Inherited ranch

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flossy21
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Re: Inherited ranch

Post by flossy21 » Mon May 13, 2019 12:01 pm

I would not do the loan, interest free or not, there are too many future outcomes that are possibly negative as mentioned by others here.

Does this property produce any income from farming or timber?

Maybe you could let the individual who wants to work the ranch pay rent to the others?

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celia
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Re: Inherited ranch

Post by celia » Mon May 13, 2019 12:24 pm

You are already generous in being willing to let them have it for less than market and one reply was to also have them finance it so it works out for them the same as if they had the same payment on an interest rate loan. But what is the other side of how the transaction can benefit the heirs? Has it been appraised for fair market value and for what it might get in today’s local market?

If you look at the difference of what the family buyer would pay and what a stranger would pay, are all the heirs willing to give that up, knowing that either buyer could turn around and sell it a few months later?


An even more important consideration is what would happen with the 4 heirs if one or more of them should die in the next 20 years? Where would their share of the payments supposedly go? This could get into the spouses, ex-spouses (if future divorces occur), children, future children, minor children, and future estate plans being impacted. And some of those secondary beneficiaries could die in the next 20 years. And any of those original or second level beneficiaries could end up with financial difficulties where they need the money ‘now’.

EVEN IF ALL PAYMENTS were made for 20 years as planned, there’s a good chance it will still end up a mess.

DON’T LEND TO THEM!

KyleAAA
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Re: Inherited ranch

Post by KyleAAA » Mon May 13, 2019 1:50 pm

The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.

NotWhoYouThink
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Re: Inherited ranch

Post by NotWhoYouThink » Mon May 13, 2019 1:57 pm

KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Interesting. My family owns the land under our houses, and we think nothing of selling it whenever the mood strikes.

If this is how it has traditionally been done, are the 20 year payments almost always made in full for the whole 20 years, or do things break down and cause strife and grief when the payments don't get made? I can think of a couple of high profile cases like that in my area. Is it considered more socially acceptable to promise payments for 20 years and not make them (bless their hearts, they tried) than to refuse to enter into that deal?

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F150HD
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Re: Inherited ranch

Post by F150HD » Mon May 13, 2019 1:59 pm

20 years? what if someone dies 1/2 way thru the deal....then what? complications await.

If they want it, you should settle it now and they pay now IMO. It just makes sense.

masha12
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Re: Inherited ranch

Post by masha12 » Mon May 13, 2019 2:01 pm

KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Curious where this is the tradition. I grew up on a farm in the Midwest and I’ve never heard such a thing. All the farms in my family have passed with the purchasing child paying FMV to the other siblings without family financing.

not4me
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Re: Inherited ranch

Post by not4me » Mon May 13, 2019 2:16 pm

This is the 2nd mention I’ve seen of this in this thread. I’m also curious about the tradition. I have heard of situations that might seem similar. For example, 3 kids – 2 have moved away &/or don’t “farm” (ranch, whatever) & the other stays behind & gradually takes over. When time comes, the farming kid pays the other 2 with some cash now, & crop proceeds for next 3-5 years.

Several have mentioned that farms are now much larger in scale; which is true, but many are also incorporated. Corporation owns land/equipment/etc & what is inherited in ownership share & not land.

In the past, I believe in several places it was “tradition” to auction the farm & let kids bid like anyone else.

I think I’m right that in some Midwest states there is so much partitioning squabble that courts require an arbitration attempt before court case.

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Re: Inherited ranch

Post by KyleAAA » Mon May 13, 2019 2:35 pm

masha12 wrote:
Mon May 13, 2019 2:01 pm
KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Curious where this is the tradition. I grew up on a farm in the Midwest and I’ve never heard such a thing. All the farms in my family have passed with the purchasing child paying FMV to the other siblings without family financing.
It was not uncommon in the southeast. I'm not sure about other parts of the country. I don't know how often something like this is done today, but for generations this was more or less what was done. Credit is a lot easier to come by now. Imagine trying to get external financing in the 30s. If you wanted to keep it in the family there weren't a ton of alternatives. If any family members have an expectation that things should be handled that way, it's something to keep in mind if family harmony is a top priority.
Last edited by KyleAAA on Mon May 13, 2019 2:44 pm, edited 1 time in total.

