Dear Moneyist,
My mother plans to leave her house, which is paid in full, equally to me and my sister. This has already been addressed with her will. However, she ultimately wants it to go to her grandchildren. I have one child and my sister has two children.
As it stands now, my sister and I will each inherit 50% of the house, meaning my child will inherit my half and my sister’s kids will get her half. My daughter is 12 years of age, and my sister’s kids are aged 16 and 19.
We know our mom’s intention is for the kids to equally have part of the home. Does that sound fair to you? When the house passes to us, what do we need to do so that the kids each get one-third of the house? My husband and I have an estate plan, but my sister and her husband do not.
Devoted Daughter and Sister
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Dear Daughter,
Inheritances, family homes and sibling rivalries often create a toxic cocktail that leaves family members and lawyers with headaches for years to come: the Troubletini, served straight up with a twist. When it hits, all hell breaks loose, and people use every slight and anger at parental favoritism as a cudgel in the ensuing legal battles. They are the spoils of a thousand dinner-table wars.
I say that not to alarm you, but to thank you for being one of the few people who respect their mother’s wishes and want to see them fulfilled. Many people would grumble over what life owes them, deciding to do one thing while their mother is alive, and doing something else entirely when she is gone. In many ways, this is a perfect post-Thanksgiving letter. Thank you.
It is fair and thoughtful of your mother to see that one-third share of this home would likely help her grandchildren immeasurably in life, either to buy their own home or further their own education, or both. My suggestion would be to leave it in a trust for when they all turn 21. So when your daughter turns 21, the three cousins can decide what they would like to do with the home.
The Internal Revenue Service would allow you to gift your niece/nephew payment toward their tuition and medical bills, as long as you pay them directly to the institution, but you may find yourself in the crosshairs of a gift tax if you want to pass on the proceeds of the sale of this house to them. Similarly, you and your sister could agree to add your children to the deed using a quitclaim.
However, I do not recommend that as a course of action here. Siblings fall out, nieces and nephews get into trouble (as do their parents) and the goalposts can shift at a moment’s notice without warning. If your mother wants her three grandchildren to receive equal shares of her home, it’s cleaner and safer to make that clear in her will, with provisions that they only inherit this home when they reach a certain age. Not every family will be as supportive, fair and loving as yours.
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