Inheriting house together with sibling...who wants to move in - WWYD?
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Anonymous
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Basics of the situation are two siblings (and, by extension, their respective families) are jointly inheriting a house valued around $3m, mortgage-free. Sibling A and his spouse and child like the house, but wouldn't want to live there (mainly due to schools in the area). Sibling B and her fiancé want to move right in, settle down there, and start having children - they're fine with the local private which they could afford given the rest of the inheritance.
Sibling B does not have the cash on hand to "buy-out" Sibling A for their half of the house. They also, likely, could not afford a mortgage on half the value of the house (especially not that mortgage plus private school). Sibling B has more emotional attachment to the house, as she lived there during HS, whereas Sibling A was in college already when the house was bought. As Sibling A, would you: 1) Let Sibling B and fam move in and just retain ownership of 50% of their house indefinitely. 2) Work out some sort of "family mortgage" or payment plan for your half of the home's value, with terms lax enough that Sibling B and fam may actually be able to afford it (likely would have to be a looooong time-frame and little to no interest to make this happen). 3) Insist on selling the house and splitting the cash with Sibling B. or 4) Other suggestions? |
Anonymous
| 3 is the least complicated legally. |
Anonymous
| Sibling that wants to live in the house needs to buy the other sibling out. My ex was in a similar situation and his brother and family moved into the inherited home. The brother in law never gave my ex anything and I suspect that he will never see a penny. Worst part is my ex doesn't have a pot to piss in and really needs his part of the inheritance (house). |
Anonymous
| Sibling needs to buy you out, but at a good deal. Maybe not market. At least half of what parents bought it for, adjusted for inflation, plus half of what money parents put in. |
Anonymous
| Force the sale of the house and split the money |
Anonymous
| If sibling B can't afford the house, they don't get the house. |
Anonymous
Why not at market? Why should A lose money on the deal? I agree with other PPs, if B can't fully buy out A, then they should sell. The only compromise I would possibly consider is to allow B to pay A rent (half of market value) for a period of time (2 years) to save money to buy. |
Anonymous
Pp here, juts realized the Problem is what if sibling sells for profit and that makes a bitter down the road? Was there additional money given in the inheritance? |
Anonymous
| They need to buy you out or sell. |
Anonymous
| I would probably not force a sale (assuming I did not need or was counting on the money). I'd probably do 1 (maybe with partial rent paid from B to A) or 2. |
Anonymous
OP here - Yes, there was. It would be enough for B to send kids to private and cover some/all college expenses for 2-3 children, but not enough to buy out A's half of the home value. Even if it did cover half the home value, B would have to somehow afford private school on top of that given the neighborhood (although I suppose she'd be living mortgage-free, so maybe do-able). Also, most of it is locked in a trust for the next 10 years for Sibling A and 15 years for Sibling B, so trustee (family friend) would have to be on-board with her plans. |
Anonymous
We don't need the money, but of course it would be nice. We're considering 1 because if they do sell down the line at a profit, 50% of the sale money will be ours. That said, I think B sees this as her home at least until retirement, and if she wants to pass it down to her/our kids things may get very complicated between cousins. |
Anonymous
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Sibling A can insist on Sibling B paying $300k upfront (assuming that's what they can afford in terms of a mortgage.) That'd give Sibling B 60% of the house, and A and B would split the proceeds should Sibling B sell.
Then when Sibling B's trust matures, Sibling A gets that money. That gives Sibling B something like 75% of the house, I'm guessing, and proceeds would get split accordingly. Then put in language to protect Sibling B in case of someone dying, or to automatically force a sale in case of Sibling B/husband divorcing. Also need language to protect Sibling A in case Sibling B's kids decide to imitate Risky Business and trash the place. |
Anonymous
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Not to be morbid. But with options one and two, what happens if your sibling dies or gets divorced? It will get even more complicated.
Rip the bandaide off now. It is a little heartache now vs a lifetime of drama and headaches later. |
Anonymous
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"I think B sees this as her home at least until retirement"
"Emotional attachment" to the house is BS. I mean, what about Sibling B's emotional attachment to Sibling A? What B should care about is people - people being treated fairly - and not causing resentment between families that could last generations. Who does B think she is? Getting more than her share. no. If they can't afford it, they can't afford it. Done. Period. Sell. |