Inherited a House with Your Siblings? Here’s What Will Happen Next

If you’ve recently inherited a family home or vacation home with a sibling, you’re likely experiencing a number of different emotions: grief over the death of your loved one, gratitude or surprise over the inheritance of the property, and maybe some anxiety over what it means to inherit this property with your sibling.

It’s a fact of life that siblings don’t always get along. Even those who are close to one another have disagreements, and little puts more stress on these relationships than losing a parent or loved one and having to grapple with the emotional and financial aftermath.

In a majority of cases where an individual inherits a home with a sibling or siblings, ownership is shared equally. This means the now-owners must negotiate and decide together what happens next. Options include: retaining the property for one or both beneficiaries to occupy, retaining the property and renting it out, one beneficiary buying out the other, or selling the property outright.

If you are in this scenario or anticipate you will be in the future, read on for more information on what to expect and contact me, Milwaukee Estate Planning Lawyer Paul Margerie, with questions today.

Navigating Shared Ownership 

If you and your siblings decide to retain shared ownership of the property, there are a couple of ways to do it. First, you must determine whether you will share ownership of the property under joint tenancy or tenancy in common. The property will have been left to you under one of these structures, but these can be changed to better meet your needs as co-owners in the future.

Joint tenancy means all parties have equal ownership in the property and, when one party passes away, sole ownership of the property goes entirely to the surviving co-owner/s rather than passing down to the deceased’s heirs.

In a tenancy in common structure, all owners may share ownership equally or some may own more than others. However, all owners have a claim to the property and no one can make a decision to sell without the others’ approval. When one owner passes away, their share of the ownership passes down to their heirs.

If you decide to retain shared ownership of a family home or vacation home with a sibling, agreeing to rules and boundaries and committing to open and honest communication will be the keys to a harmonious partnership.

Sharing Ownership & Renting Out

Renting out the home, either full-time or as a vacation rental, is an option with the added benefit of making a profit on the home. However, renting is not simple, so hiring a property manager or ensuring one sibling can commit to managing the property as a landlord is crucial.

Deciding to Sell

If you and your siblings agree to sell the home, the first step is to determine the value of the home by scheduling a professional appraisal. That way, you’ll not only know how much to list the home for but how much of the final sale should go to each sibling.

You’ll also need to determine who in your family has the right of first refusal on the property. They will need to be given the opportunity to put an offer in on the property and may request that you do not entertain other offers.

Buying Out Your Sibling

If you or one of your siblings is interested in a buyout of the others’ shares, again the first step is to get the home professionally valued. This way, all parties know the fair price the interested buyer should pay to purchase the home outright. If you’re interested in buying out your siblings, keep in mind that refinancing or getting a traditional loan to do so may be tricky, so do your research before you go all-in.

What Happens When You Don’t Agree: Partition Suits. 

Then again, you and your siblings may not be able to come to an agreement on what to do with the property. In these cases, the court system may need to intervene to dictate that the property be sold and the profit split among the owners. For most people, this is a less convenient and attractive option than figuring things out amongst themselves, as it involves a complex (and probably costly) court process.

If you have questions about inheritance, wills, trusts, or any aspect of estates and estate planning, I’m here as a resource. I’m Paul Margerie, an estate planning attorney serving the greater Milwaukee area, including Brookfield, Wauwatosa, Menomonee Falls, Waukesha, and beyond. Questions? Give me a call today.