Executive Summary
- Potential solutions for dividing inherited property include selling the property and dividing the proceeds, providing siblings with co-ownership, and having one sibling buy out the other siblings.
- Some ways to prevent inherited property disputes between siblings include proactive and detailed estate planning, negotiation, and transparent communication.
- Siblings may maintain co-ownership of property by creating a proactive agreement over how to divide the use of the property and the expenses associated with it.
- An attorney can be a valuable resource in mediating negotiations, outlining your legal options, and preventing lengthy court battles.
Glossary
Heirs’ property – This property is any property that is easily passed between multiple generations without the need for local probate court intervention based on a clear legal claim that an heir has to the property.
Introduction
When people pass away, they often leave behind bank accounts, investment accounts, retirement accounts, real property (homes, rental properties, etc.) and other personal assets as inheritance for their survivors. But how do two or more siblings divide up inherited real estate and other property? This question has caused countless family quarrels.
However, you can take measures to ensure an equitable distribution of property between your children when you pass on, and your surviving heirs can take steps to minimize disputes and allow everyone to benefit from the legacy intended for them.
Often the best approach to divide inherited property is a proactive estate plan that specifies clear intentions. An estate planning attorney can also help you leverage several strategies you can take to maximize the likelihood of a positive outcome and preserve family dynamics. This guide covers what you should expect when dividing an estate among siblings.
How Do You Split Inheritance Fairly?
There is no single best answer on what constitutes a fair split of an inheritance—every family circumstance is different. For example, one family dynamic may allow for two siblings to share ownership and use of a single property, while another circumstance may be better served with the forced sale of a property and each sibling receiving a split of the proceeds.
But let’s start with an extremely straightforward example using the following case scenario. This case scenario is not a direct translation of how the probate process may look, but it can provide some potential context for what circumstances can occur:
Imagine mom passes and is survived by her twin daughters. Neither daughter had borrowed money or otherwise taken from mom while she was alive, and gifts mom showered them with during their life have largely been the same. Upon her death, mom has $500,000 in the bank and the family home worth $500,000.
In this case, mom might think that the easiest and fairest estate plan would be to leave one daughter her bank account (either via will, trust, or joint account ownership) and one daughter sole possession of the family home (either via will, trust, transfer on death deed, or joint title ownership). Or, mom may think leaving each daughter half of the bank account and half of the house would be best (again using the same estate planning tools).
However, even simple scenarios like this one can cause disagreements. In the first scenario, one daughter gets cash, while the other daughter gets the family home. If they both have an attachment to the home, the daughter who receives the cash might be upset, and if the daughter who inherits the home needs to sell it, she will receive less because selling a home comes with significant sale costs.
In the second scenario, leaving both daughters owning the home together too may not work if they don’t get along or if they simply can’t agree on what should be done with the property (Should they live there? Should one of them live there? Should it be rented, sold, etc.). You can see how this can devolve.
Can Heirs’ Property Be Divided?
Heirs’ property is a term that is sometimes used to refer to real estate and land inherited when someone passes without an estate plan. Because there is no will, trust or deed to dictate to whom the property should be distributed, heirs’ property will be divided among and distributed to the deceased’s next-of-kin according to state intestacy law.
For instance, if the deceased was a single man with three sons, each of the three sons would receive a one-third interest in their father’s real estate. Though laws regarding heirs’ property vary from state to state, generally, any of the three sons would have the right to live on, work, and, through other processes, force the sale of the land (take a look at our materials on partition actions for more information on selling an inherited property).
For the past many centuries, land inheritances generally consisted of working farms with acreage, which often were left to the oldest child who was taking over the farming operations, or the acreage would just be split between the kids. But what happens today when three sons inherit a one-third share of the family house on a half-acre of otherwise indivisible piece of land?
The first question regarding the heirs’ property is who owns the title to the house. The short answer is they all do, and if the decedent still had a mortgage, the kids would inherit the debt and need to continue making payments. They will need to agree on who will pay the mortgage, who will pay the property taxes, who will pay the utilities, etc.
