Leaving a home to a sibling

Photo: castlelass/morguefile.com

Q. My sister owns a house with her friend, and she wants me to get her half when she dies. What plans does she need to make so that can happen? My sister is not healthy and she thinks she will die before the other owner.
— Sister

A. We’re sorry to hear about your sister’s health.

In order to answer this question we need to know how the home is titled between your sister and her friend.

A quick check of the deed will give us that answer, said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

“If it is owned ‘joint with right of survivorship,’ then should your sister die before her friend, her friend would inherit your sister’s half regardless of what your sister’s will says,” Hauptman said. “If it is titled `tenants in common,’ which is more likely to be the case, then your sister’s will would direct who inherits that share.”

Hauptmann said in order to be sure that you receive your sister’s ownership interest, she must be sure title to the property is “tenants in common” and she must execute a will leaving her interest in the home to you.

Keep in mind that your inheritance will be subject to New Jersey inheritance tax, assuming the house is located in New Jersey.

That’s because a sibling is a Class C beneficiary.

“The first $25,000 is inheritance tax free and the balance is taxed at rates starting at 11 percent and gradually increasing to a maximum of 15 percent,” Hauptman said. “Your sister might want to consider leaving you a cash bequest to cover the cost of the tax.”

Email your questions to moc.p1606978252leHye1606978252noMJN1606978252@ksA1606978252.

This story was first published in May 2017.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.