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Heir’s Argument Avoidable with Pre-Planning

Dear Mr. Premack: Two out of three heirs want to sell all real property. The third heir disagrees, wants to keep the property but cannot afford to buy the shares of the other two siblings. How long does the third heir have before he must decide to buy the property or to give in to the others and sell it? – SCB

Since you mention “heirs” I assume that the real property is being passed to these three siblings after the death of both of their parents. The answer to your question depends in part, then, upon what type of legal proceedings are taking place around the estate of the last parent to die.

Some legal procedures result in the heirs directly became co-owners of the real property. For instance, if the will was admitted to probate as a muniment of title or if the parent died intestate and the family used a Small Estate Affidavit, a Determination of Heirship or an Affidavit of Heirship, then the heirs will simply be treated legally as co-owners of the real property.

As co-owners, each of them has the right to use and to enjoy the property, each of them has the right to sell his or her undivided one-third of the property without consent of the others, and each of them has the right to refuse to sell despite the demands of the others. Co-ownership can be a cooperative venture with shared goals, shared costs and shared gains, or a nightmare of argument, uncertainty and losses.

For instance, each co-owner is liable for their share of the real property taxes, of the insurance, and of the maintenance costs for the property. What if the two siblings who want to sell refuse to pay their share of those costs? The sibling who desires to keep the property has a choice: he can pay all the bills and then sue his siblings for contribution (to get them to reimburse him), he can say he’ll pay just his one-third of the costs (but the insurance company won’t issue the policy unless paid in full, and the tax office will still take action to collect the unpaid balance), or he can also refuse to pay (in which case the house goes uninsured and the taxes go unpaid with all the negative consequences which result).

There is no time limit before the third heir must buy or sell. The three co-owners could argue until some consequence arises that cannot be ignored (like a suit by the county to collect delinquent taxes). They could also sue each other to force the property to be sold under what is called a partition action. None of these scenarios will make all of them happy.

On the other hand, some legal procedures appoint a representative to manage on behalf of the heirs. They do not directly become co-owners. For instance, if the will was probated and an Executor was appointed, the Executor can unilaterally make the decision whether to sell or retain title to the real property without consulting the three heirs. If the will says something like “I give all my estate equally to my three children” then they are entitled to equal value from the estate, but are not necessarily entitled to receive the assets in kind. Instead, the Executor can sell the real property and distribute the money in equal shares to the heirs.

Arguments can be avoided with proper legal planning by the parents. Solutions could range from a) requiring the Executor to sell the property, to b) establishing a trust for the property which will be managed by a third party for the ultimate benefit of the three children. If you are an elderly parent, recognize that no one knows your family and your assets as well as you know them. It is your responsibility to see that a similar predicament does not befall your family. Talk to your Elder Law attorney to make a proper estate plan to avoid conflict.

Paul Premack is a Certified Elder Law Attorney and a Five Star Wealth Manager (Texas Monthly Magazine 2009-2013) practicing estate planning and probate law in San Antonio.

Original Publication: San Antonio Express News, September 16, 2013


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