How Can We Preserve House for Our Brother?
We live in Stone Mountain, Georgia, and my mom is a widow with 8 adult children. She is 92 yrs young and my sister and I have been taking care of her business affairs. She owns her home and my brother lives with her. My sister and I would like to place her home in a revocable trust. Can we also have the siblings on the trust? My mom wants the house to go to the son that lives with her when she passes. However, the other siblings think the house should be sold and the proceeds divided among all the children. The house is valued at about $250,000. It has no mortgage. Can it be stipulated in the trust that the house will be sold to my brother for less than the market value after mom passes? Do we need a will to specify that my brother has the first option to purchase the house upon mom’s passing?
Your mother can direct what happens to the house either through her will or a trust and she can stipulate that your brother has the first option to purchase the property. She can set the price or simply say that it will be a certain percentage less than fair market value. I often prefer a trust for this purpose because it can give a lot of control to the trustees. For instance, if you and your sister were the trustees, you could manage the property for your mother during the rest of her life. Upon her death, you could determine the fair market value and make an offer to your brother. The trust can say that your determination of the fair market value will be final, not to be questioned by the other siblings. After the house is conveyed, you can then distribute the proceeds to the other seven siblings.
I also like this approach because it keeps the property in the family. There is a lot of scholarship recently that the sale of real estate and its division among many heirs has interfered with the creation of intergenerational wealth for many families. Once you divide up $250,000 in eight shares, there’s not that much for anyone. But if the house goes to your brother, he’ll then be able to maintain it for himself and ultimately for the family. However, once he owns the house, your brother should think about his own estate planning that would continue to keep the property intact and in the family.