When siblings inherit a vacation home, splitting it up can create family rifts. This week, estate planning lawyer Kay Brooks offers some advice.
My parents owned a summer beach cottage in Connecticut since the 1960s. When my father died years ago, my mother had my two siblings and me added to the deed. Mom passed away last May. I live 2,000 miles away, and my brother has no interest in the cottage. Now that Mom is gone, my sister feels we should just give her the cottage, since her family enjoys using it and because she spent more time with our mother. My brother and I don't want to sell to a stranger but also don't feel we should just "hand it over" to our sister. If something happened to her, I am sure her children would sell it immediately.
Since Mom passed away, my sister uses the cottage, but all three of us paid the property taxes. Is this something a court has to settle? Mom really left us in a bind. Any suggestions are welcome.
You find yourself in a tough situation that is not uncommon. You and your siblings inherited a property that has very different meaning and value to each of you. Also, it is not unusual for one or more siblings to feel entitled to a bigger share of family assets after a parent's death.
However, your parents left the property equally to the three of you, so you and your brother have legal rights that are valid, regardless of your sister's wishes.
The first step is to determine how you hold title. Did your mother add you to the deed as joint tenants or as tenants in common? The form of ownership affects your individual property rights and how the property passes at your deaths.
For example, if you were named as joint tenants, there is an automatic right of survivorship. Upon the first joint tenant's death, his or her interest passes to the survivors. The final survivor's beneficiaries end up with the property.
In contrast, when people own property as "tenants in common," each person controls who receives his/ her interest at time of death. Each co-tenant is responsible for his/her share of expenses in proportion to ownership interest. Further, one tenant in common cannot force another to buy out his/her interest, but can sell or go to court to force a partition of the property. If a court partition is successful, either the property will be physically split up or the court will force a sale and divide the proceeds. This is one path you could take, but it is an expensive and contentious way to proceed.
If you and your siblings hold title as joint tenants, any of you could independently record a legal document "breaking" the joint tenancy and changing ownership to tenants in common.
If you decide to continue co-owning the property, you have choices on how to sort out expenses, whether to rent the property, etc. (See details at sacbee.com/ PersonalFinanceBlog.)
Your sister needs to understand that you and your brother have legal rights to the property and that your views must be taken into consideration along with hers. She would clearly be happy if you gifted your interests to her, but you have no legal obligation to do so.
Would she or her children be able to buy you out with payments over time? With discussion, you may come up with a creative solution to which everyone is agreeable.
I recommend that you try hard to work this out among the three of you, because court proceedings are an expensive way to reach a conclusion. If you cannot agree, mediation and arbitration are often used to resolve these types of family matters instead of courts, but they can be costly, too.
I recommend that you discuss this with a Connecticut lawyer who can explain exactly how you hold title and what your rights/options are as a property co-owner.
Compiled by Claudia Buck