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Inheritance Dispute Between Siblings

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ScoopKona said:
There is a whole lot of "depends" there.

Capital gains.
Possibility of big change in value in either direction thanks to the economy.
How much daughter really wants to live there.
Possibility of making improvements and increasing the value by a great deal.
And most importantly -- what is available for the sales price, minus the money still owed on it, minus capital gains, divided by two.
Click to expand...
Daughter is CPA.
House will be allowed 'step up' in value, so nothing to IRS.
Daughter doesn't intend to live there -- she has a beautiful home 30 minutes away.
Nothing for sale in the area under $750,000 -- probably higher.
(If anyone finds this hard to believe -- zip code is 95060.)
 
Seeing what you just posted, it sounds like your daughter has some emotional attachment to the house. Perhaps the selling question could be tabled for a week and they should talk (where they can hear voices not via text) about what the house means to each of them and get to the root of the emotions behind the money. They might find common ground there and can use that to move back to sales discussions.
Also, if your daughter is placing this ultimatum (let me buy or be dead to me?), she should be open with her plans for the house. As executor, she needs to be careful not to appear to make decisions that lessen the inheritance for the other beneficiaries. I'm no lawyer, but I'm pretty sure there are rules about the role of the executor.

Virtual hug- I'm sorry this is happening to you!
 
bizaro86 said:
You shouldn't lie to anyone.

I don't think you'd have trouble getting a realtor to list it for you while telling the truth, and it isn't fraud to list a property and not take an offer if one is received.
Click to expand...

No trouble whatsoever. There are some who won't take the listing. But most real estate agents know from experience how messy inheritance property can be. And the chances of the heirs deciding to sell after all are high enough to be worth the risk.

I've purchased a house from such a situation. Now I'm selling it. Since most people don't buy and sell many houses in their lives, there is an awful lot of confusion about how to go about it. The reason I don't employ real estate agents isn't because I have any particular problem with them -- it's that I can do the exact same job and keep more of my money that way.

b2bailey said:
Your reply hits at crux of matter -- on all 3 points.
My relationship with daughter is tenuous at best -- but she is mother to my 3 grandchildren. It I tell her that I feel she's being greedy -- Lord have mercy.
Click to expand...

It's not greed to do what is in your best interest. There are compelling reasons to keep the property -- easy familial chain of ownership, reduced capital gains burden, potential for significant increase in equity.

You can walk straight over to ABC Realty of Santa Cruz (or XYZ Realty, if you prefer, because they're all the same), and ask if an agent would like to take the listing, with the understanding that your daughter may decide to buy the place outright, in which case, the listing agreement is void. (And make sure it's written that way.)

Then -- and only then -- will all three of you know what's actually fair. Otherwise, it's just guesswork. And it's ESPECIALLY guesswork on appraisals. I've seen some that are wildly off the mark.
 
bizaro86 said:
You shouldn't lie to anyone.

I don't think you'd have trouble getting a realtor to list it for you while telling the truth, and it isn't fraud to list a property and not take an offer if one is received.
Click to expand...

I don't know any brokers that would waste their time with this if the seller is truthful about the situation. A realtor might do a free market analysis and a broker might want to use the property to generate leads depending on their market. Currently, residential properties in many markets are still selling fast so I doubt that anyone knowing there is no deal is going to give up much effort. I wouldn't. If the property was contractually listed and a full price offer was made, the seller could back out before closing for a number of reasons, but the seller would still be responsible for the agreed upon commission and other costs in most cases.

Bill
 
ABCTravels said:
Seeing what you just posted, it sounds like your daughter has some emotional attachment to the house. Perhaps the selling question could be tabled for a week and they should talk (where they can hear voices not via text) about what the house means to each of them and get to the root of the emotions behind the money. They might find common ground there and can use that to move back to sales discussions.
Also, if your daughter is placing this ultimatum (let me buy or be dead to me?), she should be open with her plans for the house. As executor, she needs to be careful not to appear to make decisions that lessen the inheritance for the other beneficiaries. I'm no lawyer, but I'm pretty sure there are rules about the role of the executor.

Virtual hug- I'm sorry this is happening to you!
Click to expand...
Yes, I agree about possible compromise of executor position if she is wanting to settle at below FMV.
 
As a test -- I suggested my son inquire --
What if HE wants to buy her out -- could he have the same terms as she has proposed to him? She replied -- no, that would turn into a bidding war.

To me, that shows she is attempting to get a better deal than she is willing to give to him.

She can't see it that way.
 
Shiba said:
Since they can't currently agree on selling why don't they rent this home out and split the proceeds from the rent until cooler heads prevail.
Click to expand...

Have you been a landlord?

