My mother is getting along in years and isn’t getting any younger. We were looking at her estate and have some questions. There are five of us adult children: two brothers, two sisters and me.
Mother owns two houses. Her current house (GA house) and one in Utah that she rents for a nominal fee to Sister “Carol” who lives there with her partner.
Carol is on disability and has no savings. Mother wants to allow Carol and her partner to be able to continue to live in the house, but giving them the house outright would not be fair to the others.
Brother Eric is homeless and not in regular contact with anyone. He has untreated mental issues and my mother wants to set up a trust fund to disperse money to him.
Sister Brenda wants to purchase the GA house out from the estate.
For 1: Carol cannot buyout the house from the estate. If Mother divided her estate equally, Carol would get about 40% share of the Utah house as her share.
Mother would like to ensure that Carol and her partner could live there until they die. Carol’s partner has two adult children but Carol never had any kids.
Can it be set up so that the house will not be sold until Carol and her partner have both passed away, then the house would be sold and the money divided at that time?
There would be the provision that if Carol or her partner wish to sell the house earlier than the money would be divided when the house was sold.
Anything to be concerned about? It would need to be insured and such.
Are there alternatives?
The easiest thing (IMHO) would be to simply sell the house and let them purchase something with the money or rent, but my mother wants to try something.
For 2: Anyone have any experience with with a trust for a homeless, mentally ill sibling?
For 3: What is the fairest way of establishing a market value for the GA house?
I have never purchased real estate in the States.
Unfortunately good will and love is one thing lacking among my siblings so we want to get as much taken decided while my mother is in good health and mind.
Yes. It’s called a life estate. Also check into a living will. You seriously need to see a lawyer, as this estate may be complicated and you want to avoid family squabbles as much as possible.
A reverse mortgage might be useful here, too. Get a financial adviser ASAP.
Not personally, but I know several people who have done this. An attorney and a financial adviser are a must.
A local real estate agent may be able to give you a rough idea; accessing tax records online is possible for most places, where there is usually a valuation given for tax purposes. A local real estate agent can help guide you to those resources.
However, if a formal division of property is expected through a will or other legal means, an agent’s opinion may not be sufficient. For about $350US, you can hire a state-certified appraiser who will give you a dollar value for the property that you can use in court if need be.
I highly advise you to secure the services of a real estate agent. (In the interest of full disclosure, I am a real estate broker in Wisconsin.) A broker can handle most of the sale and transaction hassle and details, and in this electronic age, everything like signatures can be handled over the Internet. If you are not in the US, an agent is your lifeline to sanity.
Just in case I haven’t made my point sufficiently clear,** you need advice from professionals.**
In the USA, professions like attorney, financial adviser, appraiser, and real estate broker are licensed by state, not the federal government. While it is possible to practice in more than one state with appropriate licenses, many stick to just one.
I suggest you figure out which state (Utah, Georgia or whatever) is likely to have the most parties to a legal arrangement and find an attorney there first. You can look up attorneys at the state bar site, real estate agents at realtor.com. The attorney may suggest a financial adviser, and he can help you hook up with the appropriate parties in any other state.
Attorneys and financial advisers usually work on retainer plus billing on an hourly basis or sometimes a package deal. You may have to put something up front.
A real estate broker, if you engage him for a purchase or sale, usually works on commission, so you would not pay a fee until a sale was completed. The commission rate and/or amount is negotiable (AFAIK, no state mandates fixed rates or fees, but I could be wrong).
You are smart to get this done soon. Time has a way of catching up to us all, and family squabbles over a will can get very messy.
None of your concerns are at all complicated or unusual. Obtain the services of a lawyer, a financial planner, and real estate appraiser. Make sure that any interests in real estate are properly recorded.
I second the kudos for looking into this promptly. If relats betw you and your sibs are already rough, expect them to get worse with any estate division. No matter how “fairly” your mom tries to treat everyone, expect some to get upset.
