Will/Inheritance Question

[BondHawk]

I know the correct answer here is to ask an attorney, which I will, but figured these are common enough issues that some of you fine folks might have some good anecdotes and/or snarky comments to share....

My mother owns some farmland and our original farmstead, along with an investment portfolio that came from the previous sale of the majority of the farm. My brother and I both live 2-3 hours away and have no intention of returning home one day to till the land - though I could see the outside chance that he could possibly want to retire and live there eventually, etc. Meanwhile, I have three kids and he has one from a previous marriage, none in his current marriage and probably won't. The kids are set up by Grandma with life insurance policies on her that should cover their entire college experience and the down payment for a house someday. So, two basic questions:

1. As the assets will eventually pass 50/50 to us, how do you legally prepare for a situation where one of the 50% owners wants to sell, and the other does not - or at least does not right now, or doesn't know what they want to do? Can you write in a "grace period" of sorts where if one partner wants to retain the property, they have 12-24 months to buy the other partner out before it goes up for sale, or something like that? Just trying to avoid any potential for the nasty family disagreements that you always hear about.

2. What is the best way to handle language in my mother's will about one of her sons pre-deceasing her? i.e. if I die before she does, where do my 50% of the assets transfer to - My wife? Her blood relatives in the form of my kids? Some combination of both? Bear in mind that my brother is remarried and his current wife will have no legal rights to his child, so I would argue his half shouldn't transfer to the wife (since any relationship she has with my niece will be at the discretion of my niece's mother), whereas my wife should unquestionably have every right to the assets I would have inherited, which she would then pass onto our kids. But it is difficult to write that into my mom's will without causing massive internal family problems...

Is the best answer for both sons to set up their own trusts which the assets would pass into, with instructions for those trusts to distribute assets however we both see fit? Thereby removing the burden from my mother and putting it on her heirs? My sister-in law is great and everything, but it makes no legal sense for her and I to be 50/50 owners of this property should my brother theoretically pass on before it is liquidated.

TIA

 

[AughtSixHawk]

You are right that this is a common enough situation, and because of the dollar amounts involved you really need to consult an attorney. But you know that already. So, in the spirit of the internet and friendly banter (and not legal advice to be relied upon) I submit the following:

(1) Absent a will to the contrary, inheritance will follow the rules for decent and distribution that appear in the Iowa Code. I'm not licensed in Iowa, but give this a look: https://coolice.legis.iowa.gov/cool...info&service=iowacode&ga=83&input=633#633.210. Of particular interest to you is 633.219, which begins:

633.219 SHARE OF OTHERS THAN SURVIVING SPOUSE.
The part of the intestate estate not passing to the surviving
spouse, or if there is no surviving spouse, the entire net estate
passes as follows:
1. To the issue of the decedent per stirpes.​

You and your brother are "issue;" your wives, ex-wives, domestic partners, or life-mates are not. If you predecease your mother, absent a will to the contrary or a trust agreement governing the property, all assets of the estate will go to your kids. That's what per stirpes means.

That's the default. As to how the will should read, that depends on what your mother wants. If your mother wants to preserve family property within the family, I'd respectfully argue that the default makes a great deal of sense and to draft a similar provision in any will. But facts, circumstances, and individual desires rule the day here.

(2) Regarding the 50/50 ownership of property where one party wants to sell and the other doesn't, that is a recipe for litigation and a difficult Thanksgiving. It will also (much like the insurance policies your mother has purchased) put a few lawyer's kids through college should it come to that. So you are right to want to plan in advance.

If this were a business arrangement, there would be some kind of buy-sell agreement in place to cover this situation. Similar agreements can be reached post-facto by heirs, before the fact the best (and perhaps simplest) solution may be to have a trust agreement or will specify how a tie is to be broken. There are lots of ways of doing this--some involve naming a third party to place his thumb on the scale one way or another, etc. Talk to your lawyer about this--it is the thorniest problem in your post.

(3) As to how you should inherit the property, I'm not licensed in Iowa so I'm not even going to venture a guess (even anonymously on the internet). I know nothing about Iowa tax, and you'd want to talk to someone who does. Depending on the age of your children, it does sound as though trust agreements would make sense for both brothers.

Good luck.

 

[BondHawk]

You are right that this is a common enough situation, and because of the dollar amounts involved you really need to consult an attorney. But you know that already. So, in the spirit of the internet and friendly banter (and not legal advice to be relied upon) I submit the following:

(1) Absent a will to the contrary, inheritance will follow the rules for decent and distribution that appear in the Iowa Code. I'm not licensed in Iowa, but give this a look: https://coolice.legis.iowa.gov/cool...info&service=iowacode&ga=83&input=633#633.210. Of particular interest to you is 633.219, which begins:

633.219 SHARE OF OTHERS THAN SURVIVING SPOUSE.
The part of the intestate estate not passing to the surviving
spouse, or if there is no surviving spouse, the entire net estate
passes as follows:
1. To the issue of the decedent per stirpes.​

You and your brother are "issue;" your wives, ex-wives, domestic partners, or life-mates arconvpleasant. If you predecease your mother, absent a will to the contrary or a trust agreement governing the property, all assets of the estate will go to your kids. That's what per stirpes means.

That's the default. As to how the will should read, that depends on what your mother wants. If your mother wants to preserve family property within the family, I'd respectfully argue that the default makes a great deal of sense and to draft a similar provision in any will. But facts, circumstances, and individual desires rule the day here.

