Estate considerations with sibling living in home owned by parent

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bluebolt
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Estate considerations with sibling living in home owned by parent

Post by bluebolt »

My sibling lives in a home owned by my parent. Deed and mortgage are in parent's name and there are several years left on the mortgage. Parent is making monthly mortgage payments and intent is to continue until it's paid off. Note, parent has their own paid-off home.

Parent's will does not specifically call out the property, but divides all assets equally among all siblings.

Hopefully, nothing happens for many years, but if something does, have a few questions.

1) Can sibling stay in home during settlement of estate? I'm assuming that it would be fine to reduce sibling's disbursement by the amount of equity in the home and transfer the deed to them, but would that work?
2) Can mortgage payments be made from estate until it's settled?
3) Is there a different set-up of the will that would help in this situation? Don't think parent will make a change, but if the current situation presents challenges, maybe they could be convinced.
4) Anything else to consider?
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Re: Estate considerations with sibling living in home owned by parent

Post by Sandtrap »

What are in the current wil and trust provisions?

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Ged
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Re: Estate considerations with sibling living in home owned by parent

Post by Ged »

I had a very similar situation when I was executor of my father's estate. The only difference was that the parent's home mortgage was paid off. The will was also very simple. Share the value of the estate equally.

What makes you think your sibling would like to remain in that home? It may be unsuitable for him for a number of reasons including being too expensive. If so the cost would certainly be part of the value of the estate credited to the sibling. It well may be that the value of the home is larger than his share of the estate.

My sibling moved to another, smaller home with lower maintenance costs. The other siblings helped out with the expenses of purchasing a condo.

I don't know about your family politics, but this is what worked for us.
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Raymond
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Re: Estate considerations with sibling living in home owned by parent

Post by Raymond »

Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
+1

Unless spelled out in the will or other legal documents, one cannot assume anything about dividing a house among the siblings, the estate making mortgage payments, etc.

This situation has the potential to go wrong the way it's set up now, and, depending on the personalities involved, can wreck family relationships.

Perhaps the parent could be persuaded to make changes if the alternative is to have the children fight each other after s/he's dead?

Could the sibling who lives in the house be given that property as their share of the estate, with the others receiving amounts equal to the house equity (assuming the estate is large enough)?
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Re: Estate considerations with sibling living in home owned by parent

Post by adamthesmythe »

Simplest is to direct that the house be sold and then assets divided. The non-resident sibling could offer the resident the house at a chosen value as an alternative to sale. (Although this is potentially problematic).

In most cases the mortgage payments between death and settlement would be small change. If it were me I would not have a problem with having it paid from the estate if the estate was settled expeditiously. A more picky person might require a monthly rent cost be charged to the resident sibling.

Under no circumstances should the undivided house be left to two beneficiaries.
NotWhoYouThink
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Re: Estate considerations with sibling living in home owned by parent

Post by NotWhoYouThink »

Looks like some responses missed the fact that there are 2 houses
- one paid off house owned and occupied by parents
- one house with a mortgage owned by parents, occupied by sibling.

The sibling stays in the house unless evicted, you don't get to kick someone out just because a landlord died. Also, the parents owe money on the house, so the estate could keep up those payments.

How to split things up? Add all assets covered by the will, divide by the number of siblings. Where does the house fall in that calculation? Is the equity in the house substantial? Can the sibling pay off the mortgage?

How are other assets titled? If all the accounts have TOD designations the will may not cover much more than the 2 houses. You really need to have more information to know for sure, but probably one option is letting sibling stay in the house.
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Re: Estate considerations with sibling living in home owned by parent

Post by neverpanic »

bluebolt wrote: Fri Sep 18, 2020 4:47 pm My sibling lives in a home owned by my parent. Deed and mortgage are in parent's name and there are several years left on the mortgage. Parent is making monthly mortgage payments and intent is to continue until it's paid off. Note, parent has their own paid-off home.

