If you are leaving your home to your children (as most of us do), take heed of this cautionary tale.
In a Reddit thread a man recounts how when his mom died in 2018, she left him and his two siblings her house. “My siblings wanted to sell the house and split the money,” the anonymous poster says. “I wanted to keep the house. I asked them if I could buy them out.” They agreed. So the siblings got the property appraised, and he paid them both a third of the home’s current value.
In 2023, the man and his wife decided to move to be closer to her family, and they sold the house. By then, the price of the home had tripled. “Now, both of my siblings think that I owe it to them to split the profit I made,” he writes. “This has become really toxic and most of my family is on their side. My mom’s sister says it would have broken her heart to see her kids fight like this and I should split the money with my siblings. My dad’s sister thinks I should buy them off so they shut up.”
Does this man owe his siblings anything more? We asked the experts for their take on the situation.
What the attorneys say
“The brother is not obligated to give them anything,” says Jessa Gary, an attorney in the estate planning, trust, and probate practice at Isaac Wiles in Columbus, OH. “His siblings are not the property owners—and are not legally entitled to anything—because he already bought them out.”
When their brother bought the house, he also took on all the risk, notes Jonathan Ross, managing attorney at Texas Probate Pros in San Antonio, TX.
“This house became his investment,” Ross explains. “If the value went down, I don’t think the siblings would be offering to pay him for the loss. I don’t see any basis for complaint,” says Robert Steele, a partner at Schwartz Sladkus Reich Greenberg Atlas in Manhattan.
“It is no different than selling the property to a stranger and then wanting part of the profit later when the stranger sells the property for more than he or she paid them for the property,” says attorney Don Worley, of McDonald Worley in Houston. “The siblings were more than happy to take the money when their brother offered to buy them out, but then their greed took over when he actually did something with the property and sold it for a profit later.”
Steps you can take now to avoid future issues
No matter what, be sure to put everything in writing with an attorney. Parents can help their children in advance by drawing up a will and addressing this issue within their estate-planning documents.
“That can look like ‘the house goes to my kids in equal shares, ‘-the house needs to be sold,’ or whatever other arrangement the parents wish to make,” Gastesi says.
They can even state in their will that if one of their children buys another out at fair market value, that transaction is final and the other siblings cannot go after future gains after the fact.
But Isaac Wiles’ Gary warns parents not to leave the property to one child with the idea the child will split the money with the siblings. “They are not required to split the proceeds legally, and so it comes down to whether they want to give something to their siblings out of goodwill,” she says. “Unfortunately, this type of dispute is not uncommon.”
No matter what, be sure to put everything in writing with an attorney.
“Families often think they don’t need to go through the legalities because they are family,” Gary says. “But it can avoid a lot of issues and ensure everything is aboveboard.”
Based on content by Julie Taylor, Sept 2024
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