Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

February 11, 2013
My siblings don't agree about the property we inherited-what now?

Q: My parents have owned a summer cottage in Stonington, CT since the 1960s. When my father died 10 years ago, my mother had the names of my 2 siblings and myself added to the deed. Mom passed a few months ago. I live 2,000 miles away. My brother has no real interest in the cottage. We were always told since childhood that the cottage was the only thing my parents had to leave us. My brother and I always assumed that my sister would buy out our share. She and her family enjoy the use of the summer cottage.

Now that Mom is gone my sister feels we should just give her the cottage. She feels that entitlement because she is the only one that appreciates it and that she spent more time with our mother. My brother and I are not wanting to sell it to a stranger but on the other hand we don't feel we should just "hand it over". The cottage itself doesn't have much value, it is the property near the ocean. Total value is about $300,000. Should something happen to my sister (we are all 3 approaching 60), I am sure that her children would sell it immediately. Since last May when Mom passed we have just let my sister use it and all 3 of us have paid the property taxes. Any advice? Is this something a court has to settle? Mom really left us in a bind. Any suggestions would be welcomed. Thank you in advance. -- Cynthia, Sacramento, CA

A: You find yourself in a tough situation that is not uncommon--you and your siblings inherited a property that has very different meaning and value to each of you. Also, it is not unusual for one or more siblings to feel entitled to a bigger share of the family assets at a parent's death for any number of reasons. However, your parents left the property equally to the three of you, so you and your brother have legal rights that are valid whatever your sister's wishes are about the property.

The first step is to determine how you hold title. When your mother added you to the deed, did she add you as joint tenants or as tenants in common? These would be the choices in California, but Connecticut law may have different designations or options. The form of ownership affects your individual rights to the property and how the property passes at the death of each of you if no action is taken.

For example, if you three were named on a CA deed as joint tenants, joint tenancy comes with an automatic right of survivorship. This means that upon the first joint tenant's death, his or her entire interest passes to the survivors. The final survivor's beneficiaries end up with all the property. So if you and your siblings were joint tenants in CA and took no action, the survivor of you would eventually inherit the full property.

In contrast, when people own property as tenants in common in CA, each person controls who receives his or her interest at time of death. Unless otherwise agreed upon, each co-tenant is responsible for his or her share of expenses in proportion to his or her ownership interest. Further, one tenant in common cannot force another to buy out his or her interest, but he or she can sell his or her interest or go to court to force a partition of the property. If the partition action is successful, the property will either be physically split up or the court will force a sale of the property and divide the proceeds. This is one path you could take if your sister does not agree to sell the property and you wanted to sell it, although it is an expensive and contentious way to proceed.

If you and your siblings hold title as joint tenants and the CT law is the same as in CA, any one of you could independently record an instrument "breaking" the joint tenancy and changing your form of ownership from joint tenancy to tenants in common. A so called "unilateral severance" of the joint tenancy will generally be effective to terminate the right of survivorship so long as there is no contrary written agreement of the joint tenants and the instrument is executed, acknowledged, and recorded in accordance with statutory requirements.

If you and your siblings decided to continue to co-own the property for the time being, you have several choices as to how to sort out payments of expenses, usage, whether to rent the property out, etc. For example, if you hold or change title to tenants in common, you could create a Tenancy-In-Common Agreement (TIC Agreement). A TIC Agreement is a legal contract that sets forth the terms of ownership and any transfer restrictions. Among other things, it can include provisions relating to property management and expenses, maintenance, usage policies, rights of first refusal to the other co-tenants, and to whom each co-tenant can devise his or her interest at death. Some other options for co-ownership include creating a trust to hold the property, oriented to keeping the property in the family if that is everyone's wish, or you could also transfer the property into a LLC or partnership for management and asset protection purposes.

Your sister needs to understand that you and your brother have legal rights to the property and that your views must be taken into consideration along with hers. It would be ideal if she was in a position to buy you and your brother out of your interests in the property. She would clearly be happy if you gifted your interests to her, which you could do but have no legal obligation to do. Might your sister's children be able to buy out your interests from you with payments over time? With discussion, you may be able to think of a creative solution to which everyone is agreeable.

I recommend that you try hard to work this out among the three of you, because court proceedings are an expensive way to reach a conclusion. If you cannot agree, court intervention will likely be necessary. Mediation and arbitration are often used to resolve these types of family matters instead of court trials, but they can be costly as well. Using this overview as background, I also recommend that you talk this over with a Connecticut lawyer who can tell you exactly how you hold title and what your rights and options are as a co-owner of this CT real property. There may be other factors that affect your decisions that haven't been raised here.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at cbuck@sacbee.com

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.



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