Inheritance can strain family ties
Like in a divorce, siblings' emotions often prevail over their intelligence
But even as homeowners ascend to that great co-op in the sky (where the plumbing is excellent and every line commands sweeping views), all hell can break loose among those granted a share of the earthly dwelling left behind.
"You would think it would be easy because there's money at the end of the rainbow, but there are more problems than you would think," said Adam Leitman Bailey, a Manhattan real estate lawyer.
"This is one of those cataclysmic events that really shake everybody up. It's just like in a divorce, where you don't use your brain—you use your emotions. So you're hurt, you're not thinking clearly, and a lot of the time the person that dies is the one who used to give you advice."
For a buyer, conflict among heirs, or just conflicted feelings brought on by the death, can translate into lengthy delays at the negotiating table over what a parent, aunt or uncle's home is worth.
On the other hand, for patient buyers, such delays can spell opportunity.
"Estate taxes have to be paid within a year, and so if an apartment is still on the market after six months, you have to borrow money or make a deal with the government," said A. Laurance Kaiser IV, the president of Key-Ventures Inc., a Manhattan real estate brokerage. "Things become more negotiable."
Nevertheless, lawyers and brokers who have seen the drama play out describe qualified buyers who walk away frustrated, families who become permanently estranged over asking prices, and delays that siphon money in the form of carrying costs, legal fees and slashed sales prices.
The recent upsurge in prices has only created more motivation and opportunity for conflict as soaring property values have turned homes into the crown jewels of many an inheritance.
"Tragically, money is a god," said Kaiser, who has watched heirs become "piranhas" around their parents' pricey domiciles, sometimes securing appraisals well before a parent's last breath.
The messiest and most common estate-sale skirmishes typically involve sibling rivalry. Ancient tensions can reignite when brothers and sisters are forced to work together in an emotionally charged situation.
"This is their chance to get the attention they always wanted, to get the revenge they always wanted, and for the youngest child to finally show that they matter," Bailey said.
Brokers and lawyers overflow with stories of henpecked siblings pecking back with their newfound power, gained because their cooperation is necessary to sell a property. (Heirs were less eager to speak on the record for fear of further straining family ties.)
Charles D. Urstadt, an executive director of sales at Halstead Property, recently helped another Halstead agent mediate between two well-off sisters selling the Fifth Avenue apartment that had belonged to their elderly mother.
"One was a very strong, dominant woman who had had a great career," he said. "The other was sort of a meek person who had been concentrating more on her family. They were both very intelligent, cultured women but there was a clear difference in their personalities."
After choosing a broker, the sisters could not agree on price. Although the agent recommended $7 million, the formerly meek younger sister "said she was thinking it was more like $10 million, and there was no way you could justify that," Urstadt said. "It was clear she was trying to get to her sister. Suddenly, the younger sister was not responding to phone calls, and the whole thing kind of ground to a halt. It was not about the money. It was all about the power. It reminded me of a divorce situation where one side had a grudge and threw their weight around when they finally had the chance."
It took a month of intensive shuttle diplomacy to get the sisters to agree on the price. "Normally, it takes two days," he said.
While pricing is a common battlefield for heirs, other flash points include which agent to hire, what will be included in the sale, who is responsible for cleanup and maintenance, how much staging will be required to put an aging property in the best light and who to select as the real estate lawyer.
Some of the more bitter fights, and occasionally darkly comic ones, occur when one heir wants to live in the family home but can't afford to buy out the others.
Michele Kleier, president of Gumley Haft Kleier, a real estate brokerage in Manhattan, recalled the twins who hired her to sell their deceased mother's postwar three-bedroom apartment on the Upper East Side in 2005. "The female twin had married well and had it together, while the male twin was very dependent on mommy and daddy and was not successful in life," Kleier said. "He really did not want this apartment sold."
The twins argued bitterly over which possessions to remove from the home. Then, the son moved in, ostensibly to sort through paperwork.
Kleier showed the apartment approximately 50 times over the next six months; each visit was like another scene in a black comedy.
"He would always be home. He would follow us around and say things like, 'I can picture Mom in bed, dying,' or 'I remember when she had the IV dripping into her arm—it was such a torturous few years,' or 'Make sure you don't leave your key with the doorman because my mother had a lot of things disappear.' He would have his computer tuned to a porn site, so you would walk by and see the most vile photos. He made the apartment as messy as he could. He smoked cigars. He wouldn't open the blinds or flush the toilets."
Eventually, the executor had the brother legally removed, and Kleier found a buyer for $2.6 million. "He basically cost himself and his sister $300,000 because after the apartment sat on the market for six months, everybody in town thought it was very negotiable," she said.
Brokers say that "anxious" heirs—the graying children whose parents' long lives reduced the amount of money they expected to inherit, and also delayed its arrival—are especially prone to believe they are being cheated.
"In many cases, it's like the last money they're going to inherit, so they become very firm on the price," said Daniela Kunen, a managing director at Prudential Douglas Elliman."
As the real estate market prices drop, it is even more important to obtain an early agreement of beneficiaries and heirs regarding the expected listing price of estate and trust real estate to prevent undue delays in sales which further decrease prices obtained by trusts and estates.
Mina N. Sirkin is a Board Certified Specialist attorney in Estate Planning, Probate and Trust Law by the Board of Legal Specialization of the State Bar of California. Ms. Sirkin practices in Los Angeles County, California. MSirkin@SirkinLaw.com. http://www.SirkinLaw.com.
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Posted by: rc helicopter | December 21, 2011 at 03:56 AM