Posted on 02/16/2020 8:03:42 PM PST by madison10
This is swirling in my brain and there seems to be no good answer:
I am executor of my parents' estate. My mom passed away less than a month ago. In order to distribute the estate according to the will the farm property (and probably house) will have to be sold...or something.
Problem 1: the property has been in the family over 150 years. No one in the family farms it. We are at the end of progeny who "might" want to farm it. The one possibility is in high school still. All of the adult children but one live adjacent to the property.
Problem 2: one sibling who cared for our parents (sibling received a regular paycheck from parents for their care and lived with parents) currently lives in the family home. Said sibling is single, almost 50, has trouble walking due to arthritis, and now has no job. The fourth home "on" the property is where the sibling lives.
Problem 3:The house is 44 years old and has not been updated much. The yard is probably at least three acres to mow. Honestly, I am not sure the other siblings would want to buy the house or are able. It needs fixing up for sure.
The dilemma is: what would YOU suggest occur? There seems to be no answer in my brain. There is the business side of this, but the emotional/legacy side is tearing me up. Not sleeping a ton.
Thank you, oh wise ones.
You probably need to sell if that is the consensus of the beneficiaries. If they also want to keep the land in the family, I would look at leasing the farmland only. If it works out financially, the sibling living in the house rent free could take a reduced portion of the rent proceeds, which would be distributed out to the other siblings who are not living rent free on the property.
If you get a fully stepped up basis as of date of death, just sell and distribute the interests.
If there is capital gain, distribute the ratable interests to each sibling and sell. Each sibling can choose to do a tax deferred 1031 exchange into another investment property or pay the tax and keep the cash.
You don’t specify how many acres are involved with the farm, or what it’s good for, or how many houses (4th?) are on the property. But here’s a general idea, which was very commonly done in the midwest US for decades. Divide up the property into farmable land and “house”. Typically the farm land is salable to neighboring farmers who will remove barriers and have the benefit of a larger contiguous plot. Or to anyone else willing to pay the price.
The “house” should be left with 5 acres or so, which then makes it a “farmette” which is always a desirable property for those wishing to “live the country life” with animals and a large garden, maybe a few hobby crops, etc. These have traditionally sold at premium prices even if the house is a fixer-upper because they are scarce and demand is high.
If the family member is living in a house within that parcel, either carve it out too or work with your lawyer to create a lifetime lease agreement as long as the person is alive so it can be sold but the person can continue to live there. Make it part of the purchase contract, all of which a lawyer can arrange.
Maybe there’s more to it but it seems to me this is a pretty straightforward solution. Good luck, I know it’s hard and stressful. But sincerely, talk to some legal and real estate professionals that you trust, this is what they’re good at.
Also, I thought of turning it into a tree farm. I am 11 years older than the sibling and would not help much. Thank you for your great ideas.
Rent it out. 50 year old can go live with a family member and do housework and errands for them for keep.
Every five years re-assess.
Make improvements one at a time with any profits from renting.
Everyone donates their share to the disabled sibling who lives in the house. He/she is family and possibly the one in the worst circumstance. Then nothing needs to be sold, but all of you have to be magnanimous, in the first place.
1.) Nobody wants to farm it, but they probably want the monetary value. Sell the farm. It is always sad, but life goes on.
2.) Your sibling who cared for your parents should be helped IMO. There should be an accommodation between all of you to do this if it is possible legally. When my mother passed, our family fractured, but thankfully, my oldest brother and his wife who lived with her did the bulk of the care, and they got the house. As they should have.
3.) Just sell the house regardless of the work needed. Get what you can.
Sorry for your loss, FRiend.
Try to reach a 100% consensus from everyone involved on how to proceed. Just tell them if that condition cannot be met that you have no alternative but to seek legal counsel. #2 get legal counsel anyway so papers can be drawn and signed on the legal thing to do. #3 Get some rest. Share this burden with them and the attorney so it’s not all on you.
While I understand that the property has been in the family for a very long time and that you have some sadness at the possibility of having to end this familial ownership tradition but, you must face the reality that no one of the current recipients designated in the Will is willing to take on the responsibility of carrying on this tradition and the Will tasks you with overseeing the division of assets in some proportion among the beneficiaries.
Thus, the logical thing to do is sell and divide the proceeds in accordance with and in honor of the respects outlined in the Will.
