What Are My Rights When Inheriting a House with Siblings?
The decision of how to divide inherited property between siblings can be a complex one. This article acts as a comprehensive guide for anyone seeking to learn more about what is involved in this process.
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Shawn Kerendian, Managing Partner at Keystone Law Group, discusses the five most common methods for dividing a home that was inherited by siblings. Read the complete article below for more details. Click the YouTube Channel subscribe button to be notified when new videos are published.
What to Know When Inheriting a House with Siblings
If you are reading this article, chances are that you’re seeking to enforce your beneficiary rights in an inherited property split between siblings following the death of a loved one. The most common type of property siblings jointly inherit is a house, which complicates matters since physically dividing a house doesn’t make much sense if the siblings are not planning to reside in the house together. Some siblings may prefer to sell the home while their other siblings prefer to keep the home in the family. When disagreements such as this arise, who has the right to decide what to do with the property at issue? Can a sibling be forced to remain an owner of a home they don’t want?
When inheriting a house with siblings, it is important for you to voice your desires regarding the home (e.g., whether you would like to keep it in the family, rent it out or sell it) early in the trust or estate administration process, since the executor or trustee is generally entitled to sell the property without obtaining consent from beneficiaries first – unless, of course, the will or trust document forbids them from doing so.
A house is at times the most valuable piece of property beneficiaries inherit, which is why it’s important for them to hire a beneficiary lawyer to represent their interests and enforce their rights. A lawyer can assist beneficiaries with everything from communicating their preferences regarding the property to bringing a partition action to try to force the sale of the property.
Common Solutions for Inherited Property Splits Between Siblings
When deciding how to divide inherited property between siblings, the first thing you should do as a beneficiary is to consult the will or trust document. What percentage interest of the home have you been designated? Did the decedent leave instructions about whether to sell the home or keep it in the family?
When specific instructions regarding the disposal of the property are not provided in the decedent’s estate planning documents, the executor or trustee generally has the right to proceed with disposing of it as they see fit. Executors and trustees are fiduciaries, so it is their duty to do what is best for the estate or trust, respectively. This means that they sometimes have to make decisions that are not in line with what all beneficiaries want.
There is a lot to consider when deciding how to divide inherited property between siblings, such as your financial situation and whether you can afford the home if you were to take ownership of it. You also have to consider the preferences of your siblings.
The following are the most common options for splitting an inherited home with siblings:
- Selling the Home: The easiest solution when inheriting a house with siblings is generally to sell the house and divide the proceeds from the sale among the siblings according to the percentage shares each sibling had been designated by the will or trust.
- Renting the Home: If siblings are not ready to part with the home but no one wishes to live in it, they can try to lease the home and generate rental income to divide among them.
- Buyout: If one sibling wishes to keep the home and the other siblings do not, the sibling who wants the home can offer to buy out their other siblings’ interests in the property.
- Private Arrangement Between Siblings: Siblings might be able to reach an agreement among themselves about how to divide the property (e.g., if a decedent leaves siblings equal shares of their primary residence and a vacation home they own, one sibling could take the home and the other could take the vacation property if they are worth roughly the same amount; likewise, if one sibling wants the home but cannot afford to buy out their sibling’s share, they could arrange to buy out their sibling’s share by making payments with interest over time to their sibling or taking a loan out against the property).
- Partition Actions: When an agreement about how to divide inherited property between siblings cannot be reached, the siblings may have to involve the court in order to force the sale of the property and terminate their co-ownership; a partition lawsuit is sometimes the only viable option for resolving conflicts when inheriting a house with siblings when a sibling refuses to sell.
Am I Permitted to Reside in the Inherited Home?
Whether or not you will be allowed to reside in the home you were left depends on a variety of factors, which can include the terms of the will or trust, the executor’s or trustee’s discretion, and any agreements reached between you and your siblings. Hypothetically, if a will or trust says you and your siblings receive equal shares of a property, all of you are entitled to use and enjoy it once you have the title to it; however, in most instances, siblings jointly using and enjoying a property is impractical, so another agreement will have to be reached about how to divide the inherited property between siblings.
It is important for any beneficiary who is set on taking ownership of a home to consult with a lawyer to learn how best to enforce their right to the property. They should keep in mind that if their desire to remain in the home conflicts with their siblings’ desire to sell the home, a partition action could ultimately lead to a forced sale of the property.
Another scenario may be that you would like to reside in the home before it is disposed of through the will or trust. This might be possible, but only if fair rental value is paid to the estate or trust, respectively.
Is It Necessary to Involve the Court When Inheriting a House With Siblings?
