Complicated family home/rental property arrangement - how to sort the will

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Sottovoce

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My father, a widower in his early 80s, lives in the family home. He gets rent from a basic lock-up premises. In between the lock-up and the family home, is my sister’s house. They are all attached and share a single rear access from the street - which is beside my father’s house. My sister’s house has right of way through the yard behind my father’s house to her yard. The rental property has no rear space.

My sister was gifted her house 20+ years ago, and is the primary carer for my dad. Another sibling, the eldest, lives in New Zealand. I live some hours drive away in Ireland.

My parents originally planned to leave their home to my eldest sister, the middle sister got the middle house (in advance), and I would get the rental property. But as the years went by, it became clear that sister no. 1 is not moving back to Ireland, and so would be very likely to want to sell the family home. Problem with this is that this would make things extremely difficult for my second sister, as although they’d have right of way, they have currently usage if a lot more that that. It is a very awkward layout etc. which I don’t get into here but suffice to say it would have a major impact on their day to day life, business, and hobbies.

I am of the opinion that as my sister has had many years of carrying the largest caring load, that the fairest thing to do, and the thing that would sort it for good, would be to leave the family home to my sister. Then leave the rental unit to my eldest sibling and myself. It can be sold as a stand alone property and doesn’t have any right of way etc. It is worth maybe 50% of the house though. I genuinely would be happy to inherit nothing, but imagine eldest might feel aggrieved at the lower amount. I think that they have not been around to help my parents, my other sister has, and it has not been easy.

However, I was thinking because of the gift of the middle house, the middle sister will have a big tax bill if they inherit the family home too. The middle house needed complete renovation when they got it.

Also what if dad needs the Fair Deal - that would probably mean that sibling 2 would have to pay back that to avoid selling the house?

My dad frets about this in the sense of being fair to all, but doesn’t really grasp the tax implications etc. probably selling the whole three premises makes the most sense but sister 2 is very emotionally attached.

Any insights/suggestions welcome! Thanks.
 
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This is very complicated.

Would the following work?

1) Give Irish sister the right to buy the family home from the estate.
2) Irish sister then extinguishes the right of way of the middle house and separates it from the family home so that there is no doubt about it.
3) Irish sister than sells the middle house
4) You and NZ sister divide the estate between you - the estate comprising of the workshop and the money owed by Irish sister for the family home.

If the proceeds of the sale of the middle house are not enough to buy the family home, she can either take out a mortgage or you can agree to leave it as a debt to the estate and you can inherit the debt. So she pays you off when she can.

Brendan
 
You need to start with some basics. You mentioned the house was "gifted". What exactly does that mean, are you 100% sure the sister owns the house and has not simply been given a right to live in it. Was a Deed of Transfer done and everything from a tax perspective squared away at the time?
 
Sottovoce said:
However, I was thinking because of the gift of the middle house, the middle sister will have a big tax bill if they inherit the family home too. The middle house needed complete renovation when they got it.

My dad frets about this in the sense of being fair to all, but doesn’t really grasp the tax implications etc. probably selling the whole three premises makes the most sense but sister 2 is very emotionally attached.
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I’d agree that the care your middle sister gives should be acknowledged but she has already been very generously gifted a house, the value of which would otherwise be shared, presumably, between the three of you.

I can understand why she would be emotionally attached to your father’s home but she can’t reasonably expect to move straight in without there being some sort of tax implication.

I’d agree with Brendan that the cleanest option would be to cut off the right of way to your sister’s house and to then sell it for whatever it’s then worth.
 
Thanks for replying.
To answer some questions:
The house is definitely legally transferred, I’m not sure if there was a nominal amount paid but the deeds are my sisters. I think it is all above board, legally & tax etc. I was younger and not involved at the time. My sister has completely renovated, extended and runs a business from that house now and is 60 so I think would not be in a position to take out a new mortgage. Their house is better than the family home at this stage.
 
Brendan, you suggested this - “you can agree to leave it as a debt to the estate and you can inherit the debt. So she pays you off when she can”.
I didn’t know this was a possibility. Not sure I understand how it would work - does that leave probate etc going on for years?

I suppose, from my point of view, I don’t want anything, my middle sister has borne the brunt of a ‘difficult’ family dynamic (one of our parents) by choosing to live there and always has been there for them. It has not been easy.

I think it’s more about ensuring they can continue to easily access their own house/park/use the yard etc than actually gets their hands on the house - I’d imagine that their own child could end up living in the house (my father’s) in the long run.

When I say she is emotionally attached, I mean to the whole place, it had been unofficially used as one house for many years as we grew up ie. door broken through (now blocked up) and yards/gardens all shared as one, a couple of generations lived in one of the houses etc. Small town. She won’t want to move.
 
I don't really have any advice to give, but I just wanted to say I admire your stance and fairness. If your NZ sister could follow your lead it would make things a lot easier.
 
