Determining Acceptable Value of Inherited Real Estate?

[ultrarunner]

The executer has responsibility to the estate. Not the benefactors.
In one scenario all the OPs deeds can be ignored or discounted by simple words of "your choice" from other beneficiaries. Meaning past support and deeds have no bearing on the estate as of the now.

Your Choice has come up...

No regrets on my part but also eye opening what a future could look like.

TBN was kind enough to share a somewhat similar story and his advice in shorthand is if you want the property make the deal...

The only time factor is California Prop 13 is very real and over 10 years would save about a 100k in property tax.

Another way to look at it is my home property tax over 10 years would be 200k... if I moved to mom's the property tax over 10 years would be 50k

It's a California parent/child transfer thing...

 

[ultrarunner]

I dont even know that entitled is relevant. Based on my understanding, everyone got equal shares, so let's not act like the OP should be getting a bigger part of the equal share, regardless of the care. I do understand the perspective that a 10% investment into the home, could yield a 25% increase in value too. I just think it's better to move on quickly, get everything liquidated, and call it a day.

I do think there needs to a a quick discussion, and understanding, that you want no part of project management, and won't be handling that, and also discuss the fact there is a risk associated with the improvement costs.

I dont expect the siblings to really care about your future tax situation if you eventually purchase the property. Right now it's just the estates asset, that's it.

I'm not against you; but let's not pretend the other heirs owe you something beyond your 1/3rd share, and any legal executors fees. It all kinda sucks, but I get both sides.

I don't think they owe me anything except a can do spirit.

Maybe I'm off thinking that a buyer as is with no commissions or other charges at the full appraisal price would be suitable?

What throws me is when I ask ok, what's it worth and I get back we won't know until it's sold...

When I suggested listing with me having the right to match the best offer the response is it needs work to sell.

The only reason there is something to sell is years of careful management on my part and not going with the flow selling back in 2017

The thought of asking for consideration for moms care never crossed my mind.

The thought of everyone being happy I was able to preserve estate the estate has.

 

[ultrarunner]

He'd probably say yes.

I'm the only one around... but no.

 

[ultrarunner]

Yikes. I agree with others that your siblings must be forced to consider the real VALUE (emotional and financial) that you caring for your mother provided for all these recent years. You have the moral high ground if it comes to real argument.

I live local to my 75/74 year old parents and can see an ever-escalating path of me caring for them. My sister lives across the bay from you in south San Fran and only visits back to Michigan once or twice a year. Hopefully future estate settlements wont be a fight with her, she's quite nice and well off.

It's nice she visits... total isolation was the norm for several COVID years...

 

[paulsharvey]

Has there been a frank discussion with each sibling seperately; "how much to buy you out"?

Also, don't buy yourself into something that doesn't suit your own longer term goals/needs.

As a potential buyer; I think the renovations are a disadvantage to you.

 

[ultrarunner]

Real arguments don't give a crap about who has the moral high ground.

Someone will always bend the efforts to satisfy their present situation.

Not being snarky, but it will not mean anything to a lawyer.

This is where I questioned the estate lawyer when he advocated I consider requests outside of the trust for family harmony???

But he works with my siblings and mom met him through my brothers...

 

[ultrarunner]

Has there been a frank discussion with each sibling seperagreeeely; "how much to buy you out"?

Also, don't buy yourself into something that doesn't suit your own longer term goals/needs.

As a potential buyer; I think the renovations are a disadvantage to you.

Yes but the answer is the market determines value.

Agreed improving adds a new dimension and would delay settlement, cost money, etc.

Since meeting my inbox is flooded with comps...

 

[2manyrocks]

TBN was kind enough to share a somewhat similar story and his advice in shorthand is if you want the property make the deal...

When I suggested listing with me having the right to match the best offer the response is it needs work to sell.

Between these two statements, are they proposing any deal with you because it sounds like they only want to dress it up to sell it to the highest bidder?