Preventing the house from being foreclosed upon is in all the siblings’ interest, even if none of them plan to live in or keep the house. And if they can’t agree on what to do with the house, then any of them can force a sale of the inherited property, even if the others do not want to sell.
Practical Solutions and Strategies for Dividing Inherited Property
Dividing inherited property is a difficult task, as each sibling often has their own interests and goals relating to a specific piece of property. The following strategies may be able to support a less contentious division of inherited property.
Selling Inherited Property and Splitting Proceeds
One of the most common solutions to dividing inherited property is simply to sell the property and split the proceeds from the sale equally between all siblings. This solution typically offers the most benefits for all sides since it’s nearly impossible to split physical property into fair, equal shares. Instead, this solution ensures that all parties receive a fair split of the property value.
In many cases, a property owner can specify that they want their property sold and split upon their death. In cases where there is no will and siblings cannot come to an agreement, the court may decide to force the sale of the property—siblings may also force the sale of property at any time by pursuing a partition action through the court.
However, this may not be an ideal option in all cases. For example, if someone in the family has an emotional attachment to the property, they may want to keep the property in the family and not be satisfied despite receiving cash.
Managing Co-Ownership Challenges
When property is inherited by multiple siblings, it can lead to challenges between each party. Co-ownership can offer several challenges, often centered around how to use and manage the property.
Some of the most common challenges are:
- Difficulty determining who is responsible for maintaining property.
- Disagreements over how to split usage of the property
- Differences in opinion over selling or keeping the property
To alleviate these challenges, siblings should consider drafting a proactive agreement around how they make decisions about the property as soon as they inherit it. Some examples of potential agreements that may be helpful include:
- Siblings can set the precedent that if 2 out of 3 siblings agree to a decision around the property, then they can follow through on actions.
- Siblings may agree that one party handles the financial costs of maintenance while others handle the cost of the property taxes.
- Siblings may split time for when they can use the property, like allowing one to use it as a summer vacation home and the other to visit it during the spring.
- Siblings can agree to allow one sibling to pay for and live in the home while the rest maintain co-ownership.
- Siblings may agree to maintain the property as a rental – either managing the property themselves or hiring a mutually agreeable property management company.
- Siblings may reach a settlement negotiation to divide a property into parcels and specify who will receive ownership of which parts of the property.
From there, it’s crucial that all sides maintain clear communication with each other and ensure transparency surrounding their decisions regarding the property. If they are co-owners and continue to experience disagreements, then an inheritance dispute attorney may be helpful for mediating these disputes and seeking a compromise.
Importance of Estate Planning To Prevent Disputes
Proper estate planning can go a long way towards preventing disputes between siblings upon a loved one’s death. Having an estate plan that clearly outlines who should receive property will avoid ambiguity that can lead to disagreements about a deceased loved one’s intentions.
The two most common estate planning options are:
- Will – A will is a document where an individual names beneficiaries they wish to receive their assets upon their death.
- Trust – A trust is an estate planning tool and legal agreement that grants a third party, or fiduciary, the authority to hold and manage assets for the beneficiaries of an estate in order to specify how to distribute property.
Both of these estate planning options allow an individual to direct assets to named beneficiaries or heirs after their passing. Clear documents will ensure a smooth transfer of property to the decedent’s preferred beneficiaries and minimize the chances of any legitimate legal challenges.
When planning their estate, individuals should always consult a probate or trust administration lawyer about how to avoid ambiguity in their estate planning documents and ensure that they will accomplish the goals they intend to.
How Do You Buy Out a Sibling’s Share of Real Estate?
Buying out a sibling’s share of real estate can be challenging. The more siblings or other next-of-kin splitting a single piece of the real estate, the more complicated this task becomes, but having an experienced partition attorney can make the process more manageable.
Typically, the easiest solution to these problems is to sell the family home and divide the proceeds equally amongst the heirs. So long as the property is not underwater in debt, selling the house will give each heir their share of the inheritance and prevent further squabbles.