Tlmlb
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Re: Inherited ranch

Post by Tlmlb » Mon May 13, 2019 2:41 pm

Auction the property at at arms length terms.

fru-gal
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Re: Inherited ranch

Post by fru-gal » Mon May 13, 2019 2:52 pm

I haven't had time to read all the replies.

I'm sorry, but the plan is a bad idea. So many things can go wrong in twenty years. Extricate yourself from this situation. Ideally the branch that wants the property gets a mortgage from a regular lender and buys the other people out. You can help by waiting extra time for them to do this and accepting a lower price.

Or you can have the land divided and own 1/4 and decide what to do while having complete control of yours.

Why twenty years, is the land worth a fortune?

LFS1234
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Re: Inherited ranch

Post by LFS1234 » Mon May 13, 2019 3:59 pm

KyleAAA wrote:
Mon May 13, 2019 2:35 pm
masha12 wrote:
Mon May 13, 2019 2:01 pm
KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Curious where this is the tradition. I grew up on a farm in the Midwest and I’ve never heard such a thing. All the farms in my family have passed with the purchasing child paying FMV to the other siblings without family financing.
It was not uncommon in the southeast. I'm not sure about other parts of the country. I don't know how often something like this is done today, but for generations this was more or less what was done. Credit is a lot easier to come by now. Imagine trying to get external financing in the 30s. If you wanted to keep it in the family there weren't a ton of alternatives. If any family members have an expectation that things should be handled that way, it's something to keep in mind if family harmony is a top priority.
Something like this may have made sense in the 1930s, a time of massive deflation where assets lost value and the value of the dollar went up rather than down.

However, for this concept to have survived the inflationary late-60's through early 80's would be nothing short of amazing, and I find it quite difficult to believe - other than under circumstances where older family members intentionally were attempting to transfer assets to their progeny for what when properly taking into account the time-value of money amounts to a fraction of their actual value.

KyleAAA
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Re: Inherited ranch

Post by KyleAAA » Mon May 13, 2019 4:36 pm

LFS1234 wrote:
Mon May 13, 2019 3:59 pm
KyleAAA wrote:
Mon May 13, 2019 2:35 pm
masha12 wrote:
Mon May 13, 2019 2:01 pm
KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Curious where this is the tradition. I grew up on a farm in the Midwest and I’ve never heard such a thing. All the farms in my family have passed with the purchasing child paying FMV to the other siblings without family financing.
It was not uncommon in the southeast. I'm not sure about other parts of the country. I don't know how often something like this is done today, but for generations this was more or less what was done. Credit is a lot easier to come by now. Imagine trying to get external financing in the 30s. If you wanted to keep it in the family there weren't a ton of alternatives. If any family members have an expectation that things should be handled that way, it's something to keep in mind if family harmony is a top priority.
Something like this may have made sense in the 1930s, a time of massive deflation where assets lost value and the value of the dollar went up rather than down.

However, for this concept to have survived the inflationary late-60's through early 80's would be nothing short of amazing, and I find it quite difficult to believe - other than under circumstances where older family members intentionally were attempting to transfer assets to their progeny for what when properly taking into account the time-value of money amounts to a fraction of their actual value.
Cultural traditions don't have to make logical sense.

texasdiver
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Re: Inherited ranch

Post by texasdiver » Mon May 13, 2019 4:46 pm

KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Yes, but in my experience, this is traditionally a father-child process of passing down a farm when everyone is still living, and not a bunch of heirs dealing with an estate.

My family has a large dairy farm in Central PA that has been in the family since before the civil war. It's where my mother grew up. When I was a kid my grandfather was in the process of passing it down to my uncle. 20 years ago he passed it down to my cousin. And now my cousin is passing it down to his 25 year old son.

In all of these cases, the older farmer slowly retired and moved off the farm and the younger son (or son-in-law/daughter) slowly took over the operation of the farm and bought it from the father. Essentially the 20-year interest free (or whatever terms they had agreed to) was the retirement income for the retired farmer and his wife who moved off nearby and kept helping out from time to time for decades.

When my grandfather died in his late 80s after having moved off the farm 20 years earlier he left an estate and there was an estate auction and all the usual stuff. But the farm was not part of that because it had been passed on a generation earlier. The "estate" may or may not have been owed some final mortage payments from my uncle for the farm the he had been in the process of buying for the past 20 years or so. But the farm itself was in no way part of any inheritance. It had been passed down many years earlier when everyone was still living.
Last edited by texasdiver on Mon May 13, 2019 4:53 pm, edited 3 times in total.

