The family rift lasted 17 years, beginning in 1988 when Olivia Boyce-Abel's mother died and left a large tract of land on the South Carolina coast. As Boyce-Abel and her three siblings disagreed over the fate of the property, which included an old family vacation home, the siblings became estranged. "We didn't even tell each other what was going on in our lives — like the birth of a child," says Boyce-Abel, who was 34 when her mother died and she became executor of her estate. "We missed many family get-togethers and celebrations."
The dispute prompted three lawsuits and took eight years to resolve. Eventually, some of the land went into conservation easements while the rest was divided among the siblings. But it was another nine years before the siblings reconciled. "It took many years to heal before we could spend Christmases together again," says Boyce-Abel. "It isn't the way it used to be, but now we see each other at least yearly."
Boyce-Abel's tale represents the dark side of what can happen when siblings inherit their parents' home, whether it's a primary residence or a vacation cottage where the family spent memorable summers. Sadly, it's not a rare story, estate planners and attorneys say. Despite parents' best intentions to assure future generations of family togetherness, an inherited home often triggers lifetime grudges and, at worst, lawsuits.
"You envision your kids and their children having similar wonderful memories as they lovingly share the beach house. But before you know it, they're all fighting over who gets to use the beach house on Memorial Day weekend versus July Fourth — and what color the drapes should be, or who's going to pay for the new back deck," says Florida probate litigator John Pankauski in his e-book Pankauski's Probate Litigation Guide: Top 10 Probate Mistakes Revealed.
"You never really know someone until you share an inheritance with them," Pankauski says.
A growing number of boomers will likely go through this experience. The generation is expected to inherit $8.4 trillion, according to a MetLife report. A large portion of that likely will be in real estate because of the high rate of home ownership among older Americans, who also prefer to stay in their houses as long as they can, according to the AARP Public Policy Institute.
You and your siblings have just inherited your parents' home. Now what?
- Meet and decide if you want to sell or keep it.
- If the answer is yes and everyone is willing to share ownership, the family should draw up legal documents with professional advice to prepare for the future. This could be a joint ownership agreement, a trust or a limited-liability company.
- Put management issues in writing. Key areas: how and when the property should be used and how expenses are paid.
- Settle on the basic operating rules, much like those at beach-rental properties, including cleaning, smoking, use by nonfamily guests and damage to furnishings.
- Establish how ownership should be passed on to future generations.
- Determine how a sibling can opt out of the joint ownership. How would the price be determined? Would the payoff be a straight, pro-rated share of the entire property's value? Or would it be a discounted amount because it is also owned and managed by other people, a standard practice in real-estate transactions when control is shared by more than one person. How would the pay-off be made, through a one-time cash settlement or over several years?
For some families, inheriting a house is a harmonious affair. That was the case for retired publishing executive Robert Smith and his three siblings, who inherited a lakefront vacation home in northeastern Pennsylvania more than 30 years ago. "From the start, the four of us figured out how to manage the property," says Smith, who lives in the Washington suburbs. "We wanted to make sure the house stayed within the family, but realized it could be unmanageable if we had too many owners on the management committee." So the siblings drew up a notarized agreement and filed it in a Pennsylvania courthouse. They agreed that only their parents' blood relatives (in other words, no spouses) could be owners, and they limited decision-making to a four-member management committee. There are only general guidelines, no formal rules, for assigning use of the six-bedroom lake house. Each of the four siblings' families gets two weeks during the prime time of July and August, although everyone is welcome on July 4. In May, June and September, the house is open to anyone; the rest of the year, it's closed. "We've always tried to keep communications clear, to sit down and discuss everything," Smith says.