If you and your siblings are set to inherit your parents’ home, it’s important to be aware of potential challenges that may arise, as demonstrated by a recent real-life example.
In a popular Reddit thread, one
user shared the story of how, after their mother’s passing in 2018, she left her home to the user and their two siblings.
“My siblings wanted to sell the house and split the proceeds,” the user explains. “I wanted to keep the house, so I asked if I could buy them out.”
They agreed, and the siblings had the house appraised. The user then paid each sibling a third of the home’s value. Fast forward to 2023, and after the property’s value had tripled, the user and their spouse decided to sell the home.
Now, the siblings believe they are entitled to a share of the profit.
“They think I owe them a portion of the sale,” the user writes. “It’s become a toxic situation, with most of my family siding with them.”
So, does this individual owe their siblings any more money after buying them out? Let’s explore some expert opinions on handling similar inheritance scenarios.
What Legal Experts Say
According to Jessa Gary, an estate planning attorney, the original poster has no obligation to share the profit. “The siblings were no longer property owners after they were bought out, so they have no legal claim to the sale proceeds,” she explains.
Attorney Jonathan Ross adds that the person who bought out the siblings took on all the risk. “The house became their investment,” Ross says. “The siblings had the chance to make smart financial decisions with the money they received but chose to spend it instead.”
If the property’s value had decreased, it’s unlikely the siblings would be offering to share in the loss. As Robert Steele, a probate lawyer in Manhattan, points out, “They just happened to benefit from a market increase. There is no legal basis for a complaint.”
Dividing a Home’s Contents
House sales aren’t the only source of family disputes. Often, arguments arise over the division of the home’s contents.
“I’ve seen countless squabbles among siblings over sentimental items,” says Nikki Beauchamp, a real estate broker in New York City. “Some of the largest issues involve disagreements over who gets what.”
To avoid conflict, Ross recommends having a system in place—perhaps flipping a coin or taking turns choosing items. If disagreements are likely, hiring an estate sale company to liquidate the items and split the proceeds evenly may be the best option.
Missing Items and Inheritance Disputes
In some cases, siblings argue over items they believe have gone missing. “Often, parents may have gifted or sold belongings over the years, but sometimes, an opportunistic family member may take items before the estate is settled,” says Brian Haran, an elder law attorney.
In these situations, it’s important to assess whether pursuing legal action is worth the effort. “Chasing down missing items can be costly,” Haran explains. “Knowing something was taken and proving it are two very different things.”
What Happens When a Sibling Wants to Live in the House?
Another common issue arises when one sibling wants to move into the inherited home, or refuses to move out. “This can create tension if the sibling expects to live there rent-free,” says attorney Raul Gastesi.
The siblings must decide if the person will pay rent or buy out the others. Additionally, if the sibling doesn’t have the financial resources to buy the home, it may disappoint the other heirs, as they’ll need to either finance the house themselves or come to another arrangement.
Steps Parents Can Take to Prevent Future Conflict
Parents can help their children avoid inheritance disputes by including clear instructions in their will. This may include stating whether the home should be sold or if a buyout is an option, and if so, under what terms.
“Parents can specify that once a buyout occurs, it’s final, and no further claims on the property or profits can be made,” advises Gary.
However, she cautions parents not to assume that one child will automatically share the proceeds with the others after selling. “Legally, they are not required to do so, and it often leads to disputes.”
Buying Out a Sibling: Proceed With Caution
While buying out a sibling may seem like a fair solution, it can often lead to hurt feelings or future conflict.
“I generally recommend selling the home and dividing the proceeds evenly,” says Ross. “This prevents future jealousy if one sibling later benefits from an increase in property value.”
Final Advice for Buying Out a Home
If you do decide to buy out your siblings, it’s essential to have the home appraised to determine its current value as of the date of inheritance. This will help reduce capital gains taxes in the future.
Gary also advises that if the sibling buying out the others is the executor of the estate, they should consult with an attorney to avoid potential conflicts of interest.
Finally, always ensure that any agreements between siblings are put in writing and reviewed by an attorney to avoid future misunderstandings.
