How Jointly Inheriting Real Estate Destroys Sibling Relationships (and What You Can Do About It)
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Inheriting property jointly with your sibling(s) sounds simple enough…until it isn’t.
What happens if one of you wants to sell and the other doesn’t?
What happens if you both want to keep the house, but can’t decide who gets to use it when?
What if you both want to live in it?
There are a million ways this can go wrong. And when it does, the results can be relationship-ending.
But it doesn’t have to be that way.
In this episode, I break down the conversations you NEED to have while your parents are still alive.
Because the best way to avoid this situation is to prevent it from ever happening.
And if you’re already in the thick of a joint property ownership with siblings, I’ve got the advice you need - no matter which side of the issue you’re on.
🗓️ Schedule a FREE call to talk more about how I can help you navigate a current or future inheritance.
Transcript:
Hey, I'm Katherine and thanks for joining me at Heir Necessities, the podcast that turns complex financial topics into real talk for Gen X, Millennial, and Gen Z inheritors. Each episode of this podcast, I break down a different topic related to generational wealth and inheritance.
My goal is that you can stop asking Google or ChatGPT what to do with your money and come here instead for real talk, real solutions, and real advice that you can start implementing in your life today.
What Do You Need to Know About Inheriting a House Jointly With Siblings?
This episode of Heir Necessities, we are diving into everything you need to know about inheriting a house jointly with siblings. This is one of the most common and most disastrous inheritance situations that I come across.
There are a million ways that it can go horribly wrong. That's not to say that it will for you and your family.
But if you think you might be inheriting a house, a vacation property, commercial real estate, or investment properties with one or more siblings, you need to listen to this episode to find out what could happen and how you can try and prevent this trainwreck while your parents are still alive.
How Does Inheriting Property With Siblings Usually Go Wrong?
Before I dive into this episode, if you're enjoying Heir Necessities, I would so appreciate it if you could take two seconds to leave the podcast a five-star rating wherever you listen. Spotify, Apple Podcasts — it's hugely helpful for the show and it helps me connect with and support more inheritors like you.
Let's set the stage for how this usually goes down when it's clear it's not gonna be good. Your parents, or your last remaining parent, have just died and you and one or more siblings have inherited the vacation house jointly.
One of your siblings has a really strong emotional connection to the vacation house. You also like it, but it's not your favorite place.
It's further away for you. It's an expensive property.
Your family isn't really gonna use it. But your sibling doesn't have enough money to buy you out of the property.
Can a Sibling Force the Sale of an Inherited Property?
What happens next? The first and most important thing you need to understand about inheriting a house jointly with siblings is that you cannot force someone to own property that they don't want to own.
So if you have a property that's been inherited jointly with siblings and one sibling wants to sell, they can force a sale, which gives you two options. Either you figure out how to buy their portion of the property — you get enough cash or you get a mortgage to make it happen, buy them out, everyone can be happy — or they force a sale and everyone is extremely unhappy and probably never talks to each other again.
If you have siblings, I think you can understand how this plays out, especially because it's all happening when people are deep in grief. What happens so often after the last parent dies is that all of those sibling grudges that parents held down bubble up to the surface and they get mixed with grief and everything else — the uncertainty, the fear, the logistics of it all.
And it's a recipe for disaster.
How Can You Prevent Sibling Conflict Over Inherited Property Before It Starts?
What I want to talk about is how you can try and avoid this and the conversations that you need to have with your parents while they're still alive if you're trying to avoid this explosive situation in the future. After that, we'll dive into what you can do if you find yourself in the situation and the options that you might have.
If you think you're going to inherit a house or property jointly with siblings — whether it's a primary residence, vacation home, commercial real estate, or investment property — the first thing you need to do is have a really clear understanding for yourself of what the issues are. Do you get along with your sibling and think it will be fine?
That's great. Do you have an equal amount of attachment to these properties?
That makes it less great. You need to think through the potential pitfalls that exist.
What Conversations Should You Have With Your Parents About Jointly Inherited Property?
And then ideally with your sibling, but if that's not possible — if y'all don't have that relationship — then at least with your parents, you need to start talking through what that could look like. And that conversation could be as simple as: "We've been talking about what's gonna happen to the vacation house after you die. I know that I'm not gonna wanna own it and my sibling is. What do you think about that?"
These conversations can obviously be fraught with parents, especially if they aren't really willing to engage on these topics. But the best thing that you can do is be really clear about everything I've already told you in the first couple minutes of this episode.
Explain to them that jointly inheriting property can go really, really badly, very quickly. And see if they're open to understanding that.
If they aren't, and if you know this is gonna happen and it's gonna be a big disaster, then I'm sorry. And to some degree, all you can do is sit back and wait and emotionally prepare yourself for when the day comes.
What Happens When Siblings Inherit Commercial Real Estate or Investment Properties Together?
If you're talking about a primary residence or a vacation house, it's one thing. If your parents have a significant amount of commercial real estate or investment properties that you're gonna be inheriting jointly, that is a whole other conversation.
