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Got parties A, B, and C inheriting an estate. For hypothetical purposes,
assume the estate is valued at $300K, and consists of cash and a building
worth $200K.
Neither A, B, or C has enough money to buy 1/3 of the bldg value.
So, they split $100K cash, and each own 1/3 undivided interest in the bldg,
because each of their names are on the deed.
Let's say party A wants to cash out of A's 1/3 of the bldg, but B and C
don't want to sell.
What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
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RB wrote:
Let's say party A wants to cash out of A's 1/3 of the bldg, but
B and C don't want to sell.
What action courses are available to A to be able to get his/her
cash out of his/her share of the bldg?
It's called a partition action. If A goes to court he can force the
other partners either to buy him out at fair market value or to have
the property sold to a third party. The only requirement is that he
be an owner.
Stu
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RB wrote:
Got parties A, B, and C inheriting an estate. For hypothetical purposes,
assume the estate is valued at $300K, and consists of cash and a building
worth $200K.
Neither A, B, or C has enough money to buy 1/3 of the bldg value.
So, they split $100K cash, and each own 1/3 undivided interest in the bldg,
because each of their names are on the deed.
Let's say party A wants to cash out of A's 1/3 of the bldg, but B and C
don't want to sell.
What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
"A" would bring a partition action in civil court. If granted (and
I can't think of any reason why it wouldn't be granted), the property
would be sold and each would get their share of the proceeds.
--
This account is subject to a persistent MS Blaster and SWEN attack.
I think I've got the problem resolved, but, if you E-mail me
and it bounces, a second try might work.
However, please reply in newsgroup.
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On Wed, 19 Jan 2005 07:40:21 -0500, "RB" <rbig@bellsouth.nospam.net>
wrote:
[snip]
Let's say party A wants to cash out of A's 1/3 of the bldg, but B and C
don't want to sell.
What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
The most likely remedy is partition. If B and C are intransigent, A
would file suit for "partition". If the building isn't such that it
can conveniently be divided, and B and C can't come to an agreement to
buy A out, it would be sold and the proceeds divided.
--
Not a lawyer,
Chris Green
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RB wrote:
Got parties A, B, and C inheriting an estate. For hypothetical purposes,
assume the estate is valued at $300K, and consists of cash and a building
worth $200K.
Neither A, B, or C has enough money to buy 1/3 of the bldg value.
So, they split $100K cash, and each own 1/3 undivided interest in the bldg,
because each of their names are on the deed.
Let's say party A wants to cash out of A's 1/3 of the bldg, but B and C
don't want to sell.
What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
Partition Lawsuit. A should consult an attorney who specializes in
real-estate matters.
--
I pledge allegiance to the Constitution of the United States of America,
and to the republic which it established, one nation from many peoples,
promising liberty and justice for all.
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On 19/1/05 12:40 pm, in article u4lsu0dtvv9h4g2sk746s0k6re50odo5rq@4ax.com,
"RB" <rbig@bellsouth.nospam.net> wrote:
Let's say party A wants to cash out of A's 1/3 of the bldg, but B and C
don't want to sell.
What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
In most states co-owners (or creditors of one co-owner) can force a sale.
But this may depend on how the property was left to them. Some testators
leave property (say a traditional family vacation house) in trust in such a
way that forced sale is impossible or difficult.
Or the property may be held by a Family Limited Partnership or a LLC in such
a way that sale cannot be forced (and, BTW, estate taxes are reduced,
assuming the estate is taxable -- unlike the one under hypothesis).
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What action courses are available to A to be able to get his/her cash out of
his/her share of the bldg?
B and C can buy out A. They don't have enough cash, but they could get a
mortgage.
They could also let A sell to an outside owner (e.g., D.) Depending on what
the ownership arrangements are, A might not need B and C's permission to do so.
*****
Tim Horrigan <horrigan@aol.com>
*****
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Tam wrote:
Or the property may be held by a Family Limited Partnership or a LLC in such
a way that sale cannot be forced (and, BTW, estate taxes are reduced,
assuming the estate is taxable -- unlike the one under hypothesis).
I question your assertion that estate taxes are reduced by use
of a "Family Limited Partnership" or LLC. Can you explain?
--
This account is subject to a persistent MS Blaster and SWEN attack.
I think I've got the problem resolved, but, if you E-mail me
and it bounces, a second try might work.
However, please reply in newsgroup.
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Arthur L. Rubin wrote:
Tam wrote:
I question your assertion that estate taxes are reduced by use
of a "Family Limited Partnership" or LLC. Can you explain?
It's a common technique but not appropriate for everyone. It's based
on the court-recognized doctrine that, when someone owns a
non-controlling portion of a business, that share is worth less than
the proportionate share of the entire business, due to lack of control
and other issues. It is based on what buyers are generally willing to
pay.
On the other hand, when more than 50% of the business is given away
(generally to kids) the parent can still retain control as the
managing partner
For example, let's say you have real property worth $1,000,000. You
want to give $11,000 per year to each of your five grandchildren.
Because of the minority ownership discount, you might be able to
transfer 1.5% to each grandchild, rather than 1.1%, thus transferring
more of your property. In the mean time, after seven years you may
have transferred more than half the total value. But you can still
retain control as the managing partner.
Stu
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In article <hvebv0hf45ggnut6moi6mgbf30vpqtm21a@4ax.com>,
Arthur L. Rubin <ronnirubin@sprintmail.com> wrote:
Tam wrote:
I question your assertion that estate taxes are reduced by use
of a "Family Limited Partnership" or LLC. Can you explain?
Is the value of the estate equal to the sum of the values of the
individual bequests?
A 25% share of a property, which is unsalable without agreement of all
owners, has lower fair market value than 25% of the value of the
property, due to the restrictions.
Seth
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