Elder Law Advocates - May 15, 2020
Dear Len & Rosie,
We have a home, fully paid for, in Sonoma. Both our adult children live in other towns with their families. Both our children were raised here and they already foresee the desire to return to Sonoma for their own retirement years. Is there a way to divide the property between them in such a manner as to prevent misunderstandings, hurt feelings, division between them as they attempt to use the one property?
It would be nice to pass your home to your children, especially as they can inherit it without a reassessment under Proposition 13. They can receive the home from you and pay the same property taxes you've enjoyed under Prop. 13. But the devil is in the details. What you are asking for can be difficult to pull off. We are reminded of Solomon offering to cut a baby in half to resolve a custody dispute. If you leave the home to both children, there are plenty of opportunities for conflict.
It's not so likely that they'll want to live together after a lifetime of living independently without you telling them to split up and go to their rooms when they argue. If you leave the home to both children, but only one lives there with his or her spouse, then your other child will not receive any actual benefit from what is likely to be the largest portion of their inheritance. If both children want the home and they don't want to own it together, then there are some things you can do.
You could pick a favorite and leave the home to only one child. Your trust could allocate the home to the share of one child, while leaving the other child cash or other investments. If the home is worth more than half, then the child receiving the home could have the option to buy out your other child, so each of them gets an equal share. You can specify an appraiser, such as the California Probate Referee, to avoid potential disputes concerning the value of the home upon your deaths.
If you don't want to play favorites, you can offer the home to the child willing to pay the most money, specifying as a minimum price the date of death value as established by an appraisal. If you think that it will be contentious, then you may want a third party trustee such as a professional fiduciary so that neither child will be in a position of power over the other. You could even specify that a neutral trustee shall put the property up for sale on the open market if your children can't close a deal within a certain time, say six months after your deaths. If either child still wants to buy it, then he or she will have to be the highest bidder.
Despite all this, the very first thing you should do is to talk to your two children. You may not actually have a problem. While they may want to move back to Sonoma, they may not want to live in your home at all.
Len & Rosie
Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at (707) 996-4505, or on the Internet at www.lentillem.com. Len also answers legal questions each weekday, Noon-1 p.m. and Sundays, 4-7 p.m. on KGO Radio 810 AM.