The only way to avoid this is if all the beneficiaries agree to defer the process to accommodate the unemployed ailing person. But, if they object then that person will have to find other arrangements.
It would have been better had the assets been in a Trust and you were the Trustee with Absolute Power of Attorney. Why? Because then you would be the sole decider.
The others would not have any legal input or legal recourse so, you could decide to defer the distribution to accommodate the unemployed ailing person as long as you deemed necessary to accommodate that person’s need if you chose to do so. The other parties would have no choice but to accept your decision.
“what would you do? Tis a Puzzlement”................What kind of farming was it before? Dairy? Corn? I hear there is going to be a large demand for a certain strain of Hemp. There is still a lot of $$$$$$$ to be had in the field.
Vanity: what would you do? Tis a Puzzlement...
Drink Heavily.
Honestly, I didn’t read anything past the title.
It’s just a good go to in many situations.
72 acres tillable. No buildings, except like barn with the house. Rural, but not overly so. No woods. Very flat.
Man, I am in a weird sort of the same situation, if only in existential bits and pieces. Without knowing the full background, have you considered having the farmland parceled and keeping the family home, and using at least some of the proceeds to have the required maintenance done? As far as the sibling goes, that’s another tough nut to crack. My mother is 80, and several years ago we all decided that the family home that was built when I was an infant was going to stay in the family. Subsequently, my youngest sister (approximately your sibling’s age) had a nervous breakdown during a messy divorce, lost her job, moved back into the home, invested a good chunk of money to remodel the downstairs as her private apartment, and now the middle sister is giving me guff about feeling like I somehow have some sort of birthright to a home she wasn’t even a zygote when it was constructed, and it would be sold to pay the taxes and other expenses. And this all evolved without my knowledge or consultation. Needless to say, she can go piss up a long rope in a stiff wind. So, I don’t have any advice other than to follow your instincts on this one. Don’t overthink it. When your gut tells you ‘yes’ or ‘no’, follow it. Given my mother’s health, I may be doing that in the very near future. You’re the executor - don’t get manipulated.
“It would have been better had the assets been in a Trust and you were the Trustee with Absolute Power of Attorney. Why? Because then you would be the sole decider.
The others would not have any legal input or legal recourse so, you could decide to defer the distribution to accommodate the unemployed ailing person as long as you deemed necessary to accommodate that person’s need if you chose to do so. The other parties would have no choice but to accept your decision.”
I AM the sole decider, not just the executor, that is why there is a puzzlement. Thank you so much! I have trying to find a way to please everyone.
My brother happens to be a top specialist in this precise area. ORDINARILY there is some sort of conflict (in terms of who thinks they are entitled to what) between and among the heirs. Specifically, the notion of the “inside” sibling who cared for the folks but lived there for free and the “outside” siblings who are more or less disinterested in the property other than their share of the estate. That has happened ten million times. I have worked with him to resolve some VERY complicated estates.
It does NOT sound like you have the kind of interfamilial conflict....which is great, because it will save a TON of money...and while that removes the legal unpleasantries, it does not remove the other aspects, nor does it relieve you of your obligations as executor/or administrator of the estate. But I could be misreading your vanity.
I am sure he would be perfectly OK receiving a phone call describing the situation. FRmail me if you would like his tel number.
I am absolutely sure he will bring up 5 (if not 15) things you haven’t even thought of in a brief convo, and there will be tax considerations he is very knowledgeable about.
The family meeting should help clarify what the heirs want to do. Not knowing the acres involved, leasing to a local farmer may be an option. Use the lease money to fix up the old home and sell it. Granddad told me buy land, God don’t make it any more. Have the meeting and that should help set your course. 3 acres or so and a home sounds like a good little horse farm or a place to raise a steer. Good luck and a prayer for you.
see if someone can find oil or natural gas on the land then lease them a plot.
Everyone goes home happy
Unless a family member has stepped up because they LOVE the idea of farming...sell it. Next year will be 100 years of my hubs family farm...its leased with option to buy by neighbor ...Sale in @4 years...sure it’s hard to let go, but harder to farm unless you are well invested in more ways than one.
Can you bring an outsider to act as an arbiter if the meeting gets heated such as trusted family friend, another relative, a lawyer, a pastor?
Not a good idea. It attracts thieves who think it's MJ. I'd suggest this crop if there is a very big healthy family with guard dogs and donkeys.
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