My father died several years ago. My parents’ house has long been paid off, and my mother probably has about $120,000 in liquid assets (bank accounts, CDs, and a retirement account). My sister and I are the only children and our names are on the deed as second life tenants. The property would pass to my sister and me upon my mother’s death.
I am 54 and my sister is 51. My concern is that my sister and her husband are both financially inexperienced and even irresponsible in all respects. They have no savings, no pension and are living on borrowed time in their current situation. They live for the moment without planning for the future. My wife and I are not well off, but we are in a much better financial position.
My income is double what theirs add up. My mother’s house is worth about $450,000. My worry is what to do when my mother dies, which I hope will be decades from now. There is no way my sister and her husband can afford to get a loan to buy me out of my half of the property.
Greed versus success
One option would be to force the sale of the house, which would leave them with cash but no home, and make me look like a heel. My wife and I have a very nice home and are considered wealthy by most of our family. Even if they took all of our mother’s cash and only had a $100,000 mortgage, I don’t know if they could change that.
I don’t want to be greedy, and I’m not saying it has to be a 50/50 split either, but I shouldn’t be punished for getting a fair or reasonable share of my inheritance because I’ve had a more successful career, made better decisions, and am in a better financial situation. It would be an uncomfortable topic to raise and, again, I hope it won’t be necessary for a long time.
Keeping my name on the house forever may be more of a liability than an asset. My brother-in-law has been known to avoid homeowner’s insurance on his mobile home, which he almost lost to foreclosure, and calls the insurance a “rip off.” If something were to happen and they were sued, or the house burned down, I would be at risk of loss too.
What are my options?
The responsible brother
Related: If I Tell Me The Sky Is Blue, She’ll Tell Me It’s Green’: My daughter, 19, will inherit $800,000. How can you invest in your future?
“You can’t live your sister’s life for her, or go back and make different decisions on her behalf.”
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Kind charge,
Splitting your inheritance 50/50 is the right thing to do. Everything else is the icing on the cake. However, if you and your sister I am listed as tenants for life, you both have the right to live in your mother’s home for the rest of your lives. Neither of you will be able to sell the property, so check the exact status of your inheritance.
“The remainderman has a future interest in the property, which means he has a secured right to the property upon the death of the life tenant or at the conclusion of the measurement life,” according to the RK Act. “When the tenant dies or the measurement life ends, ownership automatically passes to the remainderman without the need for probate proceedings.”
You cannot live your sister’s life for her, or go back and make different decisions on her behalf, including choosing a life partner, so you should remove any additional pressure to fix her life. You can only do so much for people, and half of this inheritance could help change her life if she used it wisely.
You were not punished. In fact, you will likely inherit a significant amount of money, so you should take the time to figure out how to spend, save, and invest it. You have a variety of options available to you: upgrade your home, downsize, purchase CDs assuming rates are favorable, and boost your retirement savings.
Financial advisors generally recommend looking for higher-quality dividend growth stocks, playing it safe with a portion of your inheritance, and keeping your money in cash for bad days. Consider diversifying into high-quality short-term bonds and looking into gold and other commodities. A side note: Inheritance is considered separate, not marital, property.
Life changing sum of money
I’m reminded of this woman from Texas who lived on the poverty line and inherited $157,998.14. Yes, she counted every penny. Good for her! She built her off-grid tiny house for about $31,000, which includes the cost of a DIY pitch for a tiny house. She also spent $7,000 on a dentist she found in Mexico who was both intelligent and experienced.
“I have a solar roof and two small wind turbines that generate all the energy, and a rainwater collection/purification system with a water heater and a recirculating shower that ensures I never run out of clean or hot water,” he told me. “Much of the tiny house is made from repurposed materials that I got from Craigslist. Pretty much everything.”
When your mother dies, assuming she does NOT leave you a lifetime lease and instead allows you to sell the house, you could offer to provide a financial advisor as a gift to your sister and her husband, to help them make smart decisions with this money instead of using it to purchase assets that will eventually depreciate over time.
But your instincts will guide you in relation to your sister and her husband. It’s generally not a good idea to go into business with a family member, and if you both co-own a home, you actually will. Maintenance, property taxes and other costs, from what you say, would fall on you. A clean break will be wise for everyone’s sanity.
You don’t say how old your mother is now, but I hope she will have a healthy life and that her house will continue to increase in value.
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Previous articles by Quentin Fottrell:
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