4) Anything else to consider?
What is the monthly rent being paid by the sibling?
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Re: Estate considerations with sibling living in home owned by parent

Post by FIREchief »

Raymond wrote: Fri Sep 18, 2020 5:06 pm Unless spelled out in the will or other legal documents, one cannot assume anything about dividing a house among the siblings, the estate making mortgage payments, etc.
Wouldn't an executor typically be responsible for continuing the mortgage payments (whether specifically required by the will or not)?
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Re: Estate considerations with sibling living in home owned by parent

Post by FIREchief »

bluebolt wrote: Fri Sep 18, 2020 4:47 pm Parent's will does not specifically call out the property, but divides all assets equally among all siblings.
Who does the will nominate to serve as executor?
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.
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Re: Estate considerations with sibling living in home owned by parent

Post by Watty »

bluebolt wrote: Fri Sep 18, 2020 4:47 pm I'm assuming that it would be fine to reduce sibling's disbursement by the amount of equity in the home and transfer the deed to them, but would that work?
There would be an appraisal and then that amount would be subtracted out of that siblings share of the estate. In some cases you might decide to have two appraisals, one hired by the executor of the estate and the other hired by the sibling. You could then use the average price if they are reasonably close.

Assuming that you did not want the house or contents this could be a "win/win" situation since you would not need to get the house ready to sell or deal with selling the house.

That assumes that the estate is large enough that the siblings share could cover their share. Things like retirement accounts that are paid by a beneficiary will not be included in that total.
bluebolt wrote: Fri Sep 18, 2020 4:47 pm 4) Anything else to consider?
There is nothing that requires that the estate be split 50/50. If something is going on like that sibling is taking care of an elderly parent then they may very well decide to leave more of the estate to that kid.
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Re: Estate considerations with sibling living in home owned by parent

Post by Freetime76 »

bluebolt wrote: Fri Sep 18, 2020 4:47 pm 1) Can sibling stay in home during settlement of estate? I'm assuming that it would be fine to reduce sibling's disbursement by the amount of equity in the home and transfer the deed to them, but would that work?
2) Can mortgage payments be made from estate until it's settled?
3) Is there a different set-up of the will that would help in this situation? Don't think parent will make a change, but if the current situation presents challenges, maybe they could be convinced.
4) Anything else to consider?
1. Yes, if they have a rental agreement, or yes, if the executor decides it’s ok (I.e the sibling is keeping up the place).
1a. If there is enough assets/money in the estate to distribute the house ownership to the sibling, then yes. They’ll can assume payments on the mortgage, if it’s not paid off.

2. Yes, this would be the expectation. The house would be an estate asset, paid for by the estate (unless a rental agreement says otherwise, that includes utilities, taxes, insurance, repairs, upkeep).

3. If people are involved, there might be challenges, such as:
...the other beneficiaries don’t want to give the house to the sibling, or if the sibling doesn’t want the house, or if there aren’t enough assets to divide equally amongst the beneficiaries with the house going to the sibling, or if the executor either can’t make a decision or decides to sell everything and divide the proceeds because it’s easier and the beneficiaries are being difficult, or the sibling gets the house but can’t make the mortgage payment,...

4. As another said, try to avoid multiple owners of one piece of property. Remember that there may be spouses (influential), and it’s hard to predict how people will behave after a loved one’s passing. Bogleheads has an estate planning resource, BTW.
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bluebolt
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

To answer a few questions raised (and some that weren't):

The sibling and their family have been living in this house (purchased by parent) for many years.
Their share of the estate would cover the full value of this house and much more.
All the other siblings would be fine with working something out so this sibling could stay in this home with their family. The sibling and their family would definitely want to stay in the house.
Sibling is not paying any rent that I'm aware of, though it's possible they are paying something. No rental agreement is in place.
Parent's estate is under federal estate limit.
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bluebolt
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
No trust, will says all assets divided equally among siblings.
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Re: Estate considerations with sibling living in home owned by parent

Post by Katietsu »

bluebolt wrote: Fri Sep 18, 2020 7:31 pm To answer a few questions raised (and some that weren't):

The sibling and their family have been living in this house (purchased by parent) for many years.
Their share of the estate would cover the full value of this house and much more.
All the other siblings would be fine with working something out so this sibling could stay in this home with their family. The sibling and their family would definitely want to stay in the house.
Sibling is not paying any rent that I'm aware of, though it's possible they are paying something. No rental agreement is in place.
Parent's estate is under federal estate limit.
If all these bullet items are still true at the time of death, I see no problem. It sounds like there may be a good chance all could proceed as it is now and work out fine.