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Mon May 13, 2019 4:49 pm

LFS1234 wrote:
Sun May 12, 2019 11:42 am
My view: "Neither a borrower nor a lender be" - especially with family.

If you want to give them a discount, do it in the purchase price. But they'll have to find a third-party lender.
This.

Just remember you are not a bank and that you want your inheritance now not have it drib and drab in over 20 years.

retire2022
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Re: Inherited ranch

Post by retire2022 » Mon May 13, 2019 7:00 pm

Op

One of the things which has not been discussed, is there are transaction cost have you looked into marketing cost? having an commercial broker? an Appraisal cost? Survey Cost, what would it cost?

As a farm, this is agricultural land and would be hard to sell, have you looked into comparable?

these things family members would have to share.

https://www.loopnet.com/ is a commercial property listing service, your area may have some specialist.

Bobby206
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Re: Inherited ranch

Post by Bobby206 » Mon May 13, 2019 7:27 pm

Just say no.

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Bones72
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Re: Inherited ranch

Post by Bones72 » Tue May 14, 2019 6:58 am

Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.

not4me
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Re: Inherited ranch

Post by not4me » Tue May 14, 2019 7:22 am

Bones72 wrote:
Tue May 14, 2019 6:58 am
Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.
Wise! But I'd go at least another step -- which you may be planning, but didn't say. You not only need to protect your financial interest, but remember you have some legal liability as well. Ideally, it could get sold/auctioned/etc as part of settling the estate & not after title changed?

retire2022
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Re: Inherited ranch

Post by retire2022 » Tue May 14, 2019 7:56 am

Op

Here is an article which discuss population loss since the Great Recession from Citylab an Atlantic magazine publication

https://theconversation.com/most-of-ame ... ine-115343

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Bones72
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Re: Inherited ranch

Post by Bones72 » Tue May 14, 2019 8:41 am

not4me wrote:
Tue May 14, 2019 7:22 am
Bones72 wrote:
Tue May 14, 2019 6:58 am
Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.
Wise! But I'd go at least another step -- which you may be planning, but didn't say. You not only need to protect your financial interest, but remember you have some legal liability as well. Ideally, it could get sold/auctioned/etc as part of settling the estate & not after title changed?
Thanks, already considered into the mess is that nothing happens until the estate is settled and the title is changed

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Bones72
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Re: Inherited ranch

Post by Bones72 » Tue May 14, 2019 8:46 am

Another way to view this; its worth,according to real estate sales, about 480000 max to 400000. Rent payment is 3500$. Which they (pissy family members) paid twice over the last 7 years. I would rather the neighbors bought it. They're good people.

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djpeteski
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Re: Inherited ranch

Post by djpeteski » Tue May 14, 2019 9:13 am

Bones72 wrote:
Sun May 12, 2019 11:24 am
Advice needed. Parents have passed. Small (400) acres of ranch land to be split 4 ways. One branch of family wishes to purchase it, which is fine. However, they want to pay it out to the other heirs over 20 years, no interest. Thoughts? Advice? This has already caused a split n the family. The price offered is fair, below market value, but its family. The 20 year payment is uncomfortable.
The key here is that this is already tearing the family apart, and while undesirable it is probably unavoidable. Having the argument last 20 years (through the financing) will delay any possible reconciliation/healing.

If this is owner financed, you will see very few of the payments no matter the discount or favorable terms offered. People have a strange way of justifying why they deserve more than their equal share of the estate. "They deserve your 25% of the property because you have the quilt made by grandma." That quilt might not fetch much it a garage sale, but it is the sentimental value...

So if it was me, I would take my portion of the farm and do as you wish. That might include a sale. Or take a cash offer from them at about a 10% discount off of market value.

