Splitting farm & land. Tenancy in common?

P

Poliver

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Hi,

I am executor of my mother's estate comprising of a house and farmland. Everything has been left split 3 ways between myself and 2 siblings. Grant of Probate has been received (did that on my own, and would recommend anyone with a straightforward estate to do likewise and save a fortune!).

One sibling isn't interested in the house and would prefer more land in lieu.
The other sibling and I are more emotionally attached to the house.
We all get along very well and no animosity or greediness is a worry, thankfully.

The general idea is instead of 33% each it would be something like the following. (for the purposes of simplicity, let's assume the monetary values of the shares are equal, as they will be once the split is done)

Sibling 1 - 40% of land
Sibling 2 - 30% of land & 50% of house
Sibling 3 (Me) - 30% of land & 50% of house.

So far that seems straightforward enough to me (although I presume I will need to have the land surveyed and the proposed new boundaries measured/planned/etc.).

However, regarding the house, I was considering tenancy in common rather than joint ownership. Is there any benefit to choose one over the other? It's my understanding that in the event of my death, my share of the house would be passed onto my beneficiaries whereas joint ownership would mean it automatically transfers to the surviving joint owner instead.

Is there anything I should be aware of regarding future tax/inheritance issues on either path?
 
Poliver said:
Sibling 1 - 40% of land
Sibling 2 - 30% of land & 50% of house
Sibling 3 (Me) - 30% of land & 50% of house.
Click to expand...
But for this to be even roughly equal you would need a valuation of farmland and house. You might be surprised at what each is worth.

Poliver said:
The other sibling and I are more emotionally attached to the house.
Click to expand...
This is more life advice than financial advice but I would strongly advise you all to reach a financial arrangement where one sibling owns the land and another other owns the house, and appropriate boundaries are put in place so that one can be sold in future without the other. You don't divulge what your plans are for the house (renting, PPR, holiday home) but an emotional attachment alone is not a good reason for owning property in the long run. I know this is difficult and it can be hard to let go (I've been there) but it is all for the best.

If you go ahead with the split above there is so much potential for falling out between you. As you get older your needs and abilities to manage the house and farm will change. You also presumably have or will have spouses and children whose needs (and opinions!) will change over the years. If cash is short there are ways to structure a sale so that one of you repays the other(s) over time with minimal tax implications.

You have a good relationship with your siblings which is the most precious thing of all. Don't jeopardise it by entering into a complicated ownership arrangement that can only go wrong.
 
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