Also anticipate the “nonimpaired” financially solvent folk may feel they are being “penalized” for their competence. Urge your mom to appoint an executor whom you believe will be impartial and who will communicate well.
One thing you do not mention is personalty with sentimental value. In many instances, there is considerable ill will over uneven distribution of jewelry, mementoes… Say the sibling’s spouse outlives the sibling, but remains in the house. You don’t want that spouse giving away belongings. If someone is not immediately receiving property of equal value to living in the house, perhaps they could be satisfied to be given a larger share of mementoes which are meaningful to them.
Your mom is in the unique position as the ONLY person who can make these decisions. It will be INCREDIBLY easier for everyone if, after she passes, you can consistently say you are acting per your mother’s unambiguous wishes. IMO&E, if your mom fails to do that, she is really doing a disservice to her heirs, and unnecessarily sowing the seeds of dissension. (Speaking from experience with relatives who failed to take simple steps which significantly disadvantaged their heirs. Inexcusable, IMO.)
Thank you. I should have specified in the OP that we will be talking to my mother’s attorney.
The purpose of this was to allow me to do my homework before I talked to the attorney, and not instead of consulting one.
I’ve always found that the more homework I do before talking to attorneys and financial planners, the smoother it goes.
Sister Brenda in GA will be the executor of the estate so we will start off with my mother’s attorney there in Georgia. We may hire someone in Utah if necessary. Small attorney fees before a problem starts save huge ones afterward.
Also answers a question. I presume that the attorney will be able recommend one.
As long as we have a fair way of determining the value then that method will be specified by my mother in her will and it will eliminate any questions.
We’re not talking minor squabbles here. [spoiler]I had to cut both brothers out of my life entirely. Eric is not on speaking terms with anyone and only communicates through scribbled messages which he leaves under a neighbor’s doormat in Utah. Most of those messages are simply hate-filled diatribes. I had to cut him out of my life when he accused me of killing my son.
Albert, the oldest, cut the entire family off for several decades before talking very occasionally to my mother now.
He raped me and my younger brother when we were children and won’t apologize. No interest in ever talking to him again.
Brenda and I can discuss issues concerning Mother but nothing further than that. Her husband refused to talk to anyone in our family (except Mother) and there is no love lost between us.
Carol talks to me and Brenda but no one else. Since I don’t talk directly to either Brenda or Albert, I have no idea if they talk, but it’s unlikely.
Both Albert and Eric are two of the most spiteful people I know. Eric has burned cash before to prove a point. Well, he is mentally ill after all. Albert is vindictive as well. Carol is attempting to grab as much of the estate as she can. She wants the who house in Utah and cash as well.[/spoiler]The idea is that there has to be nothing which requires any kind of group decision after my mother has passed away.
As per the spoiler in my previous post, I expect everyone to get upset. There is a reason that I live on the other side of the world from them.
I didn’t mention that because I’ve already worked with my mother to start making a list of momentoes, keepsakes and such, and who has asked for what.
Other than my mother’s engagement and wedding rings, the only jewelry she owns are things which I gave her. (Including a Mikimoto necklace and a nice watch.) Likewise, 90% of her momentoes are things which I gave her over the years and she has specified that they will be returned to me.
She does have a number of gorgeous, elaborate cross-stitched pictures she made, which we are listing and will divide up. All of those decisions will be made as part of this.
Other that that, there is only one item which has a monetary value which would require appraisal. My father purchased a used solid oak desk and it’s now a hundred years old.
Carol in the Utah house has her own belongings and none of my mother’s. My mother and I are discussing future dispossession of her other non-sentimental items.
There simply isn’t anyway of making anyone happy. (Other than Brenda and I, we are the two closest to being grownups here). That actually makes it easier, since we don’t have to worry about what will make them happy.
All we need to do is make something my mother can feel good about when she dies.
Yup. That’s the plan. We already went through round one when my father died.
Your posts seem to indicate that the total value of the estate is not huge, but of course it’s possible that your mother has sizeable assets in investment accounts. The current exemption for federal estate tax is about $5.5 million. That number has varied significantly over time, and was as low as $1 million earlier this century.