PaddyW said:
I don't really have any advice to give, but I just wanted to say I admire your stance and fairness. If your NZ sister could follow your lead it would make things a lot easier.
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It would definitely makes things easier but it wouldn’t necessarily be right.
Sottovoce said:
When I say she is emotionally attached, I mean to the whole place, it had been unofficially used as one house for many years as we grew up ie. door broken through (now blocked up) and yards/gardens all shared as one, a couple of generations lived in one of the houses etc. Small town. She won’t want to move.
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So she’d like the full estate. That’s a stance I guess.

But does she expect to acquire this directly from the distribution of your dad’s estate after he dies or would she be prepared to buy out your share and that of your NZ sister?

Just because she may not be able to afford to buy you out doesn’t mean she should be gifted everything instead.

As the youngest (male) sibling in a family of older sisters, I have experience of being “told” what’s “right” and being expected to meekly comply. This relationship continues into adulthood. It doesn’t need to be accepted.

My advice would be to have a very strong think about what’s really fair, taking into account your own reasonable feelings.

I appreciate that your sister has kept things going at home but she has already been gifted a house for her trouble. You and your other sister have presumably paid rent or a mortgage over this period.

Starting with an assumption that the “right” thing to do is to make life as easy as possible for your middle sister is perhaps being too generous and could lead to an outcome you may regret in the future.
 
Sottovoce said:
My sister has completely renovated, extended and runs a business from that house now and is 60 so I think would not be in a position to take out a new mortgage. Their house is better than the family home at this stage.
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Your sister seems to want two houses?

That is unrealistic.

Can the access of the family home to the back yard be cut off. If so, then you could sell the family home and problem solved.

If your sister wants to keep the family home, she can sell her own house as it's worth more and won't need to borrow any money.

Brendan
 
A messy alternative would be to sell the workshop and give the proceeds to your NZ sister.

It might be better to set out the rough values of the properties and the estate overall.

Brendan
 
Sottovoce said:
“you can agree to leave it as a debt to the estate and you can inherit the debt. So she pays you off when she can”.
I didn’t know this was a possibility. Not sure I understand how it would work - does that leave probate etc going on for years?
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Let's say that family home is worth €100k and the rental is worth €50k.
And your father splits his estate equally between you and your NZ sister and leaves nothing to your Irish sister as she has already received a gift.

The Executor has to give you €75k and has to give your NZ sister €75k

But your Irish sister wants to buy the family home for €100k and has no money.

Sell the rental and give your sister in NZ €50k.
Irish sister then owes NZ sister €25k
Irish sister owes you €75k.

Of course, you have to receive the cooperation of your NZ sister or else find the €25k to buy her out.

Brendan
 
I think the fact is they are not two separate dwelling houses but a family complex so they have to be retained or sold as one unit. The only fair outcome for your sister in Ireland is for your Dad to leave her the family home. There seems no way your sister could live in her house if your Dads house was sold to a stranger. She would loose the use of yard/garden/outbuildings etc. So is her house worthless?

If your sister & family died tomorrow could the house be sold as a separate entity? Would your dad be able to allow right of access while makings his garden, yard & outbuildings private? I am trying to imagine a common lane way behind your dads house to a space at the back of your sisters where a new owner could park. If there was not a business being run from the house/yard could that happen? So the new owner could step out their back door and have adequate space to park and turn and perhaps a garden as well?

So is the main difficulty that your Dad has given your sister permission to use his yard/garden/outbuildings to run a business and the business would have to cease when he dies?

Scenario 1
Your Dad dies. Your sister closes her business (did you say she was 60? She could consider it early retirement). The sister in New Zealand inherits the house, ensures the boundaries are clearly defined and sells the house and land to a stranger. Your sister in Ireland continues to live in the house she loves but when she steps outside her back door she no longer has use or access to land belonging to the neighbours. Her entrance/exit are still there - her right of way has not been extinguished.

She has gained neighbours but lost her business, but continues to live in the house she loves. Your sister in New Zealand gets her wished for inheritance.

Scenario 2

Your sister inherits your Dads house. She rents this to gain some income but only gives them a small space at the back of the house as their own. She continues to run her business and eventually when she dies she passes everything on as one lot to her daughter.

She has no issues, and gains a lot - but she has fallen out with the sister in New Zealand. They haven’t spoken since the funeral.

Scenario 3
Your Dad dies. The sister in New Zealand inherit the house. They argue about the back yard/garden/sheds. Your sister sells her house, buts gets very little for it as new buyers cannot get their heads around title/access etc. she moves across town,

Your sister feels very badly done by. She has lost her Dad, house, business all in a few months. She is renting and cannot afford to buy, she has never paid rent or had a mortgage before. Life is hard. Herself and the sister never speak.

