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Is it possible to pay one person off from an estate, from the house, before finishing probate?


Janeway
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Would it be possible for me to buy out one of my siblings portion of our parents house before finishing probate? My younger sister is being very difficult about everything because she just wants the house sold and get her money. My other siblings are not eager to sell and neither am I. I am considering that maybe I should see if I can buy off my younger sister's portion so she is no longer a topic with this. Can we do this? I mean, I know I am always welcome to give her money. My concern is that at the end, she will step in and claim she has the right to take her portion anyway when the house does sell. The house is still in my parents name and will remain that way. 

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My father is one of three siblings. He was bought out of my grandparent's home by his other two siblings. The siblings kept the house for many years after the buyout. 

So, it seems possible but my guess is that state laws might vary.

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It probably depends on how the will is worded. My moms’ will stipulated that her house was to be sold and the proceeds divided. One of the siblings could have bought the house from the estate, but it would have had to be at fair market value. Ultimately, it was up to me, as the executor, to decide when to sell the house and I did so about six months after my mom died. The delay was to get work done on it and to give my brother, who was living in it, time to find another place to live. If a “buyout” Is possible, make sure the executor documents everything correctly. 
 

ETA: Also check real estate laws re: the deed staying in your parents’ names. It may need to be changed to “The Estate of…”

Edited by TechWife
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Contact a real estate attorney.

FWIW, there is often flexibility here, but typically the house will be appraised, the value affixed will be agreed on by all parties, and a contract will be signed by all parties stipulating that that on a certain date that individual's portion of the house has been agreed to be x and will be paid money as consideration and that portion of the title is assigned to whomever in return.  The Executor and the court will be involved.  You can't just willy-nilly hand over money and call it good. 🙂

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It is possible for you to buy out your sibling's share of house at fair market value, perhaps discounted for lack of controlling interest or lack of marketability.  However, as others have recommended, you may need an attorney's advice since state laws vary widely regarding real estate and probate court and to do the transfer paperwork and get new title recorded.

Note that if house eventually sells for *more* than fair market value on date of death, sister will not be entitled to a share of the appreciation since she sold her interest prior to appreciation in value.

Actually, as a person who deals with this stuff day in day out,  wanting to liquidate the house is a practical decision, so I assume she is causing rift in other ways.  Why do you and your other siblings want to maintain a non-income producing asset, assuming you are not converting it to a rental property?  Not only would house not produce income, but you would have upkeep expenses such as taxes, insurance, utilities, lawncare and routine maintenance.  Some clients choose to hang on to a home for a while due to emotional attachment, but realize that it comes at a price.

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I would weigh the timing on this as it will inevitably cost you in legal fees and may cause more tension if the share she buys ends up being significantly more or less than the house eventually goes for.

How long do you intend to hold off on selling the house? What's the purpose of waiting when the market is so strong right now? Do you foresee using it or are there a lot of assets in the house that are complex to divide up?

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I would think through a lot of scenarios before deciding on this.

What if the house goes down in value after you buy her out?  What if it goes up?  Either way there will be hard feelings in some direction.

What if it is destroyed in a hurricane or something?

 

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Also, one more thought... Is her desire to sell the house more about the money (whether she needs/could use it or not) or is it more about having things settled. Some people like business to be wrapped up tidily as quickly as possible. Other people like to leave things open ended and stay embroiled to keep their stake and process through things. Not just with a death, but in general. If the issue is the first - that she needs the money - the obviously buying her out could make sense. But if the issue is more the second (even if she also needs the money) then it's not actually going to help. You won't be resolving the business of things for her, only taking away her stake in it.

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