If your mom’s estate is large enough to make estate tax a concern, you might want a tax expert on your team. The tax would be paid out of the estate before the estate is disbursed to the heirs, but the handling of the real estate may complicate things.
My wife’s a wills and estates attorney, albeit not in GA or UT. Here are several disjointed thoughts and speaking in very broad generalities …
The whole legal process is best done based in the state where Mom lives now and (presumably) expects to die. You’ll need some UT-based tidbits, but not much.
For anyone in the wills and trusts industry, every situation you describe is bog-standard stuff. Having said that, your family seems to have done an extra thorough job of putting a dab of every item on their plate from the all you can eat dysfunction cafeteria.
Getting it all locked down now is best. Its also important for each sane member of the family to be able, when the time comes, to say to themselves: “I care about my sanity more than I care about my ‘fair’ share of Mom’s money. If necessary I will walk away with zero dollars and all my sanity.”
Brenda would be well-advised to have Mom appoint a commercial executor (lawyer, trust company, etc.) rather than herself. As executor she can’t walk away until the whole business is settled. Better to have the crazies barking at a commercial trustee than at her, even if that costs a hundred a month extra for however many years.
I *think *Carol is a sib of you and child of Mom. Not Mom’s sister = aunt to you & your sibs. As such, she’s likely to live not too much longer or shorter than the rest of you. IOW, any life estate set up for her and her partner may not mature until very late in the life of the other sibs. Some of whom may pre-decease Carol or Carol’s partner. That all but demands a commercial trustee to oversee that trust. Plus planning for how its value should be eventually distributed given various other sibs are then no longer alive. Grandkids, split & joined step-families, etc., are all factors here.
Late add: Congrats to Mom & the sane ones for making these moves now. It’ll pay off 50 or 100 to 1.
You’d be amazed how often we get called to fix a mess like the week after the funeral where there’s been zero advance planning & often not even a will. Or worse yet, an obsolete one leaving everything to Mom’s philandering and much hated first husband.
The more information you can provide about the characteristics and value of your mother’s estate the better advice you will get here.
It is better to simplify the estate now instead of waiting until she is dead. The big aspect that you have mentioned so far is the house in Utah. I am thinking there are probably better approaches than a life estate. Is is a valuable house or simply a run of the mill house? If a valuable house then perhaps your mother should sell it and help your sister buy a more modest house. If a modest house perhaps she should sell it to your sister and take back a mortgage. In reference to the personal property if she is not using it and it is simply stored away she might sell it or give it away now to the various heirs…
What if Carol wants to move out of the house? Can she sell it and keep the proceeds, or when she sells it must she split up the proceeds according to the estate?
Given your spoiler box, you’re very smart to be trying to get this as clear as possible in advance, TokyoPlayer. I agree with the recommendations that you should seek professional advice, as it all sounds complicated.
One thing you should be aware of is that the law governing real estate can vary from state to state, particularly with respect to probate, so it would be a good thing to get advice from lawyers in Utah about the disposition of that property, and how to set up a valid life interest under Utah law.
Not meant as legal advice, just a suggestion to ask your lawyers about.
I was the executor of my mother’s estate. Before agreeing to that, I told her she would need to meet with all of us (I’m one of 5, too) and explain her will, answer questions, etc. I told her, “You’ll be gone, but they will be my siblings for as long as we live.” She did that, sitting everyone down together, without spouses, to detail how she intended things to go. It wasn’t an equal division, because my mother decided that those she supported financially in her lifetime would receive less upon her death.
There was no ill-will, no one got grabby, (although there was one oil painting that several of us wanted, we settled that) and even though I had to administer the estate for 5 years to disburse the financial part if it, we all got along as well after my parents’ deaths as before.
Is there the possibility of entailing (q.v. Pride & Prejudice) the house so that while Carol and partner can live in it, it will eventually pass to other members of the family?
