Beach House Inheritance and Siblings

<p>I was talking to my neighbor and she wanted to know how we are going to solve the potential inheritance problem of a greatly appreciated coastal house. She too is in line to inherit a beach house along with her 5 other siblings. The sisters do not want the house but the brothers do. </p>

<p>I have two siblings that are located far from here and have no use of the house. I have a sister who is local and uses the house occasionally. I use the house occassionally mostly to do maintenance work. There are 5 grandkids. </p>

<p>Has anyone had experience in divving up a free house ?</p>

<p>My parents have died. My parents owned two homes (one on each coast). One was more of a vacation home, where they spent the winters. Now, admittedly it has never come up between me and my two siblings about anyone wanting either home (none of us live near the vacation home either). The two homes are part of their estate. We have sold their main home. We chose to rent out the vacation home for the winter, since it isn't a good time to sell right now, but we do plan to sell it. The homes, like everything else, are split three ways (there are three of us). </p>

<p>Now, I assume that if one of us wanted the vacation home, we might buy the other two "shares". If it were not such an expensive item, I imagine if one of us wanted something, the other two would say, "you can have it." But a house is a very expensive item and so the proceeds are shared three ways. If one wanted it, it would make sense to buy out the others' shares of this piece of the estate. With a vacation home, if two sibs wanted to use it, then work out a way to divvy up time spent there and buy out the other sibs' share in the home.</p>

<p>By the way, since we all own the home, if any of us wanted to use it now for vacation, I'm sure we could. One of my brothers has stayed there, in part to get it ready for renters but also to vacation with his family. I'm sure I could do the same but haven't chosen to (I also live on the opposite coast to the vacation home). Also, my mom died just 1 1/2 years ago. I used to go out to visit each year but haven't gone there since she died. But I am sure I could use it anytime since I own one third of it since the estate is shared three ways.</p>

<p>Actually it is in Palm Desert, CA and if it only had the beach.......</p>

<p>Those that want to keep their share of the house should buy out the siblings who don't want the house. </p>

<p>Find out the market value for the house. Divide it by the number of siblings. If sibling A wants the house, she/he should have to buy out sibling B and sibling C. </p>

<p>The free house has value and the value should be divided equally among the siblings.</p>

<p>PS--leave the grandkids out of the equation.</p>

<p>Wow, soozievt, I live in Rancho Mirage. 5 minutes away from Palm Desert. It's a beautiful area to spend the winters in!</p>

<p>This sort of thing can be a big problem among siblings. If everyone is well situated financially and there is no fight for the house, it usually work out, but otherwise it can cause friction.</p>

<p>My close friend and her 5 siblings inherited their parent's house when the mother died. Two of the siblings were living in that house when the death occurred and both are down and out with no where to go. Friend and one sibling were willing to work out something doable for the two in the house. Two other siblings were in need of funds to the point that they wanted the house on the market ASAP and the money for the house along with everything divvied up immediately. It cause a big fight. I can go on about other situations as well. </p>

<p>If the siblings are reasonable, that's one thing, but if they are not, it can be a nightmare. I hope it works out for you. My neighbor is facing the same situation about a beachhouse that her parents' own with one sibling who live so close to the house that she and her family have pretty much taken it over. She well knows there will be trouble when the house goes to her and her other two sisters, and there is no talking about it at the present because the parents will not permit it.</p>

<p>Keeponreaching, my parents lived in the Philadelphia area (which is where I was raised) and their winter home during retirement was in Palm Desert. Before they bought that home, which they have had for a LONG time, they first rented in Rancho Mirage, but once my dad retired, they bought a home in Palm Desert, where I usually went once/year (I live in VT). Sometimes our kids went out by themselves to visit. I haven't been in two years since my second parent died in the interim.</p>

<p>Some of the situations described above are too bad. My parents left their estate to their three kids to all be divided equally. There just are no questions between the three of us. They also left equal sums for all six grandchildren. There really is no discussion as to who gets what. We share all the decisions and split it all three ways.</p>

<p>You know, there is no such thing as a "free house". I know siblings who inherited property, and as much as one or more would have liked to keep it, they couldn't afford to pay for either the others' shares, or for the taxes (inheritance and property). That can be true even if you're the only heir -- pay the taxes, I mean.</p>

<p>We just made a will that specified that our home should go on the market and the proceeds shared between our kids. If one wants to live in it, he/she has to pay the other whatever amount they both agree on. I assume this would be market value.</p>

<p>Sometimes divided equally isn't the right thing to do. If two siblings live in the house and consider it their home, the parents should have willed the house to them and given other assets to the other children. I don't really think parents would want their children to be thrown out of the family home if they didn't want to go. </p>

<p>Inheritance gets very sticky when the heirs are in greatly different financial circumstances. I know of one instance of a family farm with a historic farm house sitting on it. Unfortunately it sits on the edge of a very high end development. One heir (the one with nothing) wants to sell it to the developer. The other wants it to remain farm land and deed the land and the house to the local historical society.</p>

<p>I don't have any experience in this area but I just read an article on this. There is a book out called Saving the Family Cottage. Here is a website for it:Cottage</a> Law - Saving the Family Cottage by Stuart J. Hollander</p>

<p>"The Big House" by George Colt tells an interesting story of an old family home on Cape Cod.</p>

<p>We sold my mom's condo when she died and split the proceeds among siblings, even though my DH suggested buying it. I never wanted to go there again anyway, and now a few years later, a similar one would be a fraction of the price.</p>

<p>I've seen this scenario more than once and it can get extremely complicated with hard feelings all around. If I were you I'd invest in a one hour consult with an attorney who specialises in trust and estate law to find out exactly what your options are. From there you can take it to the sibs.</p>

