When dividing an estate with multiple properties among heirs, registering them jointly in the Tabu causes future issues. An Estate Distribution Agreement lets heirs divide assets tailored to their needs while enjoying tax benefits.
What is an Estate Distribution Agreement?
This is a contract signed by all heirs. They can deviate from the default statutory partition, swapping assets. For example, if there are two homes and two heirs, each can take full title to one home instead of joint ownership.
The Major Tax Benefit: Exemption from Real Estate Taxes
Under Section 5(c)(4) of the Property Tax Law, estate distribution among heirs is not considered a taxable transaction and is **exempt from Mas Shevach and Mas Rechisha**, provided only estate assets are used.
Drafting the Agreement Correctly
The agreement must be drafted **before** registering the inheritance in the Tabu. Hiring a real estate and probate lawyer ensures your filings satisfy tax authorities.