Although there are exceptions, homes being disposed of through a will do generally need to pass through probate, which is a court-supervised process. While property held by a trust does pass through trust administration, it is not generally a court-supervised process.
As for dividing inherited property among siblings once the title of the property has been transferred to them, it is usually not required for the court to get involved unless the siblings cannot reach a mutual agreement on their own about how to do it. Only when siblings cannot agree on a route of action does it become necessary to bring something known as a partition lawsuit. We will delve more into partition actions in the next section of this article.
Can Siblings Force the Sale of Inherited Property?
You’ve inherited your parents’ home with your siblings. You want to keep it in the family, but they want to sell. You’re probably wondering: Can siblings force the sale of inherited property? What steps can I take to try to maintain ownership of the home?
When a property has two or more owners, its sale can be forced through a type of lawsuit known as a partition action. For a partition lawsuit to be started, at least the following conditions must be met:
- A co-owner wants to sell the property, but other co-owners won’t agree to sell.
- The property cannot be divided (e.g., a home cannot be split in half).
The forced sale of property can occur even in instances where the majority of co-owners wish to keep ownership of the home, as the court generally cannot coerce anyone into remaining a co-owner of a property if they do not wish to be.
Even if a partition action is started, it can be settled out of court. Those seeking to keep ownership of the home could try to seek a buyout agreement as part of the partition lawsuit. If such an agreement cannot be reached, the court will usually decide to put the property up for sale – at which point, it is out of the control of all the co-owners.
It is important to note that the winner of the partition suit can ask the court to award them attorney’s fees and costs. This could mean that the party defending the partition action could be forced to cover the litigation costs of the other side or that the costs could be covered by the proceeds from the sale of the property.
What Happens to Property That Was Co-Owned by the Decedent or Their Trust?
Another scenario in which partition actions are common occurs when the property being inherited did not fully belong to the decedent (i.e., the decedent had been a co-owner with a third party). It is often illogical for the family members inheriting the decedent’s share of such a property to maintain their ownership.
Take, for example, a decedent who had co-owned a vacation property with a friend. The decedent designated the property to go to their children in their will, but would the children be willing to share the property with the decedent’s friend? They would have to buy out the friend’s interest, or vice versa. If a deal cannot be made, and one party refuses to sell the property, it may be necessary to bring a partition lawsuit.
Sometimes the co-owner of a piece of property is a trust. The trustee of a trust can also bring a partition suit to try and force the sale of the property. Trusts are likewise entitled to defend partition actions and negotiate buyout agreements.
When Are Partition Actions Not Appropriate?
When a piece of property is co-owned, partition actions are generally a viable solution for any co-owner seeking to terminate their interest in the property by forcing its sale. Certain titles to properties, however, are binding; in these instances, partition actions cannot usually be brought.
If a co-owner is wondering about how to stop a partition action, they should keep in mind that doing so is very difficult, albeit possible. It is crucial they hire a probate lawyer to help defend their ownership rights. In fact, even those set on forcing the sale of jointly owned property through a partition action should hire a probate lawyer to achieve the best possible outcome for their case.
It’s important to remember that partition actions cannot be brought by persons who are not yet owners of a property. For instance, if you are inheriting a house with siblings, but the executor or trustee has not yet transferred the title, you are not considered an owner of the home, and therefore, you cannot bring a partition action.
If the executor or trustee is delaying transferring the home or selling the home because they are residing in it rent-free, this is wrong, but it is not cause for a partition action. In this situation, it would be best to petition the court to have the executor or trustee removed and surcharged with help from a trust and estate lawyer.
Selling Inherited Property as the Executor or Trustee
The last step of splitting property is where it gets complicated. The obvious and least complicated way of proceeding would be to sell the home and divide the proceeds from the sale among the siblings; however, what do you do if one sibling wants to keep ownership of the property?
As the executor or trustee, you are entitled to make decisions about the estate or trust, respectively. Those decisions generally include the right to sell property without obtaining consent from beneficiaries. Whether you should do so is a different story. As a fiduciary, you are supposed to represent the interests of beneficiaries, so when making a significant decision such as selling an inherited home, it is wise to involve them in the decision.
How to Settle a Dispute for an Inherited Property Split Between Siblings
Inherited property splits between siblings can get complicated when siblings don’t agree on how to divide the inherited property. The best option is generally to involve a probate lawyer who can either mediate the dispute, help create and execute a buyout agreement, or, if it comes down to it, bring or defend a partition action. A probate lawyer might also be able to help if the personal representative or trustee is trying to sell estate or trust property, respectively, that the siblings do not want being sold.