Q. My sister and I inherited our dad’s home in equal shares. I want to sell it, but my sister wants to rent it out for income. I don’t want to get in a battle about it, but I could use the money now instead of hoping we get a good tenant. Do you have suggestions?
A. In circumstances like this — and without seeing all the details of the estate — we can only answer you generally. But here goes:
The first issue is whether your father executed a will or trust that directed the executor or trustee to sell the real property and divide the assets, said Shirley Whitenack, an estate planning attorney with Schenk, Price, Smith & King in Florham Park.
Assuming that no such direction was given, Whitenack said, your sister can offer to buy your share for an agreed-upon price.
Depending on the value of the rest of what you’ve both inherited, she could potentially buy you out with other funds from her share of the estate, said Frederick Schoenbrodt, an estate planning attorney with Drinker Biddle & Reath in Florham Park.
“The estate must be constituted in a way that allows for this non-pro rata allocation of assets, the executor should be properly authorized, and you and your sister should both agree to the division of the estate in this way,” he said.
If this is not a viable option because your sister cannot afford to do so or does not want to purchase your interest, or if there isn’t enough in her share of the estate to pay you for your share, there are ways to compromise, Whitenack said.
“For example, they may agree to rent the house for a predetermined amount of time and then sell the house,” she said. “They should discuss payment of carrying costs such as real estate taxes, homeowner’s insurance and maintenance of the property.”
If you can’t informally resolve the matter on your own, Whitenack recommends you consider engaging the services of a mediator experienced in probate matters to help you come to an amicable agreement.
“A mediator is an impartial third party who assists negotiations between the parties to help them reach a mutually acceptable settlement,” she said. “Mediators do not decide who is right and who is wrong.”
She said the New Jersey judiciary web site lists mediators who have complied with training and other requirements set forth by the New Jersey Supreme Court.
You’re right to try to work this out as soon as possible.
If an arrangement cannot be worked out before distribution, then you and your sister will have to sort it out after the joint ownership is established, Schoenbrodt said.
Even after you and your sister become joint owners, you are free to work out a solution without the intervention of attorneys or courts.
But if that doesn’t work?
“If you were unable to reach an agreement, you could initiate a court proceeding known as a partition action,” Schoenbrodt said. “If your demand for partition was successful, the court would likely require the sale of the property and the division of the proceeds of sale.”
And an important note from Whitenack if you elect to sell the home.
“If, at the time of sale, the property is worth more than it was worth at the time of their father’s death, the sisters may have to pay capital gains taxes on the sale,” she said.
Email your questions to moc.p1516460649leHye1516460649noMJN1516460649@ksA1516460649.