Attorney Thomas B. Burton discusses the downsides to leaving real estate in Wisconsin directly to multiple owners upon your death and discusses some of the reasons why this may lead to unintended consequences.
Transcript of Video: The Downside to Leaving Real Estate to Multiple Owners at Death
I want to talk about one area of real
estate today and that's when multiple
parties on one piece of real estate as
joint tenants or tenants in common
now this can happen in estate planning
cases where someone leaves land to their
heirs under a will suddenly let's say
five children become the owners of a
farm if they didn't use a trust then it
passes to the children under the will and they all
own a one-fifth undivided interest in
the farm well what happens when the five
children cannot agree on what to do to
with the farm let's say one wants to
keep and farm it, two want to sell it
three want to make turn it into a
housing development they can't agree
well this is why I recommend using
trust planning to dictate what should
happen to the farm after you're gone
however if the children become one fifth
owners under this scenario and they cannot
agree on what to do
then the option they're faced with is
going to the court and asking for a
partition action meaning they would
literally ask the court to partition the
real estate into the respective fifths
so they can do with it what they wish so
the court then would decide where to
draw the lines and who gets which piece
of the farm you can see where this can
destroy value inherent in some real
estate because some things are not
easily divided a farm might be able to
be divided but it's arguable that all
pieces are equal and many farms perhaps
this parcel is worth more than this one
etc and often together it's worth more
entirely you can also think of other
things that wouldn't lend themselves
well to partition for example a commercial
office building or a commercial real
estate development site where you want
one plan for the whole thing so think
carefully before you leave real estate
to your children outright if your plan
is for them to use it to produce
income where you have some real estate
development plan it's better to leave
in place a plan to manage the
property and for what should happen to
it after you're gone than to leave it to
them jointly and risk creditor claims
and the possibility of disagreement
where you need a partition action by the
court so that in short is a partition
action.
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Transcript and captions provided for ease of access for the hearing impaired.
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