Insuring out-of-town lot might cost more than land is worth
The information in this column is intended to provide a general understanding of the law, not legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances.
Q: I live in Harris County. I purchased land in Bastrop County years ago. I have never seen the lot but have paid taxes all these years. It’s assessed at $750. It occurred to me that I may be liable for someone getting injured on the property. Short of a sale, what is the best way to protect myself ?
A: You can purchase insurance, but you might end up spending more than the property is worth each year.
Keep in mind that Texas law might already protect everything else you own from the claims of creditors. Depending on what you own, you might be facing very little risk of loss even if you are sued and lose.
You should meet with an attorney to discuss your particular circumstances to know for sure what is the best approach.
Q: I have a longtime elderly friend who has no living relatives. She has appointed me as the executor of her estate and also named me as the sole beneficiary under her will. In a letter attached to the will, she has requested that $20,000 checks be given to several charities and individuals, which I will honor. What will be the tax obligation for the estate or for me as the beneficiary in distributing this money?
A: There are a number of issues to note.
First, the letter attached to her will might be written so that it will be treated as a valid codicil. If so, then you will be obligated as executor to do what the letter says.
Second, hopefully your friend has written her will and the letter taking into consideration the possibility that you might die first.
She would want to have named a backup executor and beneficiary or several beneficiaries.
Third, if the letter is merely a letter of suggestions that she wants you to do, then she is taking a bit of a risk because you will be under no legal obligation to carry out her wishes. Today, you say you intend to honor her wishes, but you won’t have to do so.
With regard to the gifts to the charities, it would actually be a better tax result for you if you make the charitable contributions rather than her estate. If you make the gifts, you will be able to claim the income tax deduction for the gifts to charity, and that could save you considerable income taxes. If her estate makes the gift, little or no tax savings would be likely.
With regard to the gifts to the individuals, if you are the one treated as making the gifts, you would be limited to gifts totaling $15,000 per person per year. To avoid gift tax consequences, you would simply need to make the gifts over a two-year period, or if you are married, you can get your spouse to join you in the gifts. But don’t worry; if you go a few thousand dollars over the annual limit, you simply need to file a gift tax return, but no gift taxes will be owed until you give away over $11,180,000 worth of property.