My mother passed away last October (2011) and there was 275K worth of debt secured with her home and a rental property being used as collateral. This debt was "interest only" and is due in full in February 2013.
My brother's son has just received a nice ivy league scholarship and he is choosing to decline his half of the estate or set it up in a trust for his son (who is just going to college) to be able to receive when he is 25 years old.
So, in order to pay the debt owed, we are going to sell timber from our farm, jewelry and possibly some land. My brother again does not want his name on any of this leaving me as the only player.
I cannot afford to take this as personal income and be taxed on it. Is there a way to escape heavy taxes if this is being used to pay off the deceased debt? The estate was closed officially last month as our attorney said that the bank didn't call in those loans and we have paid all other bills.
Our mother and I are both residents of Virginia and my brother lives in Pennsylvania.
Any suggestions you can offer would be greatly appreciated!