Death and rental property sale

[cpabsd]

Client's husband owned the rental property 100%.  He passed away without a will.  The wife gets 60% at sale and two teenagers get 20% each.  All parties get stepped up basis for value at time of death.  Does the depreciation taken during the husband's time of ownership die with him... meaning there is no recapture to deal with once asset is sold?  

Thanks in advance.  

Bonnie

 

[Lee B]

Interesting question, I look forward to the answer

[jklcpa]

2 hours ago, cpabsd said:

Client's husband owned the rental property 100%.  He passed away without a will.  The wife gets 60% at sale and two teenagers get 20% each.  All parties get stepped up basis for value at time of death.  Does the depreciation taken during the husband's time of ownership die with him... meaning there is no recapture to deal with once asset is sold?  

Thanks in advance.  

Bonnie

 

The step up resets the basis for the heirs, and they will not have to worry about recapture, that is, unless the property is still rented after the husband's passing and depreciation had started over once title passed to the beneficiaries. 

If still rented after husband's death, depreciation for the heirs would start over using the stepped up basis.

[DANRVAN]

On 3/25/2023 at 10:06 AM, cpabsd said:

Client's husband owned the rental property 100%. 

Could be an issue of marital vs nonmarital property depending on where the funding of the property came from.

 

There are cases where 100% ownership turned out to be 50% ownership; and 1/2 step up bass instead of full step up in basis.

 

Estate attorney should have sorted it out.

[DANRVAN]

On 3/25/2023 at 10:06 AM, cpabsd said:

He passed away without a will.  The wife gets 60% at sale and two teenagers get 20% each.

 

Just curious, are the two teenagers from a previous marriage so wife did not get 100%?

 

Under that scenario in Oregon, wife would get 50% and teens 25%  each.

 

 

[cpabsd]

No children are from this marriage.  I'm not sure why wife got 60% but that is what WV law determined.  

[jklcpa]

2 hours ago, cpabsd said:

No children are from this marriage.  I'm not sure why wife got 60% but that is what WV law determined.  

Quote

Who Inherits Property in WV When the Person Dies Leaving a Spouse and/or Children?

West Virginia intestate laws look first to whether the decedent had a spouse or children. If so, the following rules apply:

• If the person is survived by a spouse but no children, the spouse inherits all of the entire probate estate (the property that is not jointly owned with someone else)
• If the person is survived by children but no spouse, the children inherit the entire probate estate
• If the person is survived by a spouse and descendants and neither the spouse nor the deceased have other descendants, the spouse inherits the entire probate estate
• If the person is survived by a spouse, descendants of that spouse, and the spouse has descendants from another relationship, the spouse will inherit 3/5 of the estate and the decedent's descendants will inherit 2/5 of the estate
• If the person is survived by a spouse and descendants from someone other than the spouse, the spouse will inherit one-half of the estate and the descendants will inherit the other half

Not sure why the fact pattern doesn't exactly match the above regarding WV law and why the spouse got 60% instead of 50%.

[Lee B]

2 minutes ago, jklcpa said:

 

If the person is survived by a spouse, descendants of that spouse, and the spouse has descendants from another relationship, the spouse will inherit 3/5 of the estate and the decedent's descendants will inherit 2/5 of the estate

[jklcpa]

31 minutes ago, cbslee said:

If the person is survived by a spouse, descendants of that spouse, and the spouse has descendants from another relationship, the spouse will inherit 3/5 of the estate and the decedent's descendants will inherit 2/5 of the estate

 

2 hours ago, cpabsd said:

No children are from this marriage.  I'm not sure why wife got 60% but that is what WV law determined.  

True, BUT the poster said that there are teen children, but no children are from this marriage, so the last bullet point in my post above more matches the OP's fact pattern, doesn't it?  I'm guessing, but that should be true unless there are some children from the current marriage at death that don't qualify to inherit under WV law so that the preceding applies and not the last bullet point.  Maybe we don't have all the relevant facts as is sometimes the case with posts on the forum, that all the facts aren't known without a lot of discussion and questions being asked.

Quote

• If the person is survived by a spouse and descendants from someone other than the spouse, the spouse will inherit one-half of the estate and the descendants will inherit the other half