(2) Regarding the 50/50 ownership of property where one party wants to sell and the other doesn't, that is a recipe for litigation and a difficult Thanksgiving. It will also (much like the insurance policies your mother has purchased) put a few lawyer's kids through college should it come to that. So you are right to want to plan in advance.

If this were a business arrangement, there would be some kind of buy-sell agreement in place to cover this situation. Similar agreements can be reached post-facto by heirs, before the fact the best (and perhaps simplest) solution may be to have a trust agreement or will specify how a tie is to be broken. There are lots of ways of doing this--some involve naming a third party to place his thumb on the scale one way or another, etc. Talk to your lawyer about this--it is the thorniest problem in your post.

(3) As to how you should inherit the property, I'm not licensed in Iowa so I'm not even going to venture a guess (even anonymously on the internet). I know nothing about Iowa tax, and you'd want to talk to someone who does. Depending on the age of your children, it does sound as though trust agreements would make sense for both brothers.

Good luck.

That all makes sense, I'm sure it will make for pleasant Thanksgiving conversation.

 

[Tenacious E]

That all makes sense, I'm sure it will make for pleasant Thanksgiving conversation.

With regard to number two I would make damn sure you are not unilaterally conversing with your mom about what to do with her stuff. Involve your brother or you could very well be inviting litigation as you do not get to plan out what she does with the farm, she does.

 

[BondHawk]

With regard to number two I would make damn sure you are not unilaterally conversing with your mom about what to do with her stuff. Involve your brother or you could very well be inviting litigation as you do not get to plan out what she does with the farm, she does.

No doubt, that's what Thanksgiving is for.

 

[Tenacious E]

No doubt, that's what Thanksgiving is for.

Very good. This is not an uncommon situation at all and there are a number of ways to address your concerns with the involvement of a good estate planning attorney.

 

[BondHawk]

I realize it is a busy week with all of the immigration and rank 'em threads (perhaps someone can combine the two?), but does anyone else have any thoughts on this before I let it die? Mostly trying to figure out how to effectively prevent and/or break the 50/50 tie scenario that I'm sure many people have had to work through.

 

[Tenacious E]

I realize it is a busy week with all of the immigration and rank 'em threads (perhaps someone can combine the two?), but does anyone else have any thoughts on this before I let it die? Mostly trying to figure out how to effectively prevent and/or break the 50/50 tie scenario that I'm sure many people have had to work through.

It just all depends on what your mom wants. There are myriad ways of effectuating what she wants. If she wants to keep the farm in the family, there are ways of doing that. If she treats the farm as an asset to be sold or kept however the beneficiaries want, there are ways of doing that. Frankly, I think that conversation being initiated by her kids could be viewed as unseemly. However, if she is open about how she wishes to dispose of her assets, then that is different. In the end she will need to see an attorney who will interview her and take inventory of her assets, ascertain what her intent is, and draft a document or documents to achieve that end.

 

[BondHawk]

It just all depends on what your mom wants. There are myriad ways of effectuating what she wants. If she wants to keep the farm in the family, there are ways of doing that. If she treats the farm as an asset to be sold or kept however the beneficiaries want, there are ways of doing that. Frankly, I think that conversation being initiated by her kids could be viewed as unseemly. However, if she is open about how she wishes to dispose of her assets, then that is different. In the end she will need to see an attorney who will interview her and take inventory of her assets, ascertain what her intent is, and draft a document or documents to achieve that end.

She is on top of all of that, and is very much the one bringing it up - she is proactive and organized to a fault. I'm just trying to help her (and all of us) avoid pitfalls that she may or may not have considered.

 

[Sooner-Be-Dead]

Sounds like there's enough assets and issues that an estate planning attorney should be consulted.

Also sounds like there'll be enough to go around, such that one sibling could take farm property and the other financial. Or some combination.

 

[Hawk96]

Sounds like there's enough assets and issues that an estate planning attorney should be consulted.

Also sounds like there'll be enough to go around, such that one sibling could take farm property and the other financial. Or some combination.

Why don't you have your mom split the land via survey while she's alive into multiple parcels so that the value is equal and your brother can get the piece(s) he may want to live on and you get pieces you can sell. You could be a nice guy and give last right of refusal of the option to purchase at appraised calue and possibly at a slight discount as you'd have no realtor costs on your end in this case. That way if he wants all the land he has the option to get it.

Other option is 50/50 on the land and if you want to sell down the road and he doesn't it comes to a partition action which can get nasty.

 

[hooper56]

You are going to want to get with someone from the Iowa development office. They can guide you on how you can get the property over to the U of I without paying a bunch of taxes. Oh, and they can help you with some good tickets to the games as well. Win-Win!!!!

 

[BondHawk]

Why don't you have your mom split the land via survey while she's alive into multiple parcels so that the value is equal and your brother can get the piece(s) he may want to live on and you get pieces you can sell. You could be a nice guy and give last right of refusal of the option to purchase at appraised calue and possibly at a slight discount as you'd have no realtor costs on your end in this case. That way if he wants all the land he has the option to get it.

Other option is 50/50 on the land and if you want to sell down the road and he doesn't it comes to a partition action which can get nasty.

Thanks man. Good to hear from you. I hadn't thought of the parceling idea, but that might make some sense. Or adjusting the inheritance of the other assets while one of us controls the land. Can at least add them to the list of options discussed if nothing else.