And what does it mean that the estate attorney advocated that you consider requests outside the trust for family harmony??? Dip into the trust funds to cover the fix up costs even if the trust doesn't authorize this expenditure of funds?

"But he works with my siblings" tells me you need independent legal advice.

 

[Tomtint]

I have what most would consider a good background in real estate, Take my advice for what you will. First.. Dealing with family once differences of opinion surface ..the absolute worst possible thing to work through. .. In most cases, the best thing to do is blind vote in a bag and just let the majority rule. .. But back to the real estate.. Lets say the appraised value today is 1M.. Pull comps that have sold for that figure in the last 3 months. And pull what's listed today at that number and how many days on market it has. Take the anticipated reno cost...and add 30% to it.. Because a reno always has unknowns that add cost and time..which equals MO-money. If your siblings are squabbling about a couple hundred K divided x 3 or 4.. minus commissions as well as time.. Who is going to oversee the reno... Just punt and move on.

 

[ultrarunner]

Lipstick on a pig not quite but more of a flip is the thinking.

When I had a sit down with the Estate Attorney he outlined legal responsibilities and then added addressing concerns raised by the family no matter how trivial go a long way to insure future family harmony…

I had expected a cut and dry engineering approach of here is the task at hand now get busy.

I had wanted to go distributing asset by asset until done but siblings objected saying they wanted it all addressed at one time together in the entirety…

My guess is bank accounts along with stocks and bonds are easy to value/sell on a given day… fractional ownership in a commercial/industrial property with small monthly rent income and such not so easy?

 

[2manyrocks]

At most the estate attorney is supposed to provide legal advice on behalf of the estate, but in my personal experience, estate attorneys don't generally want the boat to rock or be the lawyer in the firm who ticked off a real estate client who brings a lot of revenue into the law firm over an estate that didn't go like they wanted with a much smaller fee.

Once you get boxed in, your options diminish. Go get independent legal advice before you make decisions that limit your options.

I don't care whether they like it when the trustee distributes easily divisible and distributable assets. If the trust is done, what reason does the trustee have to withhold distribution? If the stock market takes a dive in the meantime, I'd rather they have direct ownership and responsibility for investing their own stock, not the trustee for any time longer than necessary to wind up the trust. If there is some contingent tax liability that has to be worked out, that's a different situation.

Sometimes fractional ownership interests can be placed in a different entity for management and liability purposes following termination of the trust. Another approach is to distribute it directly and let each beneficiary rock their own baby, especially if the one guy who has been doing all the work is tired of working for everybody else.

 

[ultrarunner]

The suggestion is a LLC for the fractional ownership of commercial property for all of the above reasons.

I’m in process of preparing 2023 returns and will have more up to date info once complete.

 

[MossRoad]

The suggestion is a LLC for the fractional ownership of commercial property for all of the above reasons.

I’m in process of preparing 2023 returns and will have more up to date info once complete.

Why don't you tell them you'll buy it from the estate now at the appraised value and you'll give them 2/3 of anything over what you originally paid the estate when you sell it in the future or the whole thing when you die?

It's speculation for sure, but it's on you, not them.

You pay (for example) $1,000,000 to the estate for the house.
All three of you get $333,333,333 from the estate.

In 5 years, you sell it for $1,300,000.
All three of you make an additional $100,000.

or

You croak, and they sell it and get $500,000 each (or more or less, but it's still gravy), on top of the $333,333 they already got!

or

In 5 years, the bottom falls out, you sell it for $500,000, so none of you three get any additional money then, but the $500,000 is in your estate along with all your other investments and such, and you've said they're the beneficiaries of the estate, so they still get way more than if they'd have sold it to a 3rd party originally.

I just don't see why they don't sell it to you at the appraised value now knowing you're going to leave it to them in the future?

I'd be tempted to throttle them.

Listen, we're all getting $333,000 now from the estate if I buy the house. If I sell the house later at a profit you'll get even more. If I don't, you'll have to wait until I croak, but you two or your children are going to get a whole lot more VS me just leaving my entire estate to a charity. If you force me to sell it to a 3rd party, you'll only get $333,000 PERIOD!

