If you own real estate, it is certainly possible to leave it to multiple beneficiaries at the same time. This often happens when parents pass away and leave the family home to two children, for example. It can also happen with vacation properties, such as cabins or cottages.
There are a few different strategies that can be used. In some cases, each child simply inherits an equal ownership share. In other situations, parents will add children to the deed as Joint Tenant with Right of Survivorship, which could facilitate property transfer, potentially skipping the probate process. Yet another tactic, which we mentioned in a previous post, is to put the real estate into a trust and to list the children as the beneficiaries of that trust.
However, no one scenario is right for every family. Some strategies can ultimately cause costly, contentious disputes you are likely hoping to avoid.
Weighing the risks and benefits
In some cases, leaving real estate to multiple people may be a viable option if you do not want to choose one child to inherit the property. If both children have fond memories of going to a family cottage growing up, for instance, they may be happy to be joint owners after your passing so that they can continue to take their children or grandchildren to the same property.
But this approach can sometimes cause disputes. For instance, if you leave a family home to two children, one may see it as a valuable financial asset that they want to sell, while the other may see it as an opportunity to own a home they can live in.
When parties are in conflict, they might consider a sibling buyout. On the surface, a buyout seems relatively simple: The sibling who wants full ownership buys out the other person’s share. But even this can lead to disputes because it can be very expensive. If they can’t afford the buyout, one person may feel that they are essentially being forced to sell a property that they would prefer to keep.
Often, it can help to simply have conversations with beneficiaries in advance, regarding how they view the property and what they expect. Doing so can help you create a comprehensive estate plan that puts your family’s future first.
