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Selling my home of 34 years and our youngest son is interested. We have come up with what we feel is a fair solution. Get an appraisal from a professional. What ever that price is we will sell the home to my son for $60,000 less. I see this as “an early inheritance”. If he sells the home at a later date or upon my wife and my demise he must get “square” with his siblings by giving each of the three of them $15,000 each.
We are ok with this as are the siblings. My concern is homes are going for $25,000 over asking price. Will the appraisal reflect that condition?
What ever that price is we will sell the home to my son for $60,000 less. I see this as “an early inheritance”. If he sells the home at a later date or upon my wife and my demise he must get “square” with his siblings by giving each of the three of them $15,000 each.
Neither you nor the siblings will be able to enforce that after the parents are gone nor will it be enforceable when he sells the house and decides not to come up with $45,000. Please don't say "Can't happen. We love and trust each other." A wise man once said "Love goes out the door when money comes in the window."
The way you make that enforceable is you put it in your will that the siblings get $15,000 each before any other distributions get made out of the estate. That would be enforceable.
Quote:
Originally Posted by caco54
My concern is homes are going for $25,000 over asking price. Will the appraisal reflect that condition?
No.
You shouldn't need any appraisal as long as you are pricing the house according to recent sales in your subdivision.
Unless the siblings want one to make sure of the starting point for their $15,000 share of the sale proceeds.
As AdjusterJack points out, such an arrangement is totally unenforceable, and is a set-up for trouble. Avoid putting your children in a situation where it's one word against another. Have everything be completely legally formalized, such as in the way AdjusterJack suggested, so that there's no room for misinterpretation (which could come from any child. It's not just about the one reneging on the $15k agreement, but on other children saying "Wasn't it supposed to be $20,000?" or wanting more due to inflation). Don't put your kids in that situation.
A second issue is—if there's any chance that you'll be needing a lot of care and will be out of savings and going on Medicaid in 5 years, Medicaid will see that as a gift and they will want it (the difference between the appraisal and what you sold it for to a family member) back.
A related issue is: Let's say this son holds onto the house until he is within 5 years of running out of savings and going on Medicaid. Now he's in a pickle. If he sells the house and gives $15,000 to each remaining sibling, Medicaid will see that as gifting and demand the money back from the siblings. If he doesn't because he's trying to abide by their rules, the siblings may feel robbed. All this time they've been expecting that little windfall, and here their brother has waited until he cannot gift them the money anymore. Either that or they just don't believe him.
Selling my home of 34 years and our youngest son is interested. We have come up with what we feel is a fair solution. Get an appraisal from a professional. What ever that price is we will sell the home to my son for $60,000 less. I see this as “an early inheritance”. If he sells the home at a later date or upon my wife and my demise he must get “square” with his siblings by giving each of the three of them $15,000 each.
We are ok with this as are the siblings. My concern is homes are going for $25,000 over asking price. Will the appraisal reflect that condition?
I'd probably get minimum 2 appraisals. Appraisers are artists not scientists and like any artist some are bad.
Quote:
Originally Posted by k350
The appraisal is just for the loan company, you can sell it for whatever you want to.
That would be true if we were talking about the appraiser hired by the lender for a mortgage application. If you hire the appraiser yourself, then the appraisal is yours and for your benefit. Of course, no matter what the appraiser says you're certainly able to sell for whatever price you want and that someone will agree to.
Quote:
Originally Posted by adjusterjack
Neither you nor the siblings will be able to enforce that after the parents are gone nor will it be enforceable when he sells the house and decides not to come up with $45,000. Please don't say "Can't happen. We love and trust each other." A wise man once said "Love goes out the door when money comes in the window."
The way you make that enforceable is you put it in your will that the siblings get $15,000 each before any other distributions get made out of the estate. That would be enforceable.
It's enforceable if you put it in writing. In fact, I'd have an attorney draw up a $60,000 mortgage to record against the property that just has a balloon payment due upon the sale of the house. Make the siblings the beneficiaries of the mortgage and you're done!
Alternatively, you can leave yourself as a "co-owner" with a contract stating you're only maintaining $60K worth of equity and then in your will you can bequeath that equity to your other kids.
Third option is to keep things simple and have your son pay full boat and then put in your will that the other kids get $15,000 when you pass.
Quote:
Originally Posted by adjusterjack
You shouldn't need any appraisal as long as you are pricing the house according to recent sales in your subdivision.
Unless the siblings want one to make sure of the starting point for their $15,000 share of the sale proceeds.
They don't need an appraisal . . . few people do except for mortgage lenders and for estates/divorces. This being said, if you get a neutral 3rd party to determine the price then likely there will be a lot less discussion over the price and/or hurt feelings afterwards. Plus, it's much less likely that someone will accuse someone else of nefarious dealings.
Quote:
Originally Posted by Mimidae
As AdjusterJack points out, such an arrangement is totally unenforceable, and is a set-up for trouble. Avoid putting your children in a situation where it's one word against another. Have everything be completely legally formalized, such as in the way AdjusterJack suggested, so that there's no room for misinterpretation (which could come from any child. It's not just about the one reneging on the $15k agreement, but on other children saying "Wasn't it supposed to be $20,000?" or wanting more due to inflation). Don't put your kids in that situation.
