Inheritance of Real Property – Buyout or Right of 1st Refusal
If you have more than one child, often, one or more of your children will wish to take title to your residue or other real property as part of his or her inheritance.
If there are enough assets in the trust estate to give the home to one child and assets of equal value to the other children, then the trustee’s job is seemingly easy. But, what if the real property is the main or primary asset in the trust estate? In such situations, the child receiving the real property must buyout his or her siblings whom are not receiving interest in the real property.
If you have more than one child and you know that one of them will prefer to receive your home or other real property in the trust estate over other assets, then you may want to consider adding language in your trust to have a right of first refusal in place. In doing so, the trustee at your death, must offer the designated child or children the right to purchase the real property in the trust estate before distribution of the trust estate in equal shares.
Having a right of first refusal gives clear direction to the trustee, provides intent of the trustor as it relates to distribution of the trust assets, and can avoid reassessment issues for the child that wishes to own the real property.
To learn how our attorneys can assist you with your estate planning or other legal needs, contact us today.