"1. I leave my house Blackacre to my daughter Carol for her lifetime.
If upon her death, her spouse is no longer living, or they have broken up, the house reverts back to my estate.
If upon her death, her spouse is still living and they are still together, the house goes to the spouse for his lifetime.
Upon his death, the house reverts back to my estate."
Of course, you want to make sure that this type of disposition is valid in Utah.
And, as others have noted, this arrangement means that the mom’s estate will have to remain open until the deaths of the daughter and her significant other. That’s a reason to say that the executor should not be any of the sibs, because you don’t want the executor to die while the estate is still open.
That points to naming a professional of some sort as the executor.
In Canada, that often means a trust company is named as the executor. I know murder mysteries always have the lawyer as the executor, but trust companies are usually cheaper than a lawyer. Also, if you name a specific lawyer as the executor, there’s the same issue about whether that lawyer will still be around when Carol and her spouse die. The lawyer might have died, or retired, or been disbarred, and then you have to apply to court to have a new executor appointed. If you name a company as the executor, it’s not dependent on whether a specific person outlives the daughter and her spouse.
Also, the family dynamics here point to a neutral third party being a good option as the executor.
Drawback is whether the estate could fund a professional executor for that purpose. As someone else commented, perhaps a reverse mortgage on the house could be set up to pay the executor’s fees?
Again, not meant as legal advice, just to point out things that you may want to consider discussing with your lawyer.
It’s all lower than that, but this does remind me that taxes will be owed on the Utah house when it’s sold because of it being rental income and appreciation, so that will need to be taken into consideration.
Thank you!
Yeah. We never liked boring, but it’s good to know this all fairly standard.
[del]I’m not sure if there are [/del] There aren’t any sane members. It’s all a question of how less crazy a couple of us are.
I’m doing this for selfish reasons.[spoiler]In my mother’s words, I’ve done more for her other the years than the rest of the family put together, including allowing her to emotionally completely depend on me during the time my extremely abusive father was dying and period after. All the while the rest of my siblings either disappeared or were going through breakdowns. This was not an easy task for a young man who was also on the verge of a breakdown
A friend and I remodeled both the Utah house that Carol lives in now and the former family home in Utah and only took a token amount of payment.
Back when I was making good money, I gave her generously, such as a trip to Turkey to see the total eclipse of the sun, some Noritake china hand carried from Japan, etc. etc.
It’s taking a hell of a lot of borrowed wisdom from friends to help me keep in check my childish feelings of wanting to be “compensated” and “recognized” by my mother. “I gave those as gifts to my mother.” Repeat as necessary.
I need to have it settled so I don’t become part of the problem. [/spoiler]
Yes, something which I’ve suggested to mother.
Yes, something I though about last night after I posted this.
Come and visit me in the looney bin if it doesn’t work out.
Thanks. It’s me. My mother and Brenda, the saner one of my sisters, are both extremely conflict adverse so this is something which I do (set up things for her to decide) or it ain’t gonna happen.
About 1/2 million give or take some, so about $100,000 each. An unbelievable fortune for homeless brother Eric, lots and lots of money for Carol on disability and not insignificant amounts for the rest of us.
I believe that my mother could find something smaller and less expensive in Salt Lake, and Carol (who is on disability for mental illness) absolutely will not like that.
I do think it’s the best option and I’ll take to my mother about it.
As I wrote, Carol has no savings and is living on disability. They are paying only a nominal amount in rent which has allowed them to survive so far.
Yes, we’re in the process of looking at this now. For example, she has a recreation property in Utah which we’ll sell in the spring.
The later.
That would be nice if it could happen, but unfortunately it’s not possible. The two brothers would make such a meeting hell, Carol would get all huffy and eventually I would lose patience.
I suspect we will get alone to the same degree we are(n’t) now. This isn’t going to be a Hollywood movie. I hear that some families are actually reasonable, but don’t have any personal experience. That’s great you guys were able to handle it well.
Thanks again everyone. I’m sure I’ll have some more questions.