When you lay out the different scenarios like this you and your Dad will know best how both your sisters will react. Just pick the least painful option for all concerned. How both sisters react to the outcome is dependant on their personalities. Would your Dad sit you all down together, and explain his plan and his wush that his 3 children continue to be in each others lives after he dies, independent of what they inherit. By being upfront it might allow each person to express their opinion and be assured that Dad had considered all options before he made the will and that he understood no outcome was ideal.

Best of luck
 
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Brendan Burgess said:
Your sister seems to want two houses?

That is unrealistic.

Can the access of the family home to the back yard be cut off. If so, then you could sell the family home and problem solved.

If your sister wants to keep the family home, she can sell her own house as it's worth more and won't need to borrow any money.
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It’s not so much they want two houses, I think. They don’t want to move, they want to carry on living as they have been, with really shared access to both backyards/gardens. The right of way to the rear of their house would effectively be reduced to pedestrian access only, due to position of the buildings. Currently they use the family home yard to park vehicles, have use of outbuildings etc. All permitted by my parents over the years. If the family home is sold, (even if someone would buy it given the right of way) the would have to park well away from their house, and there would be an impact on their business and hobbies with no access to the outbuildings there.
It may be unrealistic but they never really left home, they chose to accept the middle house, which needed complete renovation - so they do have a mortgage - maybe nearly paid now though. Similar to maybe a farming family, they continued to use both yards/outbuildings as they had as a child. If the family home is sold, this means a complete change in how they live their life.

NZ sister is very hands off, very occasional phone call and no practical assistance at all. Irish sister is on call for my dad 24 hours a day and has been there for both parents despite being the ‘scapegoat’ child. Obviously I help too but not being nearby, it is less intense.

I don’t see any easy way of selling off the family home separately while keeping access similar to what she has now.

If they were to move into the family home (if left it or if they sell their own house to buy the family home, it would mean losing their business (don’t want to ‘out’ it but equivalent t to having a shop, having to start again renovating etc. but in a smaller house etc.

Anyway I’m rambling, the point is that it’s an awkward setup and they don’t actually want to move into the family home. They want to live in their own house but retain all the extras they have been accustomed to in terms of access etc. The actual house, if they got it, would likely become their child’s in due course.

All the replies have given me food for thought. I know it seems inherently unfair for one sister to get two houses. My dad worries about the scenario and there is a will but they are not content that the family home be sold and leave Irish sister “in the lurch”. The only way out that I could see was to leave it to Irish sister and split workshop between me and NZ sister. But whatever way it happens, it looks like Irish sister will have to pay - either through inheritance tax or owing the estate. I don’t think they’d have the cash to do either, and will not want to take on debt. So…??

They should have all thought all this through more before the house was transferred originally, the ‘what if’s’.

I don’t know the actual values but at a guess I’d say the workshop might be worth €80-100k but could be less. It gets €245 a week rent. The house could be €200k-€250k maybe a bit more. Middle house now worth more than that but maybe €100k 20+years ago when gifted. Very rough guesses. Not much to go on in terms of similar sales.

Thanks everyone for replying.
 
Can the family home not be sold with the back yard cut off? It's hard to answer without seeing a map.

Lots of people live in apartments with no front or back garden. Why can this not be done with the family home?

Brendan
 
Clamball said:
If your sister & family died tomorrow could the house be sold as a separate entity? Would your dad be able to allow right of access while makings his garden, yard & outbuildings private?
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Thanks for your very comprehensive reply! That’s really helpful to have it broken down like that. I will have to digest the scenarios. Having a family meeting sounds good in principle but the family dynamics…
Brendan Burgess said:
Can the family home not be sold with the back yard cut off? It's hard to answer without seeing a map.
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Thinking about it, it would be difficult - a large outbuilding would have to be knocked to create a lane way to sister’s house. The outbuilding she needs most. But not impossible. It would leave a yard for the family home but no garden as such, but as you say, not necessarily a problem.
 
Thanks for the clarifications Sottovoce. It seems clear that you Dad wants your sister in Ireland to retain all the access she currently has to the back of her house and the use of his yard/garden/outbuildings to continue to run her business. So he should at least leave her all that land.

Can the family home be sold with parking out the front and right of way pedestrian access to back door (say for taking in and out wheely bins) or else no back door access at all - change it to a window. Then he could consider leaving just the house to the sister in New Zealand. So give everything from the outside of the house at the back to your sister exclusively with no rights of access to anyone apart from those in the middle house. I am assuming the front of the family house has a front door onto a public road.

if that is not possible then leave her the house and lands exclusively. It gives her the best options for her to decide herself what taxes if any she owes, and how she can pay them. It is not up to your Dad to figure that out, she will work out her own solution.

Whether the house has its own septic tank and where that is located or is it on a public system could throw a spanner in these options. Same with well or public water. So consider where the services come in and source of them.
 
Would it be worth talking to an architect at this stage?

Sometimes they have creative solutions which lay people just never think about.

They might not come up with anything but then again, they might.

Brendan
 
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