Probate may be needed if late wife owned an interest in house
The information in this column is intended to provide a general understanding of the law, not as legal advice. Readers with legal problems, including those whose questions are addressed here, should consult attorneys for advice on their particular circumstances.
Q: My wife died last month. She had nothing in her name, not even our house or car. We have been married for 50 years. She had a will leaving everything to me. Do I need to have her will probated? If so, can you say approximately what
should be the cost?
A: Probate is required only if you need to change the ownership of investments and accounts to your name. Therefore, if all of your accounts and car are already in your name, there is no need to probate her will.
But your house is another matter. You may not be able to sell or refinance it without trouble if your wife owned an interest in it.
The home would be your separate property if you owned it prior to marriage, if it was given to you as a gift, or if you purchased it with your own separate property funds during your marriage. Without more information, it is unclear if your wife did, in fact, have a community property interest in the home.
If she did own an interest, then there’s another issue regarding what type of probate procedure you would want to conduct. The options include full probate, probate as a muniment of title, a Small Estate Affidavit or an Affidavit of Heirship. You would need to talk to an attorney to determine which of those is the most appropriate for you.
Costs range from thousands of dollars to nearly free, as an Affidavit of Heirship can possibly be prepared by a title company at closing for a nominal fee.
Q: My brother and I inherited our mother’s home earlier this year. We sold the house a few weeks ago, and at the closing, my brother and I each received a 1099-S for the amount we received. Will we have to pay income tax on the amount we received?
A: The form you received, Form 1099-S, is used to report the proceeds from the sale of real estate, and it must be provided to you and the Internal Revenue Service.
There are a few exceptions where a transaction is not reportable, but none of them appears to apply in your situation. (You can read about these exceptions, as well as the Form 1099-S in the instructions to that form found at irs.gov.)
Importantly, receipt of the 1099-S doesn’t mean you or your brother will owe capital gains taxes on the sale. When your mother died, the cost basis in the property was stepped up to the property’s fair market value on your mother’s date of death.
Therefore, unless the property increased in value in the months after her death up to the point when the property was sold, neither of you should owe any taxes on the sale.
Next year when you file your Form 1040, talk to an accountant to be sure you report the sale properly.
Ronald Lipman, of Houston law firm Lipman & Associates, is board certified in estate planning and probate law by the Texas Board of Legal Specialization. Email questions to stateyourcase@ lipmanpc.com