When determining how to divide unwieldy family assets such as real estate among several heirs, there are many opportunities for emotions to run high and relationships to become strained. It is safe to assume that no testator would want the legacy of his or her last will and testament to lead to his or her loved ones engaged in a protracted battle over how exactly to split up some Earthly belongings.
Unfortunately, there are times when a will is written in such a way that the division of real estate is either unclear or not immediately feasible. Those facing this potential relationship landmine would do themselves well to consider some of the proven methods for fairly dividing up real estate.
The simplest way to divide up a real estate asset is to sell it on the open market and divide the proceeds of the sale equally among the heirs. If this is the course of action a given set of heirs chooses to take, it is important to remember that the sale of the house is not permissible until they have received the permission of the court. Likewise, the sale may incur several costs, which will need to be paid out of the proceeds to keep the later division of the proceeds fair and equitable.
However, a simple sale and proceed division is not always desirable. Oftentimes, especially when a sentimentally valuable family home is involved, one or more parties will wish to keep the property in the family. In such cases, it is wise to determine which parties wish to sell and which parties wish to maintain ownership. Those who wish to divest themselves of the property could have their stake in the property bought out by the parties wishing to hold the property. If it is not possible, perhaps for a lack of available liquid funds, for the parties who wish to hold on to the property to buy the stake outright, it is possible for other assets to be traded between parties to reach an equitable arrangement. But be careful: any arrangement to distribute real estate must be carefully structured to avoid reassessment of property taxes, if possible.
Property arrangements can become tricky to settle when only family is involved. It may be wise for those who find themselves facing this particular dilemma to consider the guidance of an experienced attorney who can help protect the rights of all parties, and can keep children from losing their parents' Prop 13 property tax basis in inherited real estate.
Source: bankrate.com, "How to split up the willed family home," Jay MacDonald, accessed Aug. 10, 2016