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Tue May 14, 2019 9:48 am

KyleAAA wrote:
Mon May 13, 2019 1:50 pm
The "pay it off over 20 years with no interest" strategy is how these kinds of things have traditionally been done in parts of farm country. Many in those regions will see an unwillingness to conform to this model as an insult. Enforcing some other structure may result in far more friction that going along with it depending on how individuals in the family see it. I'd keep that in mind.
Traditions end. Anyone can take insult at any time. Today is not yesterday or tomorrow. Do what is simple, uncomplicated and generous. To me that is less than fair market value but buyer finds his own financing to pay off others. This should be considered win win by all.

thx1138
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Re: Inherited ranch

Post by thx1138 » Tue May 14, 2019 9:49 am

jminv wrote:
Sun May 12, 2019 12:45 pm
My mother’s family went through something similar and they decided that it would be better to sell. Unfortunately, the sibling that wanted to keep the place (and I believed, flip it), doesn’t talk to the rest of the family to this day because of it, so that’s always a possibility.
Sounds like killing two birds with one stone to me. Property got properly liquidated to the heirs and the family members with unreasonable expectations have blessed the rest of the family by separating themselves.

Sounds like the OP has already settled on a sound decision. Best of luck and hope it goes smoothly!

Luke Duke
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Re: Inherited ranch

Post by Luke Duke » Tue May 14, 2019 9:51 am

mnnice wrote:
Sun May 12, 2019 8:14 pm
I have noticed in these deals that often the brokest member of the family that gets all sentimental and wants it.
Yep. My FIL has been trying to sell his mom's old house for 3 years. His brother and family moved in and refuses to sell. In the meantime they have trashed the house and refused to buy his share out.

ohai
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Re: Inherited ranch

Post by ohai » Tue May 14, 2019 9:57 am

If your relatives want to buy the land from you but need a loan, get them to borrow money from a bank and pay you up front.

Even if you charge them a "fair" interest rate, what will you do if they cannot pay? Sue them to bankruptcy? With the bank, it is out of your hands.

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Tue May 14, 2019 10:05 am

Luke Duke wrote:
Tue May 14, 2019 9:51 am
mnnice wrote:
Sun May 12, 2019 8:14 pm
I have noticed in these deals that often the brokest member of the family that gets all sentimental and wants it.
Yep. My FIL has been trying to sell his mom's old house for 3 years. His brother and family moved in and refuses to sell. In the meantime they have trashed the house and refused to buy his share out.
Time for lawyer to step in. First thing is to get them out.

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Tue May 14, 2019 10:07 am

Bones72 wrote:
Tue May 14, 2019 8:41 am
not4me wrote:
Tue May 14, 2019 7:22 am
Bones72 wrote:
Tue May 14, 2019 6:58 am
Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.
Wise! But I'd go at least another step -- which you may be planning, but didn't say. You not only need to protect your financial interest, but remember you have some legal liability as well. Ideally, it could get sold/auctioned/etc as part of settling the estate & not after title changed?
Thanks, already considered into the mess is that nothing happens until the estate is settled and the title is changed
Can’t selling be the job of executor?

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8foot7
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Re: Inherited ranch

Post by 8foot7 » Tue May 14, 2019 10:10 am

Dottie57 wrote:
Tue May 14, 2019 10:07 am
Bones72 wrote:
Tue May 14, 2019 8:41 am
not4me wrote:
Tue May 14, 2019 7:22 am
Bones72 wrote:
Tue May 14, 2019 6:58 am
Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.
Wise! But I'd go at least another step -- which you may be planning, but didn't say. You not only need to protect your financial interest, but remember you have some legal liability as well. Ideally, it could get sold/auctioned/etc as part of settling the estate & not after title changed?
Thanks, already considered into the mess is that nothing happens until the estate is settled and the title is changed
Can’t selling be the job of executor?
The executor generally cannot choose to sell property that has been left to beneficiaries in lieu of passing title to them.

Ping Pong
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Re: Inherited ranch

Post by Ping Pong » Tue May 14, 2019 10:12 am

I’m surprised at all the talk of a discount. If the farm has sentimental value to the buyer, then it should be worth a premium to them. I’m not saying you should demand a premium, but this fact should put things in perspective. A discount for avoided broker fees and expediency would be reasonable. But it sounds like they won’t be able to come up with financing so it’s a moot point.

If you really wanted to give them an interest free loan, it’d be better to let them get convential financing and then the other heirs could gift them an amount equal to the interest paid for each of the next 20 years. Yeah, I didn’t think so!

