The Downside to Leaving Real Estate Outright to Multiple Owners at Death


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.

© 2019 Law Office of Thomas B. Burton. All Rights Reserved.

Transcript and captions provided for ease of access for the hearing impaired.

For questions about this topic, or to suggest a topic for a future blog post, please contact my office.

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