Thursday, March 16, 2017
Two beneficiaries want Dad's house sold, and two don't. What will happen?
Posted by Lynne Butler
"My dad died and left his estate to 4 beneficiaries. Myself, and my 3 nephews. One thing on the inventory is my dads house where I'm living for the last 3 years since he got really sick. Will just states that everything should be divided 4 ways. Me and one nephew don't want to sell the house, other 2 want to sell it. Executor of the will is the nephew that wants to sell. Will doesn't say to sell all the properties (4 million total value) and house worth is around 300k. What are my options here?"
The will appears to be set up to give flexibility. It does not give individual properties to individual people but simply says to divide the whole estate in four equal shares. This gives you options. Often executors think that when everything is to be split four ways, all four names have to go on each piece of property. That is flat out wrong. There is no reason whatsoever for all four of you to be put on the individual properties before they are sold. That is just an extra step, extra work, extra cost, and extra headaches.
A will does not have to direct the executor to sell the properties, and in fact most wills don't say that. It's understood, though, that items that are not being given directly to beneficiaries will be sold and the proceeds will be divided among the beneficiaries. The person who decides whether the house is to be sold or not is the executor. It doesn't actually matter whether everyone agrees or not. He still has the power to sell it.
I assume that when you say you don't want the house to be sold, what you really mean is that you want to own it yourself. Obviously it cannot stay in your father's name so it has to be given or sold to someone.
If the estate value is four million, and you are one of four equal beneficiaries, your share is going to be something under a million dollars. Taxes and expenses will come out first before your share is calculated.
One option is instead of taking a million dollars in cash, you receive the house and $700,000. In other words, you are taking the house instead of $300,000 (or whatever the final number turns out to be). The title would be transferred from your father to the estate, and then from the estate to you. You can suggest that to the executor.
If you choose this option, it would protect both you and the executor if he got a property valuation to place an accurate price on the house and for you to exchange funds equal to fair market value for the house. You don't want other beneficiaries complaining that you were given some sort of break that cost them money.
Another option is for the house to be listed for sale on the open market, and for you to offer to buy it. You can use some of your inheritance for that.
It sounds as if one of your nephews is also interested in the house. I do not recommend that you and he both own the house. That will work for about five minutes before it falls apart. Even if you could both happily share the occupancy of the house, there will eventually be a need for one of you to sell, move, re-finance, or leave it in your will, and you can't do any of that without the consent of a co-owner.
If both you and your nephew want the house, the executor is the one who has to decide which one get it, and he has to stay neutral between you. To do this, he can use any method that gives both of you an equal chance, such as flipping a coin or drawing numbers out of a hat. It would be nice if your nephew recognized that this house has been your home for the last three years, but that is not a legal matter. Being there while your father was alive doesn't give you any right to own the house now.
Remember that if you get the house - either by gift or by purchase - you do not get the contents of the house. That's completely separate.