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Tue May 14, 2019 10:14 am

8foot7 wrote:
Tue May 14, 2019 10:10 am
Dottie57 wrote:
Tue May 14, 2019 10:07 am
Bones72 wrote:
Tue May 14, 2019 8:41 am
not4me wrote:
Tue May 14, 2019 7:22 am
Bones72 wrote:
Tue May 14, 2019 6:58 am
Wow, thanks for all the responses. The family split thing? You can pick your friends,but you're stuck with family. Yep, it's the brokest part of the family that wants it, yes they're relying on sentimentality, yes they feel entitled, no its not a ranch I was using one word to describe 400 acres of some very good pasture mixed with some very bad pasture.
If they want it they can buy it. I'm not financing them because I don't trust them.
Wise! But I'd go at least another step -- which you may be planning, but didn't say. You not only need to protect your financial interest, but remember you have some legal liability as well. Ideally, it could get sold/auctioned/etc as part of settling the estate & not after title changed?
Thanks.
Thanks, already considered into the mess is that nothing happens until the estate is settled and the title is changed
Can’t selling be the job of executor?
The executor generally cannot choose to sell property that has been left to beneficiaries in lieu of passing title to them.

Luke Duke
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Re: Inherited ranch

Post by Luke Duke » Tue May 14, 2019 10:20 am

Dottie57 wrote:
Tue May 14, 2019 10:05 am
Luke Duke wrote:
Tue May 14, 2019 9:51 am
mnnice wrote:
Sun May 12, 2019 8:14 pm
I have noticed in these deals that often the brokest member of the family that gets all sentimental and wants it.
Yep. My FIL has been trying to sell his mom's old house for 3 years. His brother and family moved in and refuses to sell. In the meantime they have trashed the house and refused to buy his share out.
Time for lawyer to step in. First thing is to get them out.
They're already in that phase. The house isn't worth much and my in-laws' net worth is probably 20x that of his brother, so things are moving slowly. The sad part is that my FIL probably would have gifted his share of the property to his brother if his brother had done the honorable thing and offered to buyout his share at the beginning.

Dottie57
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Re: Inherited ranch

Post by Dottie57 » Tue May 14, 2019 10:41 am

Luke Duke wrote:
Tue May 14, 2019 10:20 am
Dottie57 wrote:
Tue May 14, 2019 10:05 am
Luke Duke wrote:
Tue May 14, 2019 9:51 am
mnnice wrote:
Sun May 12, 2019 8:14 pm
I have noticed in these deals that often the brokest member of the family that gets all sentimental and wants it.
Yep. My FIL has been trying to sell his mom's old house for 3 years. His brother and family moved in and refuses to sell. In the meantime they have trashed the house and refused to buy his share out.
Time for lawyer to step in. First thing is to get them out.
They're already in that phase. The house isn't worth much and my in-laws' net worth is probably 20x that of his brother, so things are moving slowly. The sad part is that my FIL probably would have gifted his share of the property to his brother if his brother had done the honorable thing and offered to buyout his share at the beginning.
So sorry for your FIL.

My brother is 58 and I am 62. I can’t imagine either of us acting as if we are owed something more than the other.

rich126
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Re: Inherited ranch

Post by rich126 » Tue May 14, 2019 10:51 am

Over time I’ve come to dislike the word tradition. Often it is used as an excuse to continue something that should have ended a long time ago.

I’m definitely of the opinion you don’t mix family and money.

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BarbaricYawp
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Re: Inherited ranch

Post by BarbaricYawp » Tue May 14, 2019 11:12 am

Luke Duke wrote:
Tue May 14, 2019 9:51 am
mnnice wrote:
Sun May 12, 2019 8:14 pm
I have noticed in these deals that often the brokest member of the family that gets all sentimental and wants it.
Yep. My FIL has been trying to sell his mom's old house for 3 years. His brother and family moved in and refuses to sell. In the meantime they have trashed the house and refused to buy his share out.
This. Setting aside the risk to any value associated with a house, it is entirely possible for even open farmland to be completely trashed by someone who either doesn't know what they are doing or can't afford to maintain it. Imagine your family farm converted into a dumping ground for something while the relatives collect the fees until the place is full -- and then invite you to foreclose on what will either be severely diminished in value (best case) or an outright environmental nightmare. A few years back we had someone nearby who randomly decided to turn their farm into a dumping ground for brush and other raw materials coming from the Northern Virginia building spree. I believe their intention was to charge a modest dumping fee and then sell mulch. Our first indication that something was going on was a sudden explosion of vermin that were probably moving into the 30 foot tall brush piles. The second was an outright mulch fire -- caused by not turning the 'raw' shavings -- that crept off their farm and headed in the general direction of a group of farmettes whose owners were not typically at home during the day to rescue pets and livestock. After that the county got involved and shut them down, for which I am grateful because the third issue was likely to be groundwater contamination since I think they had begun to branch out into 'non-organic' construction materials. Lest you think this was a one-off, there was another guy a few miles further away who was running an informal 'pick your own' junkyard. County got to him faster because the drainage from the old vehicles contaminated the creek that ran through his property. I have any number of rural friends and acquaintances with similar horror stories ranging from family members/friends of family members who moved onto the property in RVs and couldn't be removed to people that sublet the property to tenant farmers that depleted the soil.