Because now you're talking about what is in effect a family business, and there are significant long-term financial repercussions to what you and your siblings want to do with those assets. If you have a sibling who's really involved in that business and is helping your parents out with it versus a sibling who lives across the country and isn't involved at all, it can get really touchy between them when you have different priorities, different styles, and again, all of those years of sibling fights that are gonna bubble up after your parents pass away.
The best approach that you can have when there's more of a business versus a personal interest in family real estate that's going to be inherited jointly is to approach it as a business discussion as opposed to a personal family discussion. Your parents own this real estate.
This real estate is generating income and is functioning — even if it's a passive business — as a business. And you need to know as an heir to this business what the plan is.
How Can Heirs Prepare for Inheriting a Family Real Estate Business?
To the degree you can, start getting familiar with these properties, getting familiar with your parents' plans, who they're using to manage the properties, what the issues are, what the maintenance schedule looks like. The more you can be involved in the business side of any future jointly owned real estate, the better it will be for you.
Because all of the information that you learn now is information you don't have to learn after a loved one has died.
What Are Your Options If You've Already Inherited Property Jointly With Siblings?
Now, this is all well and good, but if you had a loved one die and you already own property jointly with siblings, then it's a disaster and it's not gonna be much help for you. If this is the situation that you're in, the first thing that I wanna say is that I'm sorry — it's stressful.
I see you and I know how hard it is. Sibling relationships are destroyed because of the actual issue that you are going through right now.
And that's not an easy or a fun thing to be dealing with. My biggest advice is to remember that what you say and what you do now will have a lasting impact on your relationship with your sibling.
I understand that they can seem like they're being unreasonable, like they're not thinking things through. You are both grieving and you're doing it in different ways, and that is okay.
How Can the Sibling Who Wants to Sell an Inherited Property Protect the Family Relationship?
If you're the sibling who wants to sell the house and your other sibling or siblings want to keep the property, start getting creative by thinking about ways that they can buy you out. Is the property gonna generate income that they could use to pay you over time for your portion?
Are there other assets that are part of the estate that you could give up your portion of the value of the house in exchange for receiving an equal portion of a different asset? Be careful with the tax consequences of what that other asset is — especially if it's a pre-tax IRA, you're gonna need a higher amount to be equal in value based on the tax consequences of withdrawals.
But think about it creatively. Is there a way that you could make this work without forcing a sale of the entire property?
It may be that the answer is no, but putting in a good faith effort instead of demanding a sale at the outset — when you have other parties who strongly disagree — could help your relationship in the long run.
What Should You Do If You Want to Keep an Inherited Property Your Sibling Wants to Sell?
If you're the sibling who wants to keep the property when another sibling wants to sell, remember that you are not in the power position here. Like it or not, it's your sibling who has the power to force a sale.
You can't require them to continue owning property that they don't wanna own. And they could make your life extremely difficult if they choose to sell it to some other third party that you don't get along with.
This might not be a threat if you're talking about a house or a vacation property, but if you've inherited a significant land asset that has development potential, your sibling could sell it to a third party that could make your life extremely difficult for years to come. It's a very specific situation, but I have seen it happen.
How Can Siblings Find a Fair Solution When They Disagree About Inherited Real Estate?
So if you're the one who wants to keep the property and your sibling or siblings are being difficult, you have a similar role to the sibling who wants to sell. Think about how you could make this work for them.
Are there other assets from the estate that you can give them in exchange for their percentage ownership of the value of the home? If the home is a rental, can you pay out the income to them to pay off that debt over time and get them the equity they want out of the house?
Recognize that everyone is going to have different feelings about inherited real estate. It depends on your relationship to your parents, your relationship to the house, what life looks like for you right now — travel, how you feel about taking on a whole other property.
There are very rarely right and wrong answers to these questions, but there are answers that feel very right and feel very wrong to different people, which makes them dangerous and thorny issues to navigate.
How Do You Move Forward After Making Decisions About Inherited Property With Siblings?
If you're going through this right now, it might not resolve the way that you want it to. But remember that how you interact with your sibling or siblings during this time — the conversations you have, the way that you speak to each other — is going to reverberate long after a final decision on this house is made.
If you're going through this right now, or if you want to start having these conversations with your parents so you can avoid this situation at all costs, I would love to hear from you. You can email me at katherine@sunnybranchwealth.com.
You can find me on Instagram @sunnybranchwealth. Or if you'd rather just follow along with the pod, I will catch you on next week's episode of Heir Necessities.
Let’s take the next step together
Understanding how to protect, invest, grow, and/or give away a multi-million dollar inheritance isn’t easy. Inheritors can encounter a wide variety of different situations requiring knowledge and finesse to manage. If you need more help, reach out to Katherine Fox, CFP® and CAP®, financial planner for inheritors, to learn how Sunnybranch can help you evaluate your financial situation and build a plan for your financial future.
