Inheriting a Home with Your Siblings? Here’s What to Watch Out For
When siblings inherit a home, things can get complicated quickly, as illustrated by a story from a Reddit thread. After their mother passed away, three siblings inherited her house. Two wanted to sell and split the proceeds, while the third wanted to keep the house and offered to buy them out. They agreed, and he paid them each for their share.
Flash forward a few years, the house’s value had tripled when it was sold, and the siblings demanded a share of the profit. This led to family tension. But according to estate planning experts, once the siblings were bought out, they had no legal claim to any future profits from the property.
Expert Opinions
Attorney Jessa Gary says, “The brother isn’t obligated to share anything further, as he assumed all risks when buying them out.”
Jonathan Ross adds, “His siblings should have invested their share wisely instead of spending it immediately.”
Robert Steele emphasizes, “If the house’s value decreased, they wouldn’t have offered to cover the losses.”
Common Inheritance Issues
- Dividing Property: Nikki Beauchamp suggests flipping a coin or hiring estate sale services to avoid conflicts.
- Missing Items: Brian Haran advises seeking legal help if items go missing but warns about the costs involved.
- Living Situations: Raul Gastesi explains issues arise when siblings want to live in or refuse to leave the inherited house.
Preventive Measures
Parents can prevent disputes by specifying in their will how the property should be divided or sold. It’s crucial they state that any buyouts are final to prevent future claims.
The Trouble with Buyouts
Buying out siblings might seem fair, but Ross warns it can lead to jealousy and conflict. His advice? Sell the house and distribute the proceeds evenly to avoid future disputes.
Advice
If you choose a buyout, get an appraisal to determine the current value and reduce future tax liabilities. Always consult with an attorney to ensure everything is legally sound.
Buying Out a Home Inheritance
If you’ve inherited property and want to buy out your siblings, start by getting an appraisal to determine the property’s value at the time of the original owner’s death. This step is crucial, as it can help minimize capital gains taxes when you eventually sell the property.
An appraisal also aids in setting a fair buyout price if one sibling chooses to purchase the others’ shares. If the sibling handling the buyout is also the executor or trustee of the estate, it’s essential to seek legal advice first. This is because they must adhere to a “fiduciary standard of care,” ensuring they act in the best interests of all beneficiaries.
Regardless of the situation, always formalize the agreement with a lawyer. Gary advises against skipping this due to family ties, as it can prevent disputes and guarantee transparency.
KATIE WEDGE
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