In some cases, beneficiaries will get into real estate disputes over a parent’s home. When the parent passes away, the home transfers to the next generation. But if it’s jointly owned by multiple siblings, they may not agree regarding what to do with it.
For example, one sibling may want to keep the home, perhaps using it as a shared property or even asking to live in the house. Other siblings may already own their own homes and may simply want to sell their parents’ house. They have less of an emotional connection and just want to sell it to split the earnings.
To avoid these types of conflicts, a parent may put one child on the home’s title, making it jointly owned. When the parent passes away, the child on the title simply becomes the sole owner.
Pros and cons
This approach can help avoid disputes, as the house won’t go through probate and estate administration. The sibling named on the title becomes the owner, making for a smooth transfer.
The disadvantage, of course, is that other siblings may feel slighted. They may believe they had an equal right to their parents’ home.
There are two ways to address this issue. One is simply to talk with all beneficiaries in advance, explaining the decision to prevent conflicts. Another tactic is to ensure the estate plan remains equal, such as by giving a greater share of financial assets to siblings not named on the home’s title. This way, they still get a fair share of the overall estate.
As you can see, estate planning can be complex, so be sure you know exactly what legal steps to take.