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Dividing High-Value Real Estate Among Children

Posted by Debby EhrlichNov 15, 20210 Comments

Did you ever take your children to the toy store when they were younger and offer to buy only one of them a toy? Probably not. That would be madness! Chaos would ensue, and even if one kid did deserve the toy more than the other, you wouldn't risk disturbing the delicate equilibrium of peace in the family. In many ways, the only thing that changes as you and your children age is the value of the gift.

What should you do? Well, there are a few different approaches to determining how your children will inherit real estate.

Option No. 1: Your Will Vests Title Equally

If your kids inherit the family home as joint owners, they'll have to work through a few different scenarios. The appreciation of San Diego real estate won't make it any easier, by the way. Since it's unlikely that they'll move back in together to reenact their childhood, they'll need to figure out what to do with their fractional interest. In addition, they'll have to pay hefty estate taxes.

Ideally, the Executor of the estate will put the house on the market after the probate judge orders the sale of the house. Unfortunately, for this process to move forward smoothly, all siblings need to be on the same page. Some siblings may disagree on the house's value, and others may have a more significant attachment to the home.

The list goes on, but one thing is true—an adult child who owns only one-third of a real estate interest can neither sell it nor own it outright without the agreement of the other siblings.

Option No. 2: Put the Real Estate in Trust

Another estate planning option for posthumous real estate division is to move the title to the property into a trust before your passing. Generally, parents name one of their children as Trustee to be solely responsible for the property's upkeep. The trust agreement should stipulate conditions for the sale of the property and how proceeds may be obtained to pay for the upkeep.

In addition to the perks of avoiding probate and reducing estate taxes, a well-crafted trust serves as an instruction manual that removes the opportunity for sibling disagreements while simultaneously keeping title to the property whole.  

Don't Put off Creating Your Estate Plan

It's never too early to develop your estate plan. When you communicate with your family and an experienced California estate planning attorney, you'll be able to circumvent many of the emotional and complicated scenarios that occur when parents pass without giving their children the final gift of clear