The problems will arise if parents’ financial circumstances are reduced in time. For instance, what would happen if one parent needed a decade of care in a memory care unit while the other parent maintained their house. Or, maybe the relationship between siblings breaks down over end of life issues and siblings are not willing to cooperate. Just pointing out that there are ways for this situation to go bad.
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

Watty wrote: Fri Sep 18, 2020 6:07 pm
bluebolt wrote: Fri Sep 18, 2020 4:47 pm I'm assuming that it would be fine to reduce sibling's disbursement by the amount of equity in the home and transfer the deed to them, but would that work?
There would be an appraisal and then that amount would be subtracted out of that siblings share of the estate. In some cases you might decide to have two appraisals, one hired by the executor of the estate and the other hired by the sibling. You could then use the average price if they are reasonably close.

Assuming that you did not want the house or contents this could be a "win/win" situation since you would not need to get the house ready to sell or deal with selling the house.

That assumes that the estate is large enough that the siblings share could cover their share. Things like retirement accounts that are paid by a beneficiary will not be included in that total.
bluebolt wrote: Fri Sep 18, 2020 4:47 pm 4) Anything else to consider?
There is nothing that requires that the estate be split 50/50. If something is going on like that sibling is taking care of an elderly parent then they may very well decide to leave more of the estate to that kid.
Siblings would all prefer not to sell the other sibling's home. We will have to sell parent's house. All us other siblings don't want the sibling's house or contents.

Estate is large enough that each share would be a multiple of the one sibling's home price.

Estate is definitely split evenly among siblings.
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Re: Estate considerations with sibling living in home owned by parent

Post by TropikThunder »

bluebolt wrote: Fri Sep 18, 2020 7:45 pm Siblings would all prefer not to sell the other sibling's home. We will have to sell parent's house. All us other siblings don't want the sibling's house or contents.

Estate is large enough that each share would be a multiple of the one sibling's home price.

Estate is definitely split evenly among siblings.
I'm not seeing why all the angst. The value of the item (a house in this case) fits well under each sibling's share of the total estate, the resident sibling wants to stay, and the non-resident siblings are all ok with it. I would codify it in writing amongst the siblings, especially spelling out how the house will be valued when it comes time to tally everything up (I can see some potential disagreements over that aspect), but basically it seems that you are asking if a group of adults can do something they all agree on.
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Re: Estate considerations with sibling living in home owned by parent

Post by Sandtrap »

bluebolt wrote: Fri Sep 18, 2020 7:35 pm
Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
No trust, will says all assets divided equally among siblings.
Without details in a trust or will addressing these types of things, existing conditions create a precedent, a tacit approval. It can be argued by a good estate litigator that the parents created and maintained a situation, and expected it to be continued beyond their demise in good faith "as understood" by other beneficiaries, who, while they were alive, did nothing tangible to voice an objection (solid evidence of).

Not legal counsel, however, have seen this in extended family and amongst relatives in estate litigation.
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

Sandtrap wrote: Fri Sep 18, 2020 9:18 pm
bluebolt wrote: Fri Sep 18, 2020 7:35 pm
Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
No trust, will says all assets divided equally among siblings.
Without details in a trust or will addressing these types of things, existing conditions create a precedent, a tacit approval. It can be argued by a good estate litigator that the parents created and maintained a situation, and expected it to be continued beyond their demise in good faith "as understood" by other beneficiaries, who, while they were alive, did nothing tangible to voice an objection (solid evidence of).

Not legal counsel, however, have seen this in extended family and amongst relatives in estate litigation.
j :D
So what's the implication of this? That the house value (or equity) would be excluded from the estate? Or, something else?
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

TropikThunder wrote: Fri Sep 18, 2020 8:56 pm
bluebolt wrote: Fri Sep 18, 2020 7:45 pm Siblings would all prefer not to sell the other sibling's home. We will have to sell parent's house. All us other siblings don't want the sibling's house or contents.

Estate is large enough that each share would be a multiple of the one sibling's home price.