I hate to think the worst of people, but many times the 'brokest member' gets in over their head and justifies whatever behavior as 'what it will take to survive'. As others have noted, there are plenty of low-cost ag loans aimed at young, first-time farmers, women-owned or minority businesses etc. If they can't put the business plan together to get qualified even for those they probably aren't going to make the farm work long enough for you to get your money out.
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dm200
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Re: Inherited ranch

Post by dm200 » Tue May 14, 2019 12:05 pm

Bones72 wrote:
Sun May 12, 2019 11:24 am
Advice needed. Parents have passed. Small (400) acres of ranch land to be split 4 ways. One branch of family wishes to purchase it, which is fine. However, they want to pay it out to the other heirs over 20 years, no interest. Thoughts? Advice? This has already caused a split n the family. The price offered is fair, below market value, but its family. The 20 year payment is uncomfortable.
Seems like the "other heirs" are in a bit of a "family issue" here -

I 100% agree with other feedback that the 20 year payback (especially with no interest) is a high risk choice (BOTH financial and "family").

If you have not already done so, get together with the other two recipients and "brainstorm" for some kind of solution that you can - all three - agree on and propose to the 4th person.

How much is the total "value" of the inherited ranch?

Can the one wanting to purchase the ranch pay anything upfront? Can he/she qualify for any kind of mortgage or loan?

Can the 400 acres, in any practical way, be subdivided at all?

What is the current and planned use of the ranch? Does the planned use provide net income to support any kind of payments? Does the one who wants the ranch have any experience, knowledge, competence to make it a financial success?

Might it make sense for the four of you to keep/own the ranch jointly for the foreseeable/indefinite future and the one using it would pay "rent" to the others?

Might there be any other similar situations of such "ranches" being left to multiple heirs?

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dm200
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Re: Inherited ranch

Post by dm200 » Tue May 14, 2019 12:09 pm

rich126 wrote:
Tue May 14, 2019 10:51 am
Over time I’ve come to dislike the word tradition. Often it is used as an excuse to continue something that should have ended a long time ago.
I’m definitely of the opinion you don’t mix family and money.
In my experience and observations over the years, this is often very true. However, in some "cultures" as well as some individual circumstances, this can work out well. I find it very interesting how very, very intertwined family/financial situations are so well handled in these "cultures". I suppose, though, that after a generation or two, these cultures will become "Americanized".

In my case, for example, I would have little hesitation (if the details made sense otherwise) to enter into such a situation with my brother - BUT not most of my other relatives.

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Re: Inherited ranch

Post by Jack FFR1846 » Tue May 14, 2019 12:47 pm

It seems very common that a relative who doesn't even own a $20 bill wants to be given property "just because". One of my good friends saw this when his mom died. He and his 3 siblings decided immediately to sell the house. A niece and her boyfriend stepped in and wanted the house so they could fix it up. They were both students. One just out of nursing school in her first job and the other in graduate school for another year. Their net worth was maybe minus a hundred grand. Fortunately, my friend isn't stupid nor easily manipulated and just dismissed the niece's proposal out of hand.
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dm200
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Re: Inherited ranch

Post by dm200 » Tue May 14, 2019 12:58 pm

Jack FFR1846 wrote:
Tue May 14, 2019 12:47 pm
It seems very common that a relative who doesn't even own a $20 bill wants to be given property "just because". One of my good friends saw this when his mom died. He and his 3 siblings decided immediately to sell the house. A niece and her boyfriend stepped in and wanted the house so they could fix it up. They were both students. One just out of nursing school in her first job and the other in graduate school for another year. Their net worth was maybe minus a hundred grand. Fortunately, my friend isn't stupid nor easily manipulated and just dismissed the niece's proposal out of hand.
In my opinion, as well, an even bigger "risk" is that he/she has no knowledge/experience/competence to be a "rancher". I grew up on a small family farm - and KNOW what hard work is involved. I sometimes laugh when I hear how some folks think farm living is so much "fun".

