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House Divided: How Siblings Should Handle Co-Ownership

Splitting an inheritance gets complicated

spinner image co-owners stand on either side of a set of stairs outside their home
Wray Sinclair

The Problem

Married couple Jon and Tina VanderJagt wanted to know what’s fair. Since 2005, the two, both 71, have lived in the Los Angeles house Jon’s mother left to him and his sister, Lisa VanderJagt. Now Lisa, 69, wants Jon and Tina to buy out her share. But the math isn’t easy. Jon and Tina have been paying the mortgage, and they’ve spent money on improvements. “How much is owed?” asks Tina. And more important, can they do this and not strain their relationships?

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The Advice

A lot of families will likely face this issue. A 2023 Charles Schwab survey found that 76 percent of parents plan to leave their home to their children. Those children are better off setting a course of action upon inheriting the home rather than waiting, says Josh Baron, cofounder of BanyanGlobal Family Business Advisors in Boston. That could mean selling the home on the open market, having one sibling buy the others out, or defining terms of co-ownership. Otherwise, it can get messy, as in the VanderJagts’ case.

I spoke with several experts — estate planning lawyers, family business consultants, CPAs and divorce financial planners — who specialize in splitting the proverbial pie. They made some important points.

First, you need to acknowledge the parent’s intent. For Lisa and Jon’s mother, it was to divide assets equally. Second, the value of what Lisa and Jon inherited has changed. Appraised for $614,000 when their mother died, the house is now valued at $1.8 million, due in part to real estate appreciation and in part to improvements made by Jon but not Lisa. And though Jon and Tina got the benefit of living there, they have also been paying the $250,000 mortgage taken out before his mother’s death to finance a renovation. They’ve also covered taxes, insurance and everyday maintenance. “The question is, ‘Can we disentangle those things?’ ” Baron says.

A consensus of sorts formed around the math suggested by Jody D’Agostini, a divorce financial planner at the Falcon Financial Group in Morristown, New Jersey. Starting with the home’s current value, she subtracted the $175,000 remaining on the loan, leaving $1.625 million as the value of the asset being split. Then she subtracted the cost of the improvements Jon and Tina had made plus the principal and interest they’d paid on the mortgage. Dividing the result by two, she got $667,500 as the amount the couple should pay Lisa.

B.J. Hoffman, a CPA at Citrin Cooperman in Philadelphia, differed slightly, noting that he wouldn’t back out Jon and Tina’s total mortgage payments because half of them were their obligation anyway. By his calculations, Lisa is due $730,000.

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All agreed that there was no perfect answer. “What you’re trying to do is to get to a solution that feels approximately fair and doesn’t cause tension in a relationship,” says Baron. The goal, he adds, is to be able to say, “I can live with that.

The Outcome

After I showed the family both sets of numbers, they split the difference: Lisa accepted Jon and Tina’s offer of $700,000 for her share. They’re still negotiating payment terms, but all agree that untying this 18-year-old knot has made them feel better. “It’s almost like we’ve been in therapy. We’re dealing with our feelings with each other,” says Tina. “It’s kind of a relief.”

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