Estate is definitely split evenly among siblings.
I'm not seeing why all the angst. The value of the item (a house in this case) fits well under each sibling's share of the total estate, the resident sibling wants to stay, and the non-resident siblings are all ok with it. I would codify it in writing amongst the siblings, especially spelling out how the house will be valued when it comes time to tally everything up (I can see some potential disagreements over that aspect), but basically it seems that you are asking if a group of adults can do something they all agree on.
If you're reading angst, it isn't there. Just trying to understand the considerations of the situation.
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Re: Estate considerations with sibling living in home owned by parent

Post by adamthesmythe »

bluebolt wrote: Fri Sep 18, 2020 7:45 pm
Watty wrote: Fri Sep 18, 2020 6:07 pm
bluebolt wrote: Fri Sep 18, 2020 4:47 pm I'm assuming that it would be fine to reduce sibling's disbursement by the amount of equity in the home and transfer the deed to them, but would that work?
There would be an appraisal and then that amount would be subtracted out of that siblings share of the estate. In some cases you might decide to have two appraisals, one hired by the executor of the estate and the other hired by the sibling. You could then use the average price if they are reasonably close.

Assuming that you did not want the house or contents this could be a "win/win" situation since you would not need to get the house ready to sell or deal with selling the house.

That assumes that the estate is large enough that the siblings share could cover their share. Things like retirement accounts that are paid by a beneficiary will not be included in that total.
bluebolt wrote: Fri Sep 18, 2020 4:47 pm 4) Anything else to consider?
There is nothing that requires that the estate be split 50/50. If something is going on like that sibling is taking care of an elderly parent then they may very well decide to leave more of the estate to that kid.
Siblings would all prefer not to sell the other sibling's home. We will have to sell parent's house. All us other siblings don't want the sibling's house or contents.

That greatly reduces, although does not entirely eliminate the possibility of disagreement.

We had a thread here (I think) where there was a dispute about whether the value of a house was the appraised value or the appraised value less cost of selling.

Turns you when I inherited from my father there was a house to be sold and assets to be divided in a complicated way because of a second marriage. But it wasn't that much money, and both my sibling and I were doing just fine, so we just let it go through. Ended up getting a far-from-life-changing amount and a share of a fair amount of legal bills.
Estate is large enough that each share would be a multiple of the one sibling's home price.

Estate is definitely split evenly among siblings.
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Re: Estate considerations with sibling living in home owned by parent

Post by Sandtrap »

bluebolt wrote: Fri Sep 18, 2020 10:51 pm
Sandtrap wrote: Fri Sep 18, 2020 9:18 pm
bluebolt wrote: Fri Sep 18, 2020 7:35 pm
Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
No trust, will says all assets divided equally among siblings.
Without details in a trust or will addressing these types of things, existing conditions create a precedent, a tacit approval. It can be argued by a good estate litigator that the parents created and maintained a situation, and expected it to be continued beyond their demise in good faith "as understood" by other beneficiaries, who, while they were alive, did nothing tangible to voice an objection (solid evidence of).

Not legal counsel, however, have seen this in extended family and amongst relatives in estate litigation.
j :D
So what's the implication of this? That the house value (or equity) would be excluded from the estate? Or, something else?
This is why it is very important to seek legal counsel.
j :D
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bluebolt
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

Sandtrap wrote: Sat Sep 19, 2020 12:20 am
bluebolt wrote: Fri Sep 18, 2020 10:51 pm
Sandtrap wrote: Fri Sep 18, 2020 9:18 pm
bluebolt wrote: Fri Sep 18, 2020 7:35 pm
Sandtrap wrote: Fri Sep 18, 2020 4:50 pm What are in the current wil and trust provisions?

j :D
No trust, will says all assets divided equally among siblings.
Without details in a trust or will addressing these types of things, existing conditions create a precedent, a tacit approval. It can be argued by a good estate litigator that the parents created and maintained a situation, and expected it to be continued beyond their demise in good faith "as understood" by other beneficiaries, who, while they were alive, did nothing tangible to voice an objection (solid evidence of).

