For most people in North Carolina, real estate is among their most valuable assets. According to Zillow, the median home value in North Carolina is $237, 835 (May 2021). When a parent passes away, it is not uncommon for them to leave their house to their children. This creates a potential challenge: How do siblings split up an inherited house?
After all, by definition, real estate is not easily divisible. As a general rule, siblings have three options — sell it, rent it, or structure a buyout. There are estate planning strategies that can help make the entire process easier. Here, our North Carolina estate planning attorneys discuss the inheritance of a house by siblings.
Your Main Options When You Inherit a House With a Sibling(s)If you recently inherited a house with one or more siblings, you may be wondering what is the best thing to do with it. The answer depends entirely on your specific circumstances. The first thing you need to do is to refer to your parent’s will or other estate planning documents to confirm that ownership stake. Most often, siblings inherit a house together in equal shares—but that is not required by law. From there, you have three basic options for moving forward:
Sell Property, Divide the Proceeds: While a house cannot be divided easily, the proceeds of it are a different story. If all of the siblings are on board, you can take action to prepare the property for sale to a third party. Whatever proceeds are made through the sale can then be divided up proportionately between the siblings. Keep and Rent the Property: You and your siblings may not want to sell the home—at least not at this moment. At the same time, you may also not want it to sit abandoned as you pay property taxes and, if potentially, a mortgage. You can work out an arrangement to rent the property. This can be more complicated, as managing a rental home is often a lot of work. An Inheritance Buyout: Finally, siblings have the option to structure some form of inheritance buyout. A buyout makes sense if one person wants to keep the house and the other wants out of it. Essentially, this means that one sibling will purchase the ownership stake from the others. If you have access to the funds, this could be as simple as one sibling writing a check. As an alternative to writing a check for the full value of the buyout, you may be able to get financing from a mortgage lender or work out a private arrangement with your sibling(s). Plan Ahead to Make Inheritance of a Real Estate Easier for the ChildrenIt is probably not a surprise to learn that some siblings get into conflict over inheritance. This is especially common with houses. If you are a parent planning to leave real estate to your children, there are some steps that you can take ahead of time to reduce the risk of conflict. Here are three estate planning tips to get you started:
Communicate: Talk about your plans and have a conversation about your home and other property. It helps to get everyone on the same page. If you have specific wishes about what should happen to the property, make sure that your children are aware of them. Tie Up Financial Loose Ends: When possible, leaving additional funds to pay property taxes and other certain transaction costs can make it easier for siblings to navigate an inherited house. Clarity on the finances reduces the risk of a dispute. Be Flexible and Creative: Children do not necessarily have to inherit an equal share of real estate. If one child wants the home and another wants nothing to do with it, there are estate planning strategies that you can use ahead of time to ensure that they are each getting their fair share, without the need to work out an arrangement and redistribute property after you are gone. Get Help From an Estate Planning Lawyer in Charlotte, North CarolinaAt Arnold & Smith, PLLC, our North Carolina estate planning lawyers are dedicated to providing personalized guidance and advice to each and every client. If you have any questions about real estate and estate planning or real estate and inheritance, we are here to help. Contact us today for your fully private, no commitment consultation. We provide estate planning services throughout the entire region, including in Charlotte, Mint Hill, Matthews, Davidson, Monroe, and Kannapolis.