Siblings inherit property together, at odds with what to do with it.

Dear Len & Rosie,

My sister and I inherited fifteen acres in the Sierra foothills from our parents. It’s not worth that much. There’s a small cabin there where my family stays every year. I want to keep the property in the family. The problem is that my sister wants out. She lives in North Carolina and hardly ever visits. She wants to sell the property and use her half of the money to help her son buy a home. I can’t afford to buy her out and the county won’t let us subdivide the property either. Can my sister force me to sell our family’s history?

Rebecca

Dear Rebecca,

Unlucky for you, the law is on your sister’s side. There is a long-standing legal doctrine against “restraints against alienation.” The idea is that if you own property, then you ought to be able to get rid of it. When a piece of land, such as your inheritance, is owned by two or more people, then any one owner can usually force a sale of the property in an action for partition.

In a partition action, the court will order the sale of the property unless you can somehow convince the judge that it’s in the best interest of both you and your sister not to sell the property. Good luck on that one. From what you wrote in your letter, it’s fairly clear that your sister derives little benefit from the property. Your best bet is to find some way of buying her out, or hope she does not seek the advice of a real estate attorney.

Maybe your children would be willing to chip in with you to buy out your sister. If they aren’t willing to do so, then maybe you’re the only one in the family who really wants to hold on to the property. Our advice in that case is to give up. If your sister gets a lawyer to send you a letter threatening a partition action, give up. Fighting your sister in a partition will cost you money and your relationship with her, and you’ll lose.

Your property taxes must be very low, because when your parents died, you and your sister avoided a property tax increase because of the Proposition 58 parent to child transfer reassessment exclusion. If you are able to buy out your sister, that exclusion won’t apply. Your sister’s half of the property will be reassessed to its present value.

It’s all water under the bridge now, but it may have been possible for your parents to have prevented your problems. They could have given this property to you and other assets to your sister, even if that resulted in you getting more. Or they could have left the property to a dynasty trust for the benefit of the family that prohibits the sale of the property unless everyone agrees. Transferring a property into a dynasty trust can allow you to tie up the property for generations to come. While it is too late for your parents to have done this, this is something for you to think about when it comes time to creating your own estate plan.

Len & Rosie

Things to consider when picking your successor trustees, executors, attorneys-in-fact and health care agents.

Dear Readers:

Many of you have not yet created your estate plan. Many others already have estate plans that haven’t been looked at for a long time. When considering your estate plan, the most important decisions to make are who should be your successor trustees, executors, attorneys-in-fact and health care agents.

There is a tendency for parents to default to the first-born male child, you know, the new “patriarch” of the family when you’re gone. This can be a horrible mistake, because your eldest son may not be a good fit for the job.

Rule #1 about picking trustees and executors is that if they aren’t good with their own money, they won’t be any good with yours. We’re not saying they should be well off. It’s qualification enough to live within one’s means.

Rule #2: A trustee of a Trust, an executor of a Will, or an or attorneys-in-fact under a Durable Power of Attorney should be honest, moderately organized and diplomatic, the latter qualification being the most important. An important goal in a trust administration or probate is to get the beneficiaries to cooperate and agree to waive an accounting. This saves everyone time and money. If your trustee is has an arrogant and commanding attitude, and isn’t so good at letting the beneficiaries know what’s going on, he or she will create a lack of trust. It may become so bad that your other children hire lawyers because they think they are being taken advantage of.

It’s also important to recognize that sometimes you cannot avoid problems within your family when you are gone. It may be a good idea to name a bank or trust company as trustee, even though there will be added expense. Another alternative is to name a Professional Fiduciary as trustee or executor. Professional Fiduciaries are regulated by the state and they won’t be sloppy about it. Administering trusts and estates is that they do as a career. Naming a friend as trustee does not always work out so well. They have a tendency to think it is simpler than it is and cut corners when it’s not appropriate.

Naming health care agents on your Advance Health Care Directive is even more important, as it is a matter of your life and death. To put it bluntly, your health care agent is likely to be called on to tell the doctors to let you live or die. If your health care agent disagrees with your decisions regarding life sustaining treatment, he or she can override your stated wishes, even if you have instructed your physicians to not resuscitate you. They can do this is because you’ll be incapacitated at the time and your doctors don’t want to get sued.

One more point about advance health care directives is that if you know what you want done with your remains, add that to the document. Doing so could prevent or at least put an end to family arguments over how best to honor your memory after you are gone.

Len & Rosie