorney before you make any final decision.


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