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Don’t divide ownership in real estate.

Oftentimes clients who have family real estate interests want to give each of their children an interest in real property. However, this does not happen nearly as often as clients who visit their attorney asking how in the world they can sell (or build on) a property when they own only a 1/32 share! Think about it. More often that not, heirs often do not even know the other owners. This (nightmare) scenario is usually created when several owners in succession die without a will.

Consequently, you can imagine how I wince when someone is responsible enough to make a will, but then tells me that their parents left them a 1/4 interest in the parents’ home, and they want to give each of their three children an interest. This is the very type of nightmare that writing a will was meant to avoid. If you want to leave a property in such a manner that all your children and grandchildren can use it, call my office at 936-435-1908 to schedule an appointment. It can be done, but all considerations must be evaluated prior to the drafting of documents.

Lets say that Mike and Carol buy some acreage with a cabin as a vacation home. The family loves it because the scenery is beautiful, they can keep horses on the property–and it is just a three hour drive from their home. Mike and Carol envision their grandchildren and greatgrandchildren coming out to the property, riding horses, spending time together, and thinking fondly of their grandparents and great grandparents. So Mike and Carol leave the property in equal shares to their six children. After Mike and Carol’s death, the children do use the property for a while. However, some major foundation repair is necessary, and noone is willing to pay the cost to have it done. Greg offers to pay a sixth, but Peter and Jan will not participate, and noone is willing to pay “their share”. Greg has been caring for the horses and cutting the underbrush, but he becomes ill, and noone else lives close enough to take over these regular tasks. Marsha discovers that they can sell some of the pine trees on the acreage and make enough money to make the repairs, and pay for someone to do some regular maintainance, but the timber company needs the signatures of all the owners. Bobby is dead, and his wife hates the family, and will not cooperate. After a while, Bobby’s son moves on to the property full time. He is, after all, a 1/24th owner, and this saves him the cost of rent, or a mortgage. Bobby Jr, is a habitual drug user who uses terrible language. Noone wants to go on the property while he is there, and noone can get rid of him. Meanwhile, the area where the cabin is located is becoming increasingly developed. It may not be worth much as a vacation home, but it is very valualbe as commercial property. Marsha would like to sell the property, and buy a new vacation property that would be closer to the family, and more suitable. The problem is, four of the original six children are dead. The property is owned by grandchildren, great grandchildren and relatives of spouses. Marsha can only sell the property by first filing a partition action, and serving each of the 24 owners.

You probably think that I am exaggerating for effect. No, no, no! In one week, I had two different clients with properties every bit as fractured. Lawyers do not need work this badly! So avoid dividing real estate among a group of owners unless you know what the end result will look like. Let’s look at how Mike and Carol could have done it, if they had been willing to listen to their attorney.

Mike and Carol create a Brady Vacation Trust. The trust owns the property. Greg, who is the most responsible, is appointed trustee. He is given the authority to manage the property, make repairs, and request contributions. He also has the authority to restrict the use of the property by the descendants, and to terminate the ability of someone to use the property if they refuse to participate in the upkeep. Fortunately, Greg has the authority to sell the lumber, so he does not even need to ask for much upkeep. When the character of the area changes, Greg has the ability to sell the land, and buy new land which will serve the same purpose. The trust allows a majority of the survivng siblings to appoint a successor trustee. If Mike and Carol want, they can put all kinds of requirements in there, like Greg cannot sell the property if one of the orignial six siblings wants to use it, or the property can be sold anytime a majority of the users want to sell it. The point is, as a lawyer, I can make almost anything Mike and Carol want to happen with the property, happen, and I can do it without fracturing the ownership. If you would like to discuss in more detail the best way to leave real estate, please contact my office at 936-435-1908, or at 281-723-2791 for Sugar Land or Stafford residents.

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