How to Divvy Up Inherited Property: Understanding Ownership and Share Allocation

When a house is left to multiple brothers in a will, and some of them decide to sell their share, the division of the proceeds can be confusing. Here’s a step-by-step guide to help you understand how this works, ensuring that everyone involved is fairly treated.

Introduction to Inherited Property and Ownership

In a scenario where a will divides a house among six brothers, each brother gains an equal share of the property initially. If two brothers decide to buy out the remaining four, a thorough understanding of how shares are allocated and sold is crucial.

Initial Ownership Distribution

To start, each brother receives a 1/6 share of the house. This means that if the house is valued at $600,000, each brother owns an interest worth $100,000. For simplicity, let’s name the brothers Abe, Ben, Chuck, Doug, Ed, and Frank. If Abe and Ben want to buy the house from the rest, each needs to understand their own ownership share before acquiring the property.

Partial Sale and Share Transferring

When Chuck, Doug, Ed, and Frank decide to sell their shares, they cannot sell more than what they own. In this case, each of them has a share of $100,000, so they each sell $100,000 worth of the property. Each brother who sells receives a payment based on their share, which is 1/6 of the total sale value.

Buying Out and Final Ownership

Abe and Ben, who have already each owned a share of the house, are now trying to buy out the remaining shares. Here’s how the process unfolds:

Each of Chuck, Doug, Ed, and Frank sells their $100,000 share, The total value of the house is $600,000, meaning the remaining 4/6 of the house is sold. Abe is buying 2/6 of the house, adding to his existing 1/6 share, making it 3/6 (or 1/2). Ben is also buying 2/6 of the house, adding to his existing 1/6 share, making it 3/6 (or 1/2).

Understanding the Confusion

Many might think the remaining brothers should each get 1/4 of the value, but this wouldn’t be accurate because each brother still has their initial 1/6 share. The confusion arises from not accounting for the initial ownership position of Abe and Ben. If Abe and Ben had been outside investors, the distribution might have been different. However, in the actual scenario, each selling brother gets 1/6 of the value.

Legal Considerations

It is crucial to have a legal professional guide you through the process to ensure that all aspects of the sale and division are handled legally and ethically. A lawyer can help you navigate any potential issues that may arise, ensuring a smooth and fair distribution of the proceeds.

Conclusion

Dividing inherited property among multiple owners can be complex, especially when some decide to sell their shares. Understanding the distribution of ownership and the process of buying out shares is essential to avoid misunderstandings and potential legal issues. Always consult with a lawyer to ensure that all parties involved are treated fairly.

References and Further Reading

For more information on property division and inheritance, consider reading the following resources:

Heir (Legal Dictionary) - Cornell Law School Inheritance Property Sales: Handling a Loved One’s Real Estate - Nolo Inheritance Advice UK - Professional Help for Inheritance Issues