However, when there are emotional attachments to a family home or property, often one or more siblings want to keep the house and buy out the other siblings’ ownership share. If we look back at the twin sister example from above, if, after an independent appraisal, the home’s market value is determined to be $500,000, one sister can offer to buy her sister’s half of the house for half that value.
Things like who should pay for the appraisal, whether closing costs should be deducted, should there be a minority interest discount applied, etc., can all be negotiated, and it’s easier if an experienced partition action attorney is involved to facilitate the buyout.
Separately, sometimes the sibling seeking to keep the home doesn’t have the funds to buy out the others immediately. In these cases, an estate litigation attorney can help guide you to alternative financing opportunities and other structures that can facilitate a buyout, including using legally valid promissory notes and other tools.
Strategies To Prevent Inheritance Disputes Among Siblings
Although dividing inherited property is often a difficult and potentially contentious process, there are strategies that interested parties in an estate can use to prevent disputes. The best way to do so is to be proactive in one’s estate planning and avoid uncertainty regarding how property should be divided and who it should be given to upon the owner’s death.
Important strategies to consider to prevent inheritance disputes include:
- Clear estate planning – When a decedent prepares a will or trust that clearly outlines their intentions for the property, there is less room for disputes
- Negotiation – Negotiations can help prevent disputes by seeking a resolution that might appease all sides, like splitting the property into parcels or allowing one sibling to buy out the others.
An estate and probate administration attorney can be a valuable resource at all steps of this process. For example, an attorney can look over a will to help prevent any ambiguity and point out areas that may lead to conflict if not addressed. An attorney can also offer support with the negotiation process and offer their services as a mediator to prevent litigation.
The Impacts of Property Disputes on Family Relationships
Disagreements around property inheritance can cause strain on family relationships as financial interests can, at times, take priority over family dynamics. However, family relationships are invaluable, so it’s important to be aware of the risks of inheritance disputes in order to avoid them.
When possible, families should attempt to work through property disputes through steps like mediation or negotiation. Lengthy and contentious court battles often only strain family relationships further.
The support of an attorney can be helpful for navigating disputes and preventing drawn-out, contentious arguments that fracture family ties. For example, an attorney can act as a third-party mediator or help oversee negotiations to help foster a resolution that benefits all parties before disputes go to the courts.
Benefits of Legal Assistance in Dividing Inherited Property
The support of an attorney can make all the difference in determining how to divide inherited property effectively. Trust and probate litigation attorneys often have extensive experience in navigating and resolving disputes over inherited property.
With this experience, working with an attorney offers multiple benefits:
- Legal guidance – With a detailed understanding of the legal system and local laws, an attorney can help you understand your legal options and determine what kinds of agreements or outcomes are possible for your specific case.
- Mediation and negotiation support – If there are disputes regarding how to divide inherited property, an attorney can act as a mediator in discussions to help facilitate a compromise and develop an agreement that satisfies all sides.
- Estate planning – An attorney can help individuals complete their estate planning documents clearly and ensure they properly outline their intentions and are least likely to lead to disputes.
A skilled inheritance disputes attorney has years of experience in navigating and resolving disputes over inherited property. Consulting a lawyer with this experience can help you determine the best possible outcome for your case and facilitate a legal resolution.
Avoid Inheritance Disputes with RMO
Inherited property between siblings can be difficult to divide equally and fairly. Solutions like selling the property, proper estate planning, and mediation can all reduce the chances of lengthy sibling disputes. In any case, the support of a lawyer can be valuable for verifying the legitimacy of estate planning documents, mediating disputes, and more.
At RMO, our probate litigation attorneys are here to help you overcome inheritance disputes. Our lawyers have decades of experience in helping families navigate inheritance disputes and secure access to their rightful inheritance. When you contact us, we’ll help you build a winning strategy to secure the best possible outcome for your case.
Schedule a consultation with our team today to get started.
RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego, Fresno, the Bay Area, Dallas, and Houston. For more information, please visit RMO Lawyers.
