Yes, I am thinking that as well. So far, we thought having the property held as an investments was nice for a stream of income, but I think it would be really good if we were able to figure out the best tax-advantaged way to sell the property and have the two brothers each get their 1/2 equity out free and clear, to invest or do whatever they think best for their futures.
I am also very concerned about the estranged niece and nephew and how things will work out between them. The rift is very wide and deep and has been going on for over a decade and a half! My BIL is in the middle of it. It saddens H and me greatly, but we can only try to offer support to BIL and he lives and his two kids live in a different state from us.
At a minimum you should have a buy/sell agreement which requires the surviving brother to buy out the heirs if he so chooses. That way, they are out and you a free of their burden. Can always sell and split the proceeds too or offer his 1/2 to the brother’s kids. But you, as the surviving partner, want to be in control of how the property is handled.
@somemom – OK, I get it-- I do have a bunch of paper I Bonds and did try to set up an account and also found the government website to be impossible to deal with — so I just opted to keep the paper. They are in a safe deposit box & executed as payable on death to my son… so I have assumed that the paper form will still be redeemable.
@Himom – the problem with the jointly held property is that the family relationships only get more complicated as time goes on – as the offspring get married, have families of their own, etc.
You don’t have to sell the property now— but anticipate that it will be sold as part of the estate. One other option is to simply have the property go outright to the surviving partner, either through operation of the will or by creating a joint tenancy now. That depends on the value of the property, amount of income it produces, and overall size of the estate, of course, since that’s giving up something that could go to your kids. It’s just your BIL is a relative too, so there’s nothing that says you can’t just leave your interest to him if it isn’t a significant part of your estate.
I was cashing in my mother’s ebonds of a few sorts. Because they were in her name only (and paper,) I had to mail them in. Easy peasy, the money came in the next week.
I don’t remember what supporting docs (likely the death cert and my administrator confirmation.) But a number of her stock holdings needed a Medallion Signature Guarantee. Jeez, that was hard. Many local banks no longer offer this service and stock brokerages require you have a long standing account. Luckily, one bank where I had a small secondary account would do this.
In contrast, her retirement account did have my brother’s and my name on it, as beneficiaries. I was able to splt the distribution with him, he got his own 1099. BUT, I was the one who had to learn what and how, make the calls and google, learn how odd numbers of shares get handled, do the papers, follow the trail. One of your heirs could be in this position. It’s a hassle.
I mention this because it’s important to (try to) dot all the i’s and cross all the t’s, when you anticipate. What seems like a simple ‘show the death cert and get it done’ can be complicated. No way my brother could have done this admin work, with kids and in the middle of a custody fight. In fact, he couldn’t hold the details in mind that I nicely put in spreadsheets or notes and I wound up ofte repeating myself or resending emails. If one kid has to take this control and the other balks or contests, it could be worse.
On the Parents Caring for Parents thread, I remember a poster/executor who needed something like 3 years to resolve, maybe more.
Yes, it would be easy if the property was of insignificant value and didn’t generate significant income. That is NOT the case. I much prefer working with my BIL than either of his kids. It probably needs to be discussed sooner than later but neither H nor his brother like to talk about these things. I really am NOT willing to gift our 1/2 interest in this property to anyone.
We need to talk with our CPA to get a better idea of tax minimizing options for us.
Another wrinkle is that they are finally building rail and it MAY go near the property, hopefully raising its value. H wants to wait—he’s very patient. I want us all to have a succession plan so we aren’t co-owning with niece & nephew if anything happens to H or BIL.
Then I think you should seriously look at creating a trust to own & manage the property. It would mean that ownership wouldn’t change due to the death of one partner, but each partner could pass their beneficial interest (right to income) to their designated heirs. So you could find yourself down the line being responsible as a trustee to manage the property and send regular checks to the niece & nephew, but you wouldn’t be legal co-owners — so they wouldn’t become deciders either.
Yeah, we have a lot to discuss and talk about to decide IF any of us want to keep the property, perhaps do a tax-free 1031 exchange to 2 separate rental properties, or other options. Yes, a trust is another possible option.
I would not do a trust. As a trustee you have a fiduciary duty to the beneficiaries. Sets you up for a lawsuit if you do something they don’t agree with. You could use an llc - majority will rule. But your best bet is to get them out.
Yeah, it may be time for us to split this up, so it is sold either outright and taxes paid or in a 1031 exchange where each party (H and BIL) can get a rental property to own without anyone else. That way we don’t have so many involved in future decisions.