Definitely always best to put things involving money in writing especially when it comes to family matters. It keeps things a lot friendlier.
Quote:
Originally Posted by Mimidae
A second issue is—if there's any chance that you'll be needing a lot of care and will be out of savings and going on Medicaid in 5 years, Medicaid will see that as a gift and they will want it (the difference between the appraisal and what you sold it for to a family member) back.
A related issue is: Let's say this son holds onto the house until he is within 5 years of running out of savings and going on Medicaid. Now he's in a pickle. If he sells the house and gives $15,000 to each remaining sibling, Medicaid will see that as gifting and demand the money back from the siblings. If he doesn't because he's trying to abide by their rules, the siblings may feel robbed. All this time they've been expecting that little windfall, and here their brother has waited until he cannot gift them the money anymore. Either that or they just don't believe him.
This is why I suggested the mortgage. It changes it from a gift to a debt that needs to be paid. Definitely check with an accountant about that.
Neither you nor the siblings will be able to enforce that after the parents are gone nor will it be enforceable when he sells the house and decides not to come up with $45,000. Please don't say "Can't happen. We love and trust each other." A wise man once said "Love goes out the door when money comes in the window."
The way you make that enforceable is you put it in your will that the siblings get $15,000 each before any other distributions get made out of the estate. That would be enforceable.
No.
You shouldn't need any appraisal as long as you are pricing the house according to recent sales in your subdivision.
Unless the siblings want one to make sure of the starting point for their $15,000 share of the sale proceeds.
And it happens all the time.
When my mother was ill (father died 30 years ago) she told both my brother and I she was leaving the 200k to our sister. Both my brother and I are financially well off. Upon her death no will was found with her records. (Although one had been written years ago.) But my brother and I honored our mother's wishes and let our sister have the money.
However, I do know a number of families where things got ugly. One siblings was made executor but didn't want to sell the vacation home and split the funds because he was living in it.
Same thing with my cousins. One of the brothers was living in the house and while his mother was in the hospital got her to sign over the property to him.
Happened in San Francisco. Two brothers I know can't sell the SF home (worth 1.7 million) and use their share to pay off their own house. Why not? Because older brother is living in the SF house and won't leave.
When you're pushing 60 and basically broke.... it's every sibling for themselves.
Selling my home of 34 years and our youngest son is interested. We have come up with what we feel is a fair solution. Get an appraisal from a professional. What ever that price is we will sell the home to my son for $60,000 less. I see this as “an early inheritance”. If he sells the home at a later date or upon my wife and my demise he must get “square” with his siblings by giving each of the three of them $15,000 each.
We are ok with this as are the siblings. My concern is homes are going for $25,000 over asking price. Will the appraisal reflect that condition?
Yes. If the comparables sold over asking, the appraised value will be affected since they reflect the current market.
Selling my home of 34 years and our youngest son is interested. We have come up with what we feel is a fair solution. Get an appraisal from a professional. What ever that price is we will sell the home to my son for $60,000 less. I see this as “an early inheritance”. If he sells the home at a later date or upon my wife and my demise he must get “square” with his siblings by giving each of the three of them $15,000 each.
We are ok with this as are the siblings. My concern is homes are going for $25,000 over asking price. Will the appraisal reflect that condition?
It's clear that you want to give equally to all of your children, but I don't think that this is the way to do it. Even if you are able to draw up a binding agreement whereby your youngest son will distribute $15,000 to each of his siblings at a later date, you're just making it more complicated--and there would still be potential legal headaches if, for whatever reason, your son was unwilling or unable to follow through on his promise. I think it's best to avoid potential problems--especially amongst family members.
If you're going give $60,000 at this time, do so equally--giving each $15,000. That way they are truly getting equal shares. Under your plan, it may be 20 or 30 years before your younger son would make any distribution to his siblings. The value of $15,000 at that time will likely be much less than the value of $15,000 today. The siblings would also be left out of the opportunity to either use that money now or to invest it.
If your youngest son cannot finance the purchase at the higher price, his siblings could potentially loan that amount to him now, with interest, but that would be even more complicated and would yield more potential headaches. Once all in your family give your current idea more thought, the more chance that they'll realize that it isn't really that equitable.
Yes. If the comparables sold over asking, the appraised value will be affected since they reflect the current market.
The appraisal will definitely reflect today's prices. You could skip it and just use recent sales figures all on your own.
Making sure to will the other children 15k or whatever figure it ends up being will stop resentments and sibling alienation later.
The appraisal will definitely reflect today's prices. You could skip it and just use recent sales figures all on your own.
Making sure to will the other children 15k or whatever figure it ends up being will stop resentments and sibling alienation later.
Unless the house is a sub-division where all the houses are the same except for the wall colors, most people are not that skilled at reading comparable sales. In fact, I see it on a daily basis.
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