It's an awful lot of work. You can't trust property managers. And now there's the potential for damage to the property before ownership is decided. This could make an already-bad situation much, much worse.

I absolutely loathe being a landlord. I'd rather just flip houses. The additional income has made it worth it for my wife and I. I still can't stand doing it. But we hardly ever have any disagreements. If my wife wanted to sell and I wanted to rent, it would change my calculus 180-degrees. The only way that makes sense is if everyone involved is in favor of the plan.
 
ScoopKona said:
You can walk straight over to ABC Realty of Santa Cruz (or XYZ Realty, if you prefer, because they're all the same), and ask if an agent would like to take the listing, with the understanding that your daughter may decide to buy the place outright, in which case, the listing agreement is void. (And make sure it's written that way.)
Click to expand...

Would you take a deal like this ?

Bill
 
Digging around on the internet, I found:

"To sum up, executors should not buy the property of the estate, unless it is for fair market value and with either signed consent from each and every beneficiary or an order of the court authorizing the executor to transfer the property to himself."

I sent an email to both, with this information.

The Appraisal was done for the purpose of "Other - IRS Fair Market Value"
The first box said simply FMV -- and that was not checked.
 
b2bailey said:
Digging around on the internet, I found:

"To sum up, executors should not buy the property of the estate, unless it is for fair market value and with either signed consent from each and every beneficiary or an order of the court authorizing the executor to transfer the property to himself."

I sent an email to both, with this information.

The Appraisal was done for the purpose of "Other - IRS Fair Market Value"
The first box said simply FMV -- and that was not checked.
Click to expand...

You really can't trust appraisals or appraisers. Even though it's their job to get the numbers right, it's still basically guessing. Many places (Santa Cruz included), any listing is very likely to get cash offers over list price. Why? The market and the real estate appraisers don't agree. Appraisals are only really useful for obtaining loans on property. And even then, they can be very, very off.

There's only one sure-fire way to know what fair market value is. Even a good appraisal has a margin of error. And in high-dollar zip codes, that can be a significant chunk of change.

From the sounds of it, your daughter has her finances ship-shape and wants to pounce on an opportunity. And your son wants a check. There's nothing wrong with wanting a check. There's also nothing wrong with wanting to pounce on an opportunity. Determine the actual market value and you should be able to keep the peace.
 
b2bailey said:
Digging around on the internet, I found:

"To sum up, executors should not buy the property of the estate, unless it is for fair market value and with either signed consent from each and every beneficiary or an order of the court authorizing the executor to transfer the property to himself."

I sent an email to both, with this information.

The Appraisal was done for the purpose of "Other - IRS Fair Market Value"
The first box said simply FMV -- and that was not checked.
Click to expand...
Yep. Probably should get a lawyer involved.
 
Your daughter has no leverage (unless you consider her thr
b2bailey said:
Digging around on the internet, I found:

"To sum up, executors should not buy the property of the estate, unless it is for fair market value and with either signed consent from each and every beneficiary or an order of the court authorizing the executor to transfer the property to himself."

I sent an email to both, with this information.

The Appraisal was done for the purpose of "Other - IRS Fair Market Value"
The first box said simply FMV -- and that was not checked.
Click to expand...
Is the home in a trust, or is there a will or nothing?
 
davidvel said:
Your daughter has no leverage (unless you consider her thr

Is the home in a trust, or is there a will or nothing?
Click to expand...
Home is in trust. Very few other assets.
(His 2004 Porsche Boxter was left to long time live in girlfriend.)
 
b2bailey said:
I've been wondering if a Mediator could handle.
Click to expand...

That may be necessary. But without knowing the actual value of the house, nobody is going to be happy.

Let's say the actual value of the house is $1.5 million and your daughter buys it. There is no scenario where your son doesn't feel cheated.
Let's say the actual value is somehow less than the appraisal. Rare, but it happens. Now your daughter buys it and feels cheated.
Let's say your daughter is denied the opportunity to buy the house -- because a bunch of people on a timeshare forum think that's a bad idea. Again, she feels cheated.

I don't see any way mediation, arbitration or litigation is going to make any sense until the actual value of the house is both known and agreed upon by both parties. Sort that out, and there's a good chance everything else falls into place. The adult version of "you cut the cake, I choose my half."

I've seen two inheritances go completely sideways. Threats. Restraining orders. Both of them had the same thing in common -- everyone went off half-cocked, not knowing the value of the estate.
 
easyrider said:
I don't know any brokers that would waste their time with this if the seller is truthful about the situation. A realtor might do a free market analysis and a broker might want to use the property to generate leads depending on their market. Currently, residential properties in many markets are still selling fast so I doubt that anyone knowing there is no deal is going to give up much effort. I wouldn't. If the property was contractually listed and a full price offer was made, the seller could back out before closing for a number of reasons, but the seller would still be responsible for the agreed upon commission and other costs in most cases.