<p>This can be sticky in many different ways. People I know are going through this now.</p>

<ol>
<li><p>A mentally incompetent sibling owned a beautiful home in a distant state. He moved in with his sister after his debilitating stroke and their father lived in the home, supported by the sister and their other brother. Owner (lawyer without a will) died, then father died. Sister and brother are in litigation. Surviving brother won't cede his share to sister.</p></li>
<li><p>Parents left equal shares of cottage to their 3 kids, spouses of the 2 who were married at the time, and 4 grandchildren, 9 shares. # 3 kid is now married and has a child. In litigation.</p></li>
<li><p>H & W own a vacation "mansion" which is used happily and constantly by their 3 kids and families. W cannot afford to keep up mansion if H dies. 2 kids want to keep mansion, 3rd doesn't but the 2 can't afford to buy out the 3rd. So far this is a situation for the future.</p></li>
</ol>

<p>I believe that if the house is sold, the heirs will owe capital gains tax, but only on the appreciation in value since the house was inherited. It makes sense then to get an appraisal when the parents die. If the house is sold 6 months later or 10 years later you will have some protection against Uncle Sam assuming that your initial house value was the low price your parents paid for it when they bought it.</p>

<p>We are sort of living this situation right now. H's parents owned a place in Canada since H was little - gorgeous location, but cottage not so gorgeous. :) Needed TONS of work. H is one of 4 kids. The cottage is very special to my H - he has toiled over/for it as long as I have known him. His siblings? Never cared to go or if they went, just rolled in, enjoyed and rolled out never contributing in anyway. My father-in-law recognized that my H was the only one who was really invested in the place so several years ago he turned the property over to H - on paper - so for the last several years we have done all the upkeep, paid all the tax and other bills etc. - in addition we paid his dad's long-term insurance premiums - a deal H made with his father. </p>

<p>Over the years my H has been working very hard to make improvements on the cottage. Guess what?! Now that cottage is looking better his siblings and their children who are older all want to use it! H has let them and charged a minimum (ridiculously low in my opinion)nightly fee for use- again, they roll in- enjoy - roll out when done. (I'm steaming as I write this!!!)</p>

<p>Father in law died this May. His Will states that his primary residence is to be divided among the 3 of the 4 children - but not my H - he states H is not included because he has ownership of the cottage. Smart man! We are so thankful he made the plans for this on paper and in legal form. Now, however, siblings are whining (big time) that the primary house is in kind of crappy condition and that they will not get much $$ for it in this economy (Michigan). They are WHINING that H doesn't have to worry about the house (even though he has helped to clean out and many other things) and after all, "YOU HAVE THE COTTAGE - YOU ARE SO LUCKY!!!" Hello people! We have paid thousands of dollars towards it over the last several years, gave up days upon days, hours upon hours working on improvements, thousands of miles on cars driving the 180 miles up there and back, and LET YOU USE IT for practically nothing and now you are whining??!!!</p>

<p>Ok, rant done. :) My point being, tell your parents - if one of them is still alive - to decide on provisions for the property in their will - be very clear in spelling out what they want done with it. You can't account for emotions, but paper speaks legally. </p>

<p>BTW, our neighbors at the cottage (they were friends of FILaw and bought at the same time) are battling the same issues - parents still alive but not well - 2 siblings involved who don't get along real well - one obviously does more to take care of it then the other - they set up a formal schedule of who gets to have it when for the summer and then they have to divvy out their scheduled time with their own children. But it's dicey. </p>

<p>And remember, whether you are close by or not - a house needs maintenance and will cost your $$$ - it will never be a "free" property.</p>

<p>My Dad's family had a gorgeous ocean house in southern ME gor generations. When my grandparents pased away, their estate was left in equal shares to the 3 remaining sons, and to the two children of the one deceased sister. My father was the only one who wanted to keep that property in trust, to be shared and passed on by family. All of his siblings/sister's kids wanted the money and my father could not afford to buy the others out....so the property was sold along with their main house...and all assets were evenly distributed. Very, very unfortunate.</p>

<p>As an aside, that is how lots of other people get great deals on vacation properties....from the heirs who are desperate to sell!</p>

<p>My inlaws have a lake house. Its existence strikes fear in my heart. I so hope they sell it before they die. There are four siblings and two families will want to keep it in the family and two of us will want to sell, but one of the two who would want to keep it could never afford to buy out anyone else's share. </p>

<p>I'm fine with getting no inheritance from the inlaws...I just don't want an inheritance from the inlaws that costs me thousands of dollars a year!</p>

<p>Interesting thread. There will be future issues regarding a lakefront cottage in dh's family when his mother (sole owner) dies. Supposedly it will be left to all the sibs (three live in the area, and two -- including dh -- do not live close. The three closeby sibs will probably not have the $ to buy the other two out. It's a small cottage with no potable water that needs a lot of maintenance. (I suspect the value is in the lot.) Here's the part I'm wondering about...I've also heard that there is a stipulation in mil's will that the house cannot be sold to anyone outside the family. So that will eventually leave the ten grandchildren owning this cottage. That's going to get complicated!</p>

<p>It is an interesting thread. </p>

<p>If the will stipulates that the cottage cannot be sold outside the family, then those who want to buy can basically name their own price. Market price wouldn't apply since the 'market' is family only.</p>

<p>I think it gets really dicey when several "own" together - I can't imagine the time/arguements/discussions over all the issues that can come up with who gets it when, what repairs to make, who is going to arrange for the repairs, stipulations of who can use the cottage (funny how that works sometimes - one of the siblings or grandchildren go to use it, but bring half the town with them....).</p>

<p>It seems to me that SOMEONE has to ultimately be "in-charge" and making decisions.</p>