A house can hold many precious memories fora family, especially if a family has lived inthat same house for many years. Unfortunately,the sentiment surrounding thosememories can quickly turn sour when parents attempt toleave that house to their children. Careful planning,however, can ensure that those memories are maintainedin the highest esteem.
New York Times
According to a report, the actualact of leaving a house to your children is easy enough. Inmost states, when the last surviving parent dies withouta will, any property they owned automatically passes tothe children. But simply allowing the law to run itscourse might not be the best way to proceed, especiallyif you want to maintain harmony within your family.
For starters, houses are not like bank accounts thatcan, for the most part, be easily divvied up into equalportions. It's possible to do that with an undevelopedpiece of property, but not with a finished house. In addition,1 of the partners in the marriage may have childrenfrom their current spouse as well as children from a priorspouse. Legal obligations aside, the potential for emotionalconflict here can be enormous.
Another scenario is when children die before theirparents. In this case, the article notes that if the survivingparent dies without a will, the estate is divided amongthe individual's children and grandchildren, with thegrandchildren in effect receiving the share their parentswould have received. If the grandchildren were minors,that further complicates matters as a guardian wouldhave to be appointed to handle the property.
In some instances, it's possible that 1 of the childrenmay have outstanding judgments against them.Certainly, no one wants a creditor to become a co-ownerof a family residence. The solution here is to put thatchild's inheritance into a trust. Then, if conditionschange, the trust can be adjusted as well.
In some complicated cases, courts will order that theproperty be sold and proceeds divided among the survivingheirs. While that simplifies things, it also meansthe house passes out of the family, and that can be anemotional experience for all family members.
In the article, estate and tax planning attorneyMartin Shenkman says that the most commontype of dispute among siblings who jointly inherit ahome is when 1 of them either will not or is unable tomaintain their end of the financial responsibility forthe home. The options thenâ€”and none are too pleasantâ€”are to simply tolerate the deadbeat sibling, figureout a way to purchase their share of the home, or simplysell the home and move on.
There are, however, some things parents can do toalleviate the potential turmoil before it starts. Shenkmansuggests that parents write a letter of instruction to thechildren, clearly spelling out what they would like to seehappen with their estate. In addition, the children couldsign a tenants in common agreement indicating eachsibling's responsibility regarding the home.
Of course, it might also be a good idea to simply sitdown and talk with your children. In the article,Elizabeth Arnold, a San Francisco-based family wealthcrisis prevention expert, says interesting things mightcome out of that discussion. For one, the childrenmight not be as attached to the house as the parentsthink. Or, if the parents sense that passing the house onto the children would simply create more problemsthan anyone really wants, they could arrange inadvance for the house to be sold and the proceedsdivided among the children. To help answer that latterquestion, Arnold suggests parents ask themselves 1simple question: Can their children share their toys?She also suggests that parents consider their children'srespective spouses when making the decision.
When parents leave vacation homes to their children,the waters are not as muddied. Because the vacationhome is not occupied on a full-time basis, it's usually easierto work out an access schedule with which everyonecan agree. And here, too, parents can diffuse any potentialproblems by having everyone sign off on an ownershipand access arrangement that works for all parties.In this day and age of transient households, a homethat has remained within a family for a long time can bea valued treasure. Take the steps necessary to ensure thatit remains as such.