IT'S A NO BRAINER!!!

Use the big stick with the big carrot.

Good luck. I know family business can be trying.

 

[ultrarunner]

I like the way you think as I’m here paying a few bills at the house tonight.

Doubt it would fly but worth a try.

At this rate I will be working at least a few more years…

I’ve been number 2 seniority at work for a few years… when folks retire I remember when they started working here.

Opps… wrong thread about being old.

 

[MossRoad]

I like the way you think as I’m here paying a few bills at the house tonight.

Doubt it would fly but worth a try.

At this rate I will be working at least a few more years…

I’ve been number 2 seniority at work for a few years… when folks retire I remember when they started working here.

Opps… wrong thread about being old.

Between your investments that you've mentioned over the years and the profit from the eventual sale of your mom's house, they stand to lose way more than the additional money they'd make from fixing it up and seeing what it'll sell for VS just letting you buy it at the current price and risking losing your generous gift.

Of course, that could drive a bigger wedge of resentment into the mix. But in all seriousness, they should be thankful for having a brother like you.

 

[quicksandfarmer]

Siblings say hire someone to clear out the property, spend $100,000 fixing it up over 3-4 months will increase the value from 975k appraised as is to maybe 1.3m California values.

So this would achieve a hypothetical 1.1m net or a 125k above the appeal price.

200k is estimated fixing, commissions, etc.

That doesn't sound like an attractive deal. Adjust for risk and the cost of project management and the expected return is essentially zero. If your siblings are in the RE business they should know that.

 

[quicksandfarmer]

Are you the executor of the estate ?

What are the terms of the will as to how the assets of the estate are to be disposed of, in terms who gets what ?

As they used to say on Columbo, "That, Detective, is the right question."

 

[ning]

When my grandmother passed, she left one of my two uncles as the executor; the will just stated that the estate was to be split three ways (my mother & her two brothers).

The executor-uncle got everything valued and split things by value, without cashing everything out; my Mom felt she came up short but not enough to fight it; she also pretty much expected that from that brother. After a few years they were ok again.

IMO there's no good answer; ultra is screwed any way he does this. Stick to the letter of the will but don't go out on a limb trying to make the others happy because you'll come up short and if you're anything like me it'll leave a bad taste in your mouth.

Get multiple assessments of the property value, average them, tell your siblings how much they'll get. Are they going to waste a good sized chunk of the estate because they didn't get to speculate? It's on them to abide by the will, and if they refuse, they're the ones breaking the family goodwill.

 

[mikester]

The executer has responsibility to the estate. Not the benefactors.
In one scenario all the OPs deeds can be ignored or discounted by simple words of "your choice" from other beneficiaries. Meaning past support and deeds have no bearing on the estate as of the now.

If mom wanted her estate dealt with by a consensus then she would have appointed all the beneficiaries as trustees.

Instead she selected the one person whom she felt was competent and would make the best decisions according to her beliefs and wishes. Remember that

My condolences to you and I'm sorry to hear about your troubles.

 

[Sigarms]

If mom wanted her estate dealt with by a consensus then she would have appointed all the beneficiaries as trustees.

Instead she selected the one person whom she felt was competent and would make the best decisions according to her beliefs and wishes. Remember that

End of the day, without an explicit will or trust set up spelled out on exactly how everything is to be done, the BEST the executor can hope for is peace in the family.

Luckily for myself, when my dad passed, I was an only child and he and my mom set up a trust 25 years ago with everything spelled out. When dad passed, no probate, quick and easy.

My aunt who passed around 2010 didn't have much money and rented an apartment. No will, but very limited money for people to fight over. She left me the executor living over 400 miles away. It was kind of a horror story with a laywer, and lots of family fighting for what possessions she had. End of day, IMO you need to act like ****** and do what you think is right for the one who left you as the executor and spell it out for everyone.