Ask Paul: Splitting parents' estate could divide the family
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
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.