Not legal counsel, however, have seen this in extended family and amongst relatives in estate litigation.
j :D
So what's the implication of this? That the house value (or equity) would be excluded from the estate? Or, something else?
This is why it is very important to seek legal counsel.
j :D
Except it's neither my will nor my house, so it's not helpful for me to seek legal counsel. Parent has made it clear they are splitting everything equally among siblings. I can recommend that they seek legal counsel, except without giving a compelling reason (and maybe even with a compelling reason), I doubt they will.

Hence seeking the wise counsel of Bogleheads on this thread.
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Re: Estate considerations with sibling living in home owned by parent

Post by NotWhoYouThink »

Looks like an easy situation as long as there is not a material change in the parents' financial situation (like 10 years in memory care, and related costs, or one parent dies tomorrow and the other remarries), and as long as investment accounts go to the estate and are not POD/TOD.

So that's something to ask about - For the non-house assets, are they covered by the will, or do they have beneficiary designations?
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Re: Estate considerations with sibling living in home owned by parent

Post by Freetime76 »

bluebolt wrote: Sat Sep 19, 2020 1:40 pm
Sandtrap wrote: Sat Sep 19, 2020 12:20 am
bluebolt wrote: Fri Sep 18, 2020 10:51 pm
Sandtrap wrote: Fri Sep 18, 2020 9:18 pm
bluebolt wrote: Fri Sep 18, 2020 7:35 pm
No trust, will says all assets divided equally among siblings.
Without details in a trust or will addressing these types of things, existing conditions create a precedent, a tacit approval. It can be argued by a good estate litigator that the parents created and maintained a situation, and expected it to be continued beyond their demise in good faith "as understood" by other beneficiaries, who, while they were alive, did nothing tangible to voice an objection (solid evidence of).

Not legal counsel, however, have seen this in extended family and amongst relatives in estate litigation.
j :D
So what's the implication of this? That the house value (or equity) would be excluded from the estate? Or, something else?
This is why it is very important to seek legal counsel.
j :D
Except it's neither my will nor my house, so it's not helpful for me to seek legal counsel. Parent has made it clear they are splitting everything equally among siblings. I can recommend that they seek legal counsel, except without giving a compelling reason (and maybe even with a compelling reason), I doubt they will.

Hence seeking the wise counsel of Bogleheads on this thread.
Hmm, I suppose that an attorney could let you know if there are any wild card-type situations (like the one Sandtrap mentioned) that could pop up, so you can decide if you care to pass on the info or not. A good attorney has seen it all, and death sometimes does bring out unexpected responses in people.

It sounds to me like you have a good laundry list here, and none of it seems to be a concern in your eyes. Lol, I think we all hope our wills go smoothly after our passing.

And many wills simply say “split it up equally” between people. Boring and humdrum when all goes well, which allows loved ones to grieve and move on. When it gets interesting is if someone has a different opinion and starts causing a problem. And there are oh so many ways to do that.

Cheers, and good luck!
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

NotWhoYouThink wrote: Sat Sep 19, 2020 5:00 pm Looks like an easy situation as long as there is not a material change in the parents' financial situation (like 10 years in memory care, and related costs, or one parent dies tomorrow and the other remarries), and as long as investment accounts go to the estate and are not POD/TOD.

So that's something to ask about - For the non-house assets, are they covered by the will, or do they have beneficiary designations?
Only one parent still around. Good point about the possible implication of change in situation due to long term care and about the POD/TOD accounts.
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Re: Estate considerations with sibling living in home owned by parent

Post by celia »

Katietsu wrote: Fri Sep 18, 2020 7:42 pm
bluebolt wrote: Fri Sep 18, 2020 7:31 pm To answer a few questions raised (and some that weren't):

The sibling and their family have been living in this house (purchased by parent) for many years.
Their share of the estate would cover the full value of this house and much more.
All the other siblings would be fine with working something out so this sibling could stay in this home with their family. The sibling and their family would definitely want to stay in the house.
Sibling is not paying any rent that I'm aware of, though it's possible they are paying something. No rental agreement is in place.
Parent's estate is under federal estate limit.
If all these bullet items are still true at the time of death, I see no problem. It sounds like there may be a good chance all could proceed as it is now and work out fine.