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Re: Inherited ranch

Post by mnnice » Tue May 14, 2019 1:55 pm

Bones72 wrote:
Tue May 14, 2019 8:46 am
Another way to view this; its worth,according to real estate sales, about 480000 max to 400000. Rent payment is 3500$. Which they (pissy family members) paid twice over the last 7 years. I would rather the neighbors bought it. They're good people.
That’s really (insert your favorite moderator unfriendly term). Not only do they want an interest free loan they have no intention of paying it back either.

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Re: Inherited ranch

Post by mx711yam » Tue May 14, 2019 4:30 pm

Definitely no. You dont do business with family.

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Re: Inherited ranch

Post by celia » Tue May 14, 2019 5:12 pm

Bones72 wrote:
Sun May 12, 2019 11:24 am
Advice needed. Parents have passed. Small (400) acres of ranch land to be split 4 ways.
See if any adjoining neighbors want to buy 300 acres. If so, sell them the 300 acres closest to their existing property and let the other heir have the last 100 acres.

That sounds like a win for everyone. Three of you get cash and one gets land.

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Re: Inherited ranch

Post by mrspock » Tue May 14, 2019 6:30 pm

mx711yam wrote:
Tue May 14, 2019 4:30 pm
Definitely no. You dont do business with family.
This. My answer would be a polite but firm no. To even ask for an “interest free” 20 year loan seems a bit absurd to me. I’d re-word it to them (if loan was 250k @ 5%): “Hey would you mind giving me $250k in 20 years? Because you know... we are family... ya... I figured, that’s my answer too.”

Mind blown.... :shock:

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Re: Inherited ranch

Post by texasdiver » Wed May 15, 2019 12:57 pm

mrspock wrote:
Tue May 14, 2019 6:30 pm
mx711yam wrote:
Tue May 14, 2019 4:30 pm
Definitely no. You dont do business with family.
This. My answer would be a polite but firm no. To even ask for an “interest free” 20 year loan seems a bit absurd to me. I’d re-word it to them (if loan was 250k @ 5%): “Hey would you mind giving me $250k in 20 years? Because you know... we are family... ya... I figured, that’s my answer too.”

Mind blown.... :shock:
Zero-interest loans and such are actually common for instances such as when a father is passing a farm down to his son or daughter. I know that's what my grandfather did when he passed the family farm down to my uncle. The mortgage payments were essentially the retirement income for my grandparents.

But this is a different situation. It's simply a bunch of heirs deciding how to divide up an estate.

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dm200
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Re: Inherited ranch

Post by dm200 » Wed May 15, 2019 1:05 pm

So much here seems to depend on family details and circumstances.

It might be that the OP would place a priority on family harmony over net financial gain.

As several posts discuss, some choices (including the original one presented) involve financial risks and entanglements.

If I were in this situation, I think I would first consider choices that would minimize actual financial risk and/or entanglements/messes. Then, decide what I am willing to do (or not do) for the sake of family harmony. I would consider the whole family - not just the sibling who wants the property.

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Re: Inherited ranch

Post by Broken Man 1999 » Wed May 15, 2019 5:46 pm

This activity is a business transaction. So,do it with your head, not your heart. The land won't care who owns it.

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Re: Inherited ranch

Post by obafgkm » Thu May 16, 2019 6:51 am

stoptothink wrote:
Sun May 12, 2019 6:36 pm

The entire family, 7 siblings, got totally screwed by the youngest (who just so happened to be adopted)...
I do not see the relevance of how the sibling became part of the family.

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Re: Inherited ranch

Post by happymob » Thu May 16, 2019 7:56 am

Bones72 wrote:
Tue May 14, 2019 8:46 am
Another way to view this; its worth,according to real estate sales, about 480000 max to 400000. Rent payment is 3500$. Which they (pissy family members) paid twice over the last 7 years. I would rather the neighbors bought it. They're good people.
So below market rent, which they can't even be bothered to pay most of the time. Lovely.

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