Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Everything is paid off! We don't owe a dime to anybody! but....
We need some input on a situation that has come up. My mother-in-law passed away about 3 weeks ago. The trust states that my wife and her sister split the house 50/50. But, the trust also says that my wife and I can stay in the house and my wifes sister doesn't get her 50% of the house value until we sell. So technically, we can live in the house until we retire and the sister won't see any money until then. I will be 60 years old in December.
Of course my sister-in law is besides her self. She can't believe her mom would have created that deal. I won't go into it here but my wife and I were always there for my mother-in-law and my sister-in-law was there when it was convenient for her.
The house is paid for so we will not have any rent/house payments. There is a pool that will increase our cost to live there. The house needs work. We are only painting and putting in new baseboards at the moment. We are moving in next week.
So the question is do we buy my sister-in-law out or live rent free for a few years and then buy her out, or live there 5 years then sell. I just spoke with a foreman who is working on a house across the street that they flattened and showed him around the house. He said the house would need about $150,000 in upgrades to make the house fully upgraded.
Looking for a game plan. I could stay in the house until I retire. Putting money into the house and buying out sister-in law would put us into probably a $2500-$3000 mortage again and I don't know if I have it in me to get into debt again. I know money is cheap now but the house would probably appraise for around $800-850K. I would need to take out a $400,000k loan and maybe add another 150k to do the upgrades or do not upgrades. Thoughts?
Of course my sister-in law is besides her self. Thoughts?
Start with a professional appraisal.
Include the list of work needed/planned and those costs.
You might decide to sell it now AS IS and split the sale.
First of all, congratulations on getting out of debt!
I'd be very wary about the $150K worth of upgrades and would definitely talk to a few local realtors about what might make the house more marketable. Certainly you need to fix things that could get worse (e.g., a leaky roof, windows with condensation between panes, fixes that might make it more energy-efficient) but beyond that you can get into "wants" that aren't always to every buyer's tastes, such as new cabinets, or that can quickly become out-of-date. And another thought: before you put any large amount into the house, get something in writing from the sister about how the proceeds will be split at sale. Fifty-fifty is fine as is, but if you put $150K into repairs and upgrades, should she get half of the increased value? And will sister be paying her share of property taxes since she's half-owner?
I'd also be cautious about taking on a $600K mortgage just to get the sister off your back, which is what it looks like you're doing. You have every legal right to stay as long as you want before selling.
Do you live in an area where $400K (half of your share of the proceeds of the house) would buy a decent place for you to live?
I apologize if it’s mentioned somewhere else in this long thread, but do you currently live in the house? If not, I would make just the necessary repairs, as mentioned above by Athena, sell the house, and split the profit. The money for the repairs should come from the estate/trust. I’d consider doing that and moving if I lived there.
First of all, congratulations on getting out of debt!
I'd be very wary about the $150K worth of upgrades and would definitely talk to a few local realtors about what might make the house more marketable. Certainly you need to fix things that could get worse (e.g., a leaky roof, windows with condensation between panes, fixes that might make it more energy-efficient) but beyond that you can get into "wants" that aren't always to every buyer's tastes, such as new cabinets, or that can quickly become out-of-date. And another thought: before you put any large amount into the house, get something in writing from the sister about how the proceeds will be split at sale. Fifty-fifty is fine as is, but if you put $150K into repairs and upgrades, should she get half of the increased value? And will sister be paying her share of property taxes since she's half-owner?
I'd also be cautious about taking on a $600K mortgage just to get the sister off your back, which is what it looks like you're doing. You have every legal right to stay as long as you want before selling.
Do you live in an area where $400K (half of your share of the proceeds of the house) would buy a decent place for you to live?
Don't even consider the bolded. If you stay there for years before paying your sister in law, not only will it likely wreck your relationship with her, she also very well may file a lawsuit against you and you will have to defend it using real money whether you win or not.
If its me I'm selling the house right now and splitting the proceeds.
Edit to add: either that or just buy her out right now and be done with the financial entanglement.
The last thing you want is a lawsuit from your sister on this and you have to go spend money on an attorney, this drags on...people get bitter and more entrenched on their position without wanting to compromise etc.
I agree sell it split the money move on. Fixing up a house is always more expensive and time consuming than you thought.
But why would there be a lawsuit? We don't have the wording of the OP's mother's will but if it says the OP can live in the house indefinitely, that should settle it. There are cases where the heirs can force the sale of a house but that's typically when multiple people own it and the will says nothing about who can live there or when it must be sold, and some of the heirs want their money.
But why would there be a lawsuit? We don't have the wording of the OP's mother's will but if it says the OP can live in the house indefinitely, that should settle it. There are cases where the heirs can force the sale of a house but that's typically when multiple people own it and the will says nothing about who can live there or when it must be sold, and some of the heirs want their money.
Here is the language from the trust.
In regards to the real property asset, the property shall not be sold or possession shall
not be challenged so long as (My Wife) occupies the property. It is only
after (My Wife) vacates or decides to release possession of said property,
that it will be sold and the proceeds from said sale will be divided equally between
(My Wife) and (My Wifes Sister) as stated hereinabove under Section 5.4(a).
I'd sell the house as-is now, split the proceeds with the sister, or take the mortgage and buy her out if it's a MUST you have the house.
I doubt the sister will agree to pay half that to upgrade the house, and Your money, sunk into the house, would increase it's value, and shed benefit from more of your money, not just mother's.
I'd just sell and take proceeds to buy back the house or buy your own house or build one you like.
Splitting inheritances is ALWAYS a messy business.
Someone ALWAYS feels they"didn't get their rightful share".
And as noted upstream, is sister going to share the costs of running the house and property taxes while you live there?
Here is the language from the trust.
In regards to the real property asset, the property shall not be sold or possession shall
not be challenged so long as (My Wife) occupies the property. It is only
after (My Wife) vacates or decides to release possession of said property,
that it will be sold and the proceeds from said sale will be divided equally between
(My Wife) and (My Wifes Sister) as stated hereinabove under Section 5.4(a).
I'm not a lawyer but that's pretty clear. Your SIL would probably have a hard time finding an attorney to force you to sell so she can get her money, as someone upthread implied she might.
If you choose to stay and put a lot of $$ into repairs and improvements, I'd suggest you have SIL sign an agreement that her share of the proceeds whenever it's sold will be reduced by some amount- let's say half the amount you and DW put into it, multiplied by (the sale price of the house / the value of the house when you inherited it). If she refuses to sign anything, count on her reaping the benefits of the work you pay for when you sell. I'd have a lawyer prepare it, of course.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