Bill
Click to expand...

If you're a RE agent/broker who has been successful that deal would likely not be of interest. Plenty of hungry folks just starting out would be willing to take that risk, I suspect.

Edited to add: ultimately though I think an auction is better because its 100% fair. If you just take offers someone can say "we should have waited longer for a higher one" or "that offer was too conditional".
 
Last edited:
b2bailey said:
Home is in trust. Very few other assets.
(His 2004 Porsche Boxter was left to long time live in girlfriend.)
Click to expand...
Your daughter has little to no leverage, and as others noted could be liable for breach of fiduciary duty among other things (extortion, etc.) Assuming they can't otherwise agree, the Court will order the property sold and the net assets divided. It could be ordered to auction (which will not be the highest value achieved), or a judge could order an open market listing.

As to other comments as to appraised value vs. actual value, many of my appraiser friends would be offended. Generally they do a very good job of assessing a property's true fair market value, not all these low ball evaluations referenced here. In a skyrocketing market there will always be some lag in comps vs the next sale, but a competent appraiser can and will account for that.

I would suggest a few other solutions, but it seems your daughter is not interested in a fair division. My guess is this is not the first time you have observed such behavior.
 
Your daughter should be able to buy the house for a price that does not include real estate commission, transfer taxes if those can be avoided as well as “carrying costs” and risk. The brother should understand the time value of money and 1 in the hand is better than two in the bush.

The daughter is way off base with her threat. She may feel that way and very well carry it out but no need to use it as a bargaining chip. At this point the brother should just tell her no problem as he already knows her worth of him.
 
davidvel said:
As to other comments as to appraised value vs. actual value, many of my appraiser friends would be offended.
Click to expand...

They can be as indignant as they want. Appraisals aren't reality. They're a snapshot of what someone thinks reality is.

Ever seen an appraiser offer a "if I'm wrong, I'll refund the difference between my appraisal and what the actual sale was?" Of course not. They're not going to put their money on the line.

I find appraisers to be absolutely indispensable -- since they are almost always low in my area, it allows me to purchases houses for less than they are actually worth. The same with seller's agents. Most seller's agents would rather make a sale right now, than wait and get the most possible money for their client. They are very reliable in this respect. I can count on them to lean on their client and try to get each offer that comes in accepted.

This is how I've made my living for nearly 20 years. Sure, I also worked. But my main income came from real estate. And it's still very much "buyer beware" (and seller beware). The entire industry isn't all that far removed from timeshares.


And then there's this:

 
davidvel said:
Your daughter has little to no leverage, and as others noted could be liable for breach of fiduciary duty among other things (extortion, etc.) Assuming they can't otherwise agree, the Court will order the property sold and the net assets divided. It could be ordered to auction (which will not be the highest value achieved), or a judge could order an open market listing.

As to other comments as to appraised value vs. actual value, many of my appraiser friends would be offended. Generally they do a very good job of assessing a property's true fair market value, not all these low ball evaluations referenced here. In a skyrocketing market there will always be some lag in comps vs the next sale, but a competent appraiser can and will account for that.

I would suggest a few other solutions, but it seems your daughter is not interested in a fair division. My guess is this is not the first time you have observed such behavior.
Click to expand...
I beleive the home is in a trust, so I don't think the courts would get involved unless the brother opted to sue to force a sale. It wouldn't go through probate.
 
davidvel said:
Your daughter has little to no leverage, and as others noted could be liable for breach of fiduciary duty among other things (extortion, etc.) Assuming they can't otherwise agree, the Court will order the property sold and the net assets divided. It could be ordered to auction (which will not be the highest value achieved), or a judge could order an open market listing.

As to other comments as to appraised value vs. actual value, many of my appraiser friends would be offended. Generally they do a very good job of assessing a property's true fair market value, not all these low ball evaluations referenced here. In a skyrocketing market there will always be some lag in comps vs the next sale, but a competent appraiser can and will account for that.

I would suggest a few other solutions, but it seems your daughter is not interested in a fair division. My guess is this is not the first time you have observed such behavior.
Click to expand...
I'd be interested in hearing your other ideas.
 
b2bailey said:
Daughter is CPA.
House will be allowed 'step up' in value, so nothing to IRS.
Daughter doesn't intend to live there -- she has a beautiful home 30 minutes away.
Nothing for sale in the area under $750,000 -- probably higher.
(If anyone finds this hard to believe -- zip code is 95060.)
Click to expand...
Daughter wants the property as an investment and doesn't want to pay fair market value to acquire it.
 
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