Family Inheritance Planning
Posted on August 13, 2008 by Her and tagged family, future
This weekend was my maternal grandmother's 85th birthday, and my family threw a big party for her. Our family is scattered across the country, but most of the family made the trip to celebrate with her. Her home is the heart of our family. Everyone calls it "the Big House" as in, "Will you be at the Big House for Christmas?" It has been in our family for generations and serves as the gathering place for every family celebration. But lately the big house has become too big for my grandmother. Even though there are other family members living there with her, nobody hears her frequent falls because the house is too big.
So the future of the Big House was called into question this weekend, with everyone gathered there. What will become of the Big House when grandmother is no longer able to live there, or when she passes away? The entire family agrees that the house should stay in the family, but who exactly will inherit it is undetermined. The six-bedroom house is much larger than the typical modern family needs. It is older and costly to maintain: a recent roof replacement alone cost $30,000. The property is huge and requires a gardener. The property taxes are very high. Who in my generation of grandchildren could even afford to keep the home?
We proposed that possibly, if the timing worked out in a few years, we could. Our income is higher than almost all of my other cousins' incomes, so we would best be able to afford it. Another option would be a cousin and his wife, who could share the home and expenses with their parents. Though the expenses would be a burden, it would mean preserving a family bond for one more generation. To me and my family, that is priceless.
Have you ever taken on a large financial obligation out of duty to your family?
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ACB | Aug 13, 2008
A belated happy birthday to your grandmother!
My parents live in a home like that, five generations of my family were raised there, and it's very special to all of us. With five bedrooms, a workshop, and a backyard the size of a small park it requires a lot of maintenance. But it is far more than simply a house, so we've been trying to decide who in my generation would take over, and so far no decision has been made. I completely understand wanting to keep the home even though it could be a 'financial burden', some places are more than places. That's wonderful that you would be able to take it on :)
Ezumwalt | Aug 13, 2008
Oh, I understand the emotional connection. My grandfather gifted what is left of the 100+ year old family farm to my mother and her brothers. This year, one brother needed the money and wanted to sell his portion of the farm. Thankfully we were able to step up and offer to buy that portion.
I do warn you that even if you are buying property to keep it in the family, there will be some resentment and family drama involved. One uncle was upset that we were doing anything with the property while my grandfather was alive, one was upset that the wifes had to be put on the title, the one selling it thought I was lowballing the price and my grandfather didn't understand why the appraisal came be half of what he thought it was worth.
But it is worth keeping the farm intact for another generation.
dogatemyfinances | Aug 13, 2008
We had a house like that, it was gone for reasons that are still not quite clear to me when I was barely a teenager.
Selling the Big House doesn't take away the memories, it just makes it a special place that exists in your memories.
My immediate thought is why does one family member have to own it? Could it be put into a trust of some sort? The question is then how to apportion the costs among descedants. And what to do with the house when you are visiting there. If it is in a good location it might be possible to rent it out and earn the income to upkeep it. Or possibly ownership is in trust but whoever lives there has to pay the taxes and maintenance.
As for you taking it on, do you want to live in that location?
I wouldn't take on that expense out of obligation to my family. If it's really affordable for you, and wouldn't be that much more expensive than your other housing options, then, go ahead. But it seems crazy for your family to expect you to take on a major financial obligation just because you, out of all your cousins, are best able to afford it. Will all your family still flock there every year once your grandmother is gone? Will you be hosting the entire family every Christmas, even when you have your own family? I know it's tough to lose a family home -- my dad still mourns the loss of his childhood summer home. But you may have more important obligations because of your higher income -- what if someone gets laid off and sick at the same time, and no one but you can afford to help them out? Is it really worth spending that extra money on the house? Here's another option: renovate the house so that half of it can be rented to another family.
Wow -- this is tough. I am big on family legacy and if i were in your shoes I would be thinking how can I make this work. Family means so much to me I would consider carrying a big financial obligation for the family and its legacy. But is it a wise move -- I doubt it. I think renting all or part of the house might be the bestt move if its too much of a burden. Or maybe renovating the house into a duplex so you and another family member can live in each part? You can always renovate it back once your finances are in a position where you can live in the whole house. Any way you slice it though it will be tough.
Traciatim | Aug 13, 2008
Though I'm sure there is a great emotional attachment to the home, have you considered selling it and using the proceeds to open an investment account that generates some income to be able to rent an appropriate gathering spot and help pay for travel costs to get the family together either annually or every other year?
Each time each there could be a short list of 3 places to go and then take a vote and use the funds to pay for rental space, activities, and travel costs.
Seems plausible.
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