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Ask Paul: Splitting parents’ estate could divide the family
By Paul Clitheroe Published on June 27, 2018
Q. Sadly, about 18 months ago we lost one of our elderly parents.
The estate was left to four of the adult children with a property worth $1.4 million in a busy capital city.
As siblings we are now classified as tenants in common.
We have the property rented with very good tenants and are receiving a fairly good income.
What happens if one of the siblings wants to sell their portion?
This is an issue at the moment, with the other siblings becoming very angry that they have been asked to buy that quarter share.
In the long run wouldn't they end up being better off as they would then have "a bigger share of the pie"?
Or is it possible for that quarter share to be sold to a person outside the family? - Marilyn
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A. Wow, this is dangerous territory, Marilyn. I've seen families torn apart by money issues such as this.
If anyone wants to get out, it is clearly better if one or more of the others buy them out at a fair market price.
If three want to sell, it is also easy. If the fourth person can't buy the other three out, it goes to market.
There are rarely happy outcomes with situations like this. Parents are better off stating in their will that the property is to be sold. Bringing in an outside party to buy one share looks like another potential disaster to me.
Clearly, one of your siblings wants to sell. If the other three cannot agree to buy them out, it will be a very uncomfortable situation.
I would think it would be a good investment for the three who keep the property - a third is better than a quarter!
If relationships are to be maintained, maybe selling and each taking a quarter share and investing elsewhere is the way to go.
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3 responses to “Ask Paul: Splitting parents’ estate could divide the family”
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I fear this is what will happen when my mum’s parents pass away. Her siblings are already arguing over who gets what. It’s disgraceful.
It’s exactly the same in a family business situation. If you buy in, you have to expect that you may not be bought out on your demand. It’s the choice and investment you make. It is disgraceful, in some situations. In a housing situation, majority rules – this sense of entitlement is disgusting.
If only more families had an open, honest discussions about death. I discuss my wishes every five years and preface it on the basis of dying tomorrow. Things change too much over a longer period to agree to a relatively cumbersome way to draw an investment income like in the letter.
Paul’s advice is great. Separate investment from family. Family is too important to mix with money, unless it means you can actually get behind helping family through investment (I love his suggestion of investing funds in kids offset accounts at a discount from awhile back).
This just sounds like a joint investment club that one member may not have signed up for and wants out. $300K+ could do a lot for a family member who might be in dire straits, and there’s plenty of good places to reinvest, while saving ties with family members who have already been through a lousy experience losing mum. Hope it works out!