Need help finding a solution to a real estate inheritance

[Kekila Keuma]

Hello,

I need help finding a solution to an issue that my fathers house is creating.  My father and I are trying to figure out what to do with his home after he passes.  It's the home we grew up in and its a home that no one in the family would be able to purchase ever again.  His home is in Oahu, Hawaii and is valued at around $1 M (bought for $80k back in 60-something).  He has no other assets and three children to leave it too.  The three children does not include myself since I don't want any part of the house.  There is $700k of equity in the house.  None of my siblings have the means to purchase the house for market value, that way the other siblings can be compensated equally and one sibling doesn't inherit an unequal share of equity.  Unless I am able to come up with a plan, or my siblings suddenly strike it rich, the current plan is to just sell the house and split the profits three ways.

The best plan I had was to have the house left to me, I would refi for 80% of the value, give each of my siblings $100k and then use the remaining equity to put an ADU on the property. The ADU would then be rented as a short term rental to help cover the note and the original house would be rented to one of the siblings. This plan collapsed when I did some digging and found out that Oahu has banned short term rentals and they are actually enforcing the ban with $1000/day fines.

I have no idea how to keep the house in the family and ensure that when my father passes, any inheritance is equally split between my three siblings.  I'm hoping someone on here can think of something creative.

Thanks,

-Kila

[Doug Nordman]

Quote from @Kekila Keuma:

This very situation happened with my grandfathers beachfront house in Waimanalo.  $2.5M and he left it entirely to one brother.  It destroyed the family.  None of my uncles and aunts speak to each other because of it and its been decades.  I am trying to avoid the same thing from happening to my siblings and me.

  Do you have a referral for an estate planner?

Thank you gents,

-Kila

Kila, I'm in Mililani.  We've discussed similar issues in our family, and here's a couple of ideas.

- Contact Michelle Hobus (estate planning lawyer) at Sterling & Tucker about putting the house in a revocable living trust.  When your father passes (or whenever he chooses to) he can pass the house to the successor trustees who have the power to dispose of it-- or arrange loans to buy out each other.  Michelle may have other ideas which are better than mine.  She took care of our estate plan, which includes a RLT and a bunch of other details that your family may want to use.

or

- Your father could set up his estate to pass the house to one of you.  He could then (separately) buy single-premium permanent life insurance policies in the names of your siblings so that everyone gets either the house's equity or the amount of the life insurance.  Again, I'd work this with an estate-planning lawyer.