The problems will arise if parents’ financial circumstances are reduced in time. For instance, what would happen if one parent needed a decade of care in a memory care unit while the other parent maintained their house. Or, maybe the relationship between siblings breaks down over end of life issues and siblings are not willing to cooperate. Just pointing out that there are ways for this situation to go bad.
Other ways things can go wrong if the will doesn't address this:
* Owner is sued and loses and the estate has much less value.
* Sibling living in the house dies before their parent, thus leaving fewer beneficiaries.
* Insurance lapses on the house and then it burns down, is hit by a natural disaster, a tree falls on it or someone falls on the sidewalk and sues.
* A lien is placed on the house.
* Another sibling (or their new spouse) wants the house after parent dies.
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

celia wrote: Sat Sep 19, 2020 8:34 pm
Katietsu wrote: Fri Sep 18, 2020 7:42 pm
bluebolt wrote: Fri Sep 18, 2020 7:31 pm To answer a few questions raised (and some that weren't):

The sibling and their family have been living in this house (purchased by parent) for many years.
Their share of the estate would cover the full value of this house and much more.
All the other siblings would be fine with working something out so this sibling could stay in this home with their family. The sibling and their family would definitely want to stay in the house.
Sibling is not paying any rent that I'm aware of, though it's possible they are paying something. No rental agreement is in place.
Parent's estate is under federal estate limit.
If all these bullet items are still true at the time of death, I see no problem. It sounds like there may be a good chance all could proceed as it is now and work out fine.

The problems will arise if parents’ financial circumstances are reduced in time. For instance, what would happen if one parent needed a decade of care in a memory care unit while the other parent maintained their house. Or, maybe the relationship between siblings breaks down over end of life issues and siblings are not willing to cooperate. Just pointing out that there are ways for this situation to go bad.
Other ways things can go wrong if the will doesn't address this:
* Owner is sued and loses and the estate has much less value.
* Sibling living in the house dies before their parent, thus leaving fewer beneficiaries.
* Insurance lapses on the house and then it burns down, is hit by a natural disaster, a tree falls on it or someone falls on the sidewalk and sues.
* A lien is placed on the house.
* Another sibling (or their new spouse) wants the house after parent dies.
The first four seem possible, but relatively unlikely. The last one isn’t going to happen.
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Re: Estate considerations with sibling living in home owned by parent

Post by celia »

The point is that something can always happen unexpectedly and the 'current plan' (the will) makes no effort to account for these unknowns, in regards to this house.
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Re: Estate considerations with sibling living in home owned by parent

Post by fourwheelcycle »

bluebolt wrote: Sat Sep 19, 2020 1:40 pm .... it's neither my will nor my house, so it's not helpful for me to seek legal counsel. Parent has made it clear they are splitting everything equally among siblings. I can recommend that they seek legal counsel, except without giving a compelling reason (and maybe even with a compelling reason), I doubt they will.

Hence seeking the wise counsel of Bogleheads on this thread.
No comment yet on who is the executor - sibling living in house? bluebolt? another sibling? surviving parent's attorney?

Overall, there seems to be little problem. I agree it would be presumptive to ask surviving parent to revise will just to address siblings' concerns about issues not identified and addressed in the will. If all siblings share concern about ambiguity, and agree on future distribution of assets, they can memorialize their agreement themselves, without involving an attorney. An informal agreement would not be legally binding, but if even one sibling disagrees an attorney-drafted agreement would never be signed by all.

Plenty of long-shot issues, like significant reduction of estate value, but one less long-shot issue is sibling in house may want their share to be larger than others to reflect reimbursement for future value of rent-free housing they have been receiving. However, rent-free housing would reasonably be expected to stop in any event at death of surviving parent, absent any change and clarification of will, so this concern is probably unlikely.

Simplest next step would be to talk to sibling living in house about their thoughts on future asset distribution, e.g., they keep house and fair market value is deducted from their share of estate, with any savings for private sale vs. open market sale allocated equally to each sibling's share. An eccentric executor could always head out into left field even if everyone thinks they have a shared understanding - like insisting on sale of both houses so assets could be cleanly divided and distributed. If bluebolt is the executor and is just looking for advice, the way forward seems fairly clear and reasonable if bluebolt and sibling in house can discuss now and reach agreement.
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StevieG72
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Re: Estate considerations with sibling living in home owned by parent

Post by StevieG72 »

Is it possible that the sibling living in the home will expect to keep the home and not include it in the estate disbursement due to the current arrangement?

