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My grandmother died 10 years ago, leaving her small house in a purely verbal will to my sister. My sister is a "poor musician" and could use the property for rental.

However, the will was not written down, my parents inherited the property by default. They have not rented it out or sold, as they don't desperately need the money and don't want the hassle. It would by now require moderate redecoration, which my parents don't want to commit to financially. They indicated they would be open to some kind of deal whereby renovation costs and rental property proceeds would be shared, but without any details. I also live abroad, so I am further removed from the situation.

Aside from personal problems that could arise, what could be practical and reasonable ways to structure some help for my sister? She cannot afford any renovation outright, but could manage a rental property.

The only idea that comes to mind is to lend my sister the renovation money and receive a share of the rent, with my parents retaining ownership (and thus value increase). Eventually the property would likely be inherited by us two anyway, assuming it isn't sold before. My loan would be repaid from rent money, and I think I can break even within a year or so (the works aren't major). But this seems quite bad; very complex, I invest in a property I don't own, and I make an unsecured loan to a family member.

The general sentiment of this website seems to be, if you want to help a family member then send them cash, however here it would irk that there is a productive asset lying spare, which could provide ample support. Give a man a fishing rod and all that.

It could be that there isn't a good option for me, but I'd like to canvas opinion on the matter.

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    How was the estate addressed to begin with? Was it not addressed at all?
    – Jon Custer
    Aug 8 at 16:51
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    I’m voting to close this question because this is entirely a legal question requiring hired legal advice.
    – Grade 'Eh' Bacon
    Aug 8 at 18:09
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    @Grade'Eh'Bacon Its not a legal question and I'm not asking about legal advice. I'm asking about whether there is a sane financial structure (personal loan? shared management of a rental property?) that makes sense in the circumstances...
    – Bennet
    Aug 8 at 19:23
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    One thing I am confused about: are your parents contesting that your grandma intended for the house to go to your sister, or are they aware and in agreement and so far simply nobody could be bothered to "make it official"?
    – xLeitix
    Aug 9 at 11:52
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    @bennet no sane solution to this would exclude a lawyer. You are basically asking how to enact a potentially as-of-yet unrecognized transfer of ownership of real property, without a lawyer. You are avoiding a few thousand in legal fees now that might cause catastrophic family fighting, tax bills, or other problems now or in the future. The legal issues won't go away on their own, they will get worse if not dealt with professionally. By a lawyer. Because this is at its core a legal question. Then, ask your lawyer to refer you to an accountant who does estate planning.
    – Grade 'Eh' Bacon
    Aug 14 at 14:43

1 Answer 1

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The situation with the property started because there wasn't a will.

Now 10 years have gone by.

However, the will was not written down, my parents inherited the property by default. They have not rented it out or sold, as they don't desperately need the money and don't want the hassle. It would by now require moderate redecoration, which my parents don't want to commit to financially. They indicated they would be open to some kind of deal whereby renovation costs and rental property proceeds would be shared, but without any details. I also live abroad, so I am further removed from the situation.

Unless somebody has been living in it, or regularly maintaining it, there is great risk that the house needs more than redecorating. We watched a house in our neighborhood sit empty for 3 or 4 years, it took a few months of a small team to fix the problems that developed over that time.

Unless there are written agreements the risk is that at some point in the future there will be disagreements regarding the split of the profits. There are many questions on this site regarding ownership splits that were verbal. and now nobody can agree.

Putting the house up for rent will bring tax issues for the parents, which will have to be resolved, they can't be ignored.

The only idea that comes to mind is to lend my sister the renovation money and receive a share of the rent, with my parents retaining ownership (and thus value increase). Eventually the property would likely be inherited by us two anyway, assuming it isn't sold before. My loan would be repaid from rent money, and I think I can break even within a year or so (the works aren't major). But this seems quite bad; very complex, I invest in a property I don't own, and I make an unsecured loan to a family member.

Adding you to the mix makes it even more complex.

A more straight forward way to provide help to your sister would avoid tax issues, and ownership issues.

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  • Agreed. It was a creative attempt to address the situation, but making it all work will require getting the whole family to agree on who actually owns the property and what should be done with it. Verbal intent is worth the paper it's printed in, otherwise.
    – keshlam
    Aug 8 at 12:57
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    Critical moral, and something I too have been bad about: WRITE A WILL OR SET UP A LIVING TRUST, unless you are entirely content with the government's default inheritance rules. And it's probably a good idea even then.
    – keshlam
    Aug 8 at 15:25
  • It's all true, the original sin of the situation is the lack of written will and my parents decision 10 years ago. I'm still interested if there's anything to be done today.
    – Bennet
    Aug 8 at 15:33
  • Without a will, it probably belongs jointly to your grandmother's children. Unless they agree, no, nothing can be done. It's not uncommon for property to be tied up that way; I can think of three houses in my own neighborhood that were jointly owned by groups of relatives who had trouble reaching consensus. ... So try to convince them, if you want to pursue this. That may involve buying people out, which may or may not be practical.
    – keshlam
    Aug 8 at 17:01
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    As per the question, convincing the owners (my parents) is secondary to knowing how to structure a deal financially. Or are you saying, the only practical structure is to buy them out?
    – Bennet
    Aug 8 at 17:09

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