The following is a post submitted by David Williamson about how to handle property inherited by multiple heirs.
If multiple heirs inherit a single property, it’s all too common for what is an already upsetting situation to become even sadder. Solicitors like Coles Wills & Probate Services receive calls and emails on a daily basis, all enquiring as to just what can occur on a legal basis to prevent other inheritors doing something they don’t support. Well, in the interest of keeping the peace and to avoid things going unnecessarily too far, here are your must know tips for handling inherited property fairly and legally.
1. Sale
The first and perhaps most obvious solution to ensure everyone gets a piece of the pie is to sell the property. Unfortunately, however, this is not always the first choice for all parties involved for various reasons: Perhaps the market isn’t at its best presently, or perhaps there are just too many memories wrapped up in this property to simply get rid. Either way, this solution is simple: The costs going in and the money coming out all need to simply be shared as per the ownership percentages as laid out in the will of the previous owner.
If you are considering this option, the first thing you should do is survey house prices in your area. Consult an estate agent, find out how long your house may sit on the market, how much it might go for and how much you could realistically gain – or lose – from selling the house in a hurry. Just be mindful, it could be the case that renting out your property might be a much wiser financial decision, especially considering that in most cases there won’t be any mortgage/repayments due on the house itself.
2. Rental
If you decide to rent out the property, then dividing the property into portions of responsibility can be tricky. The most sound advice in this situation is to relinquish all responsibility to an estate agent: Hand over the keys, sign the documents, and agree to pay the maintenance/management costs per month straight out of the rental profit. This way, there is no direct financial or time investment required from any party, and at the end of the month all that’s left is to divide the profit into respective portions matching the ownership amount of the house.
3. Moving In
This final solution may prove a tricky one, but if one of the inheritors really wants (or needs) to move in, the best way to ensure everything is fairly split would be to consult an estate agent and find to out what the rental price of the property would be if it were advertised on the property market. They should then pay a percentage of the rent to the remaining parties each month matching the amount of the house that they don’t own. Along the same line, it would also be wise to treat all renovations, damages or repairs exactly as you would if the house was rented on the wider market: Both parties contribute an appropriate amount in line with the inherited percentage of the property.
Fundamentally, however, there is little you can do in the case that neither party agrees with what should become of the property. In terms of legal standing, the usual outcome is a forced sale, with each party getting their respective share of the property after sale – minus, of course, the high legal costs one is privy to in this situation. Therefore, it is best for all parties to agree in writing to any course of action you decide to pursue and to seriously consider the short and long-term repercussions of making a hasty decision. After all, you would not have been left property to squabble over. Use it and benefit from it, just as the deceased would have wanted you to, and don’t let it corrupt any personal relationships.
There is another option that I would like to understand. If 3 siblings inherit a property and one buys out the other two, with funds that are not part of the estate, would stamp duty and other taxes come into play.