need ideas to keep from selling family home

[Michael Lauther]

We recently Inherited Our family home in Bethpage NY. There are 4 grown children that will share equally in the estate that consists of the residence worth approx. 320,000 to 350,000 and 20,000 in government bonds. No other cash.

The challenge is that one of the four beneficiaries has lived in the home for the last 51 years and has shared the home with her daughter and husband along with our mom who fully supported the home. Understandably our sister wants to remain in the home but will not currently qualify to get a mortgage to compensate the other 3 siblings for their share. Her credit score is approx 620 but her husbands is in the 500? and he is on disability with an income of around $4000 monthly and a candidate for bankruptcy. His financial problems are separate from my sisters but currently his is the only income and My sister is unemployed looking for work. Her anticipated income would be around 2000 monthly.

The other three siblings would not qualify for a mortgage on there own for reasons including already owning property that would make the debt to income ratio untenable and in one case troubled financial history.

I am thinking that one solution would be for us to accept the property and then transfer it to either a trust or an LLC which would rent it to My sister untill she could qualify to buy the others share. The thought would be that we could then possible qualify for a loan to satisfy those of us that need the cash or a portion of their inheritance and adjust the trust or LLc accordingly.

Any Thoughts would be appreciated.

[Tom Goans]

@Michael Lauther,

Your question and situation is extremely complex and delicate. Family issues can be extremely emotional and volatile. Almost in all situations, feelings are hurt - whether expressed or not. Some family members may feel favored or neglected.

I already see a huge issue with what is stated in your post - the ranging value of the real estate. As my father always told me, a property is only worth what someone will pay for it TODAY.

Because of the complexity of family issues and the emotions involved, it may be the wisest decision for all family members to have meetings with licensed professionals where the property is located. This way, each individual heir’s situation will be considered, all brought to the table, and options will be presented that best suit the needs of the total as well as keeping the peace.

Perhaps all family members can agree to sell the property to the one family currently living in the property and finance the purchase. This can lead to problems, but can provide the remaining family members a cash flow to pass on their heirs. If you consider this, it may be wise to hire a third party to collect the payments and send any notices required. Keep the other family members out of the potential argument.

There are many options to consider. Having meetings with legal and financial professionals would be extremely wise. Then, the blame is on them should someone become unhappy.

Best of luck in this sensitive family situation.