If its owned by the parents it obviously will be part of the estate, the sibling may not see it this way though.

Having read Beyond The Grave, I now believe outrageous unexpected things really do happen when money is involved.
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neverpanic
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Re: Estate considerations with sibling living in home owned by parent

Post by neverpanic »

StevieG72 wrote: Sun Sep 20, 2020 8:57 am Is it possible that the sibling living in the home will expect to keep the home and not include it in the estate disbursement due to the current arrangement?

If its owned by the parents it obviously will be part of the estate, the sibling may not see it this way though.

Having read Beyond The Grave, I now believe outrageous unexpected things really do happen when money is involved.
Exactly this.

Greed often does not show up until there is something to be greedy over. It's very common for the spouse of an heir to pressure DW/DH to "get your fair share!" in scenarios similar to the OP's. How often does the rent-free sibling have the cash on hand to pay everyone else off? In OP's case, the fact they all agree means they all agree right now. Sometimes, it's best to put things in writing and remove all the worry.
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Lee_WSP
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Re: Estate considerations with sibling living in home owned by parent

Post by Lee_WSP »

The easiest solution is for parents to carve out the house for sibling and deduct fair value from their distribution. A fight will probably ensue over market value, but whatever, it'll be limited to a reasonable range and honesty there's no way to resolve it unless everything is sold for cash and then divided up.

The better solution is to see an estate attorney and draft a revocable trust which details exactly how the estate will manage things upon death, whether the mortgage will be paid off whether the bank will force a full payment etc etc.
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bluebolt
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

fourwheelcycle wrote: Sun Sep 20, 2020 8:36 am
bluebolt wrote: Sat Sep 19, 2020 1:40 pm .... it's neither my will nor my house, so it's not helpful for me to seek legal counsel. Parent has made it clear they are splitting everything equally among siblings. I can recommend that they seek legal counsel, except without giving a compelling reason (and maybe even with a compelling reason), I doubt they will.

Hence seeking the wise counsel of Bogleheads on this thread.
No comment yet on who is the executor - sibling living in house? bluebolt? another sibling? surviving parent's attorney?

Overall, there seems to be little problem. I agree it would be presumptive to ask surviving parent to revise will just to address siblings' concerns about issues not identified and addressed in the will. If all siblings share concern about ambiguity, and agree on future distribution of assets, they can memorialize their agreement themselves, without involving an attorney. An informal agreement would not be legally binding, but if even one sibling disagrees an attorney-drafted agreement would never be signed by all.

Plenty of long-shot issues, like significant reduction of estate value, but one less long-shot issue is sibling in house may want their share to be larger than others to reflect reimbursement for future value of rent-free housing they have been receiving. However, rent-free housing would reasonably be expected to stop in any event at death of surviving parent, absent any change and clarification of will, so this concern is probably unlikely.

Simplest next step would be to talk to sibling living in house about their thoughts on future asset distribution, e.g., they keep house and fair market value is deducted from their share of estate, with any savings for private sale vs. open market sale allocated equally to each sibling's share. An eccentric executor could always head out into left field even if everyone thinks they have a shared understanding - like insisting on sale of both houses so assets could be cleanly divided and distributed. If bluebolt is the executor and is just looking for advice, the way forward seems fairly clear and reasonable if bluebolt and sibling in house can discuss now and reach agreement.
Sorry, didn't mean to leave that part out. Yes, I will be the executor.

Thanks so far for everyone's feedback. This is all extremely helpful.
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bluebolt
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Re: Estate considerations with sibling living in home owned by parent

Post by bluebolt »

StevieG72 wrote: Sun Sep 20, 2020 8:57 am Is it possible that the sibling living in the home will expect to keep the home and not include it in the estate disbursement due to the current arrangement?

If its owned by the parents it obviously will be part of the estate, the sibling may not see it this way though.

Having read Beyond The Grave, I now believe outrageous unexpected things really do happen when money is involved.
Good point that a couple of folks have raised. I don't believe this will be the case. But, you never know.
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