What happens if I inherit the same piece of property as someone else
If someone leaves you a piece of property in a Will or Trust, talk with a St. Louis estate planning attorney like Vince
Estate planning can be a complicated endeavor. Creators of estate plans often have very different ideas from their beneficiaries. But because they are the ones in charge of creating their Will or Trust, and, thus, determining what should happen to their property after their death, the beneficiaries often have little say in the matter.
Unfortunately, however, beneficiaries oftentimes have different ideas about how they want to handle the Decedent's property after death. Sometimes, Decedents get the idea that they want to divide their real estate evenly between beneficiaries. This happens a lot. However, the beneficiaries to the Will or Trust usually have different ideas about how they wish to proceed with owning the real estate (i.e., to sell or not to sell).
Here's the scenario: A dies leaving behind a piece of land to be owned jointly between B and C. B and C are now the joint owners of the land. B wants to sell the land, but C does not. Must they come to an agreement on how to proceed? Will B have to sue C in order to sell the land? Is there any legal recourse for either party?
The short answer to all of those question is "Yes."
Missouri allows parties who inherit land, yet who have very different ideas with what to do with it, to initiate a legal process called Partition. Partition simply means dividing property between the owners so that they no longer own it jointly; they now own it separately and can do what they please with it. In a Partition action, B can now sell his portion and C can retain hers.
To get a better understanding of Partition actions, let's take a look at how they operate.
- Voluntary vs. Compulsory Partition Actions
It is not uncommon for joint owners of a property to have different interests regarding that property. If they inherit a piece of land in a Will or Trust, they may wish to retain the property for their children or sell the property and live off the proceeds of sale. In these situations, joint owners of the property may wish to compromise or negotiate with the other, but when that fails, they will likely bring a Partition suit. There are two ways to bring a Partition action: Voluntary or Compulsory. Let's look at both.
Although the owners of the real estate property may not concur on the use of the property (i.e., to sell or not), they may agree that they should open a Partition action with the court. The court will be located in the same property in which the property is situated (we call this "Jurisdiction").
If the parties agree that a Partition action is necessary, they will file the action voluntarily. This legal motion to partition the land is known as "Voluntary Partition."
When joint property owners agree to voluntarily partition the land, the land will be divided equitably between the two. B will retain his half of the property as sole owner and C will do the same. After the court divides the land between the parties, the parties may do what they please with the property they inherited from the estate plan which gave it to them.
After the equitable division, the parties will likely iron out various issues through conflict resolution measures like mediation or arbitration. These issues may involve easements or covenants, and how now separate pieces of land will interact with the other. If B's portion of the once-whole property does not have access to a road, then B and C may work together to create an easement so that whomever buys the land from B can have access to the road.
When conducting estate planning, it is important to discuss with family members, particularly those who are to inherit property, what they plan to do with the property after your death. Consulting with The Taormina Firm, an estate planning law firm, will help you to have these discussions with family members so that everyone behaves amicably after your death.
Sometimes, however, inheritors to property will not agree to conduct a Voluntary Partition action. These scenarios arise when parties to inherited property from a Will or Trust cannot agree on what should happen to the property. B wants to sell and C does not. And neither will agree to a Voluntary Partition. This leads to Compulsory Partition.
The party seeking a Compulsory Partition must file a petition with the court. The court will then decide what shall happen to the property owned by both parties. If the court steps in, there may be other parties that become involved. These parties may assist with setting a value to the property, such as appraisers, or they may oversee the partitioning process overall.
These third-parties must be paid out of the value of the property. In other words, when the property is divided, the court will determine how much the third-parties will be paid for their services. RSMo. § 528.220.
Since the third-parties will have to be paid for their services relating to compulsory partition, it is important to discuss your options with an estate planning attorney, like me, Vince Taormina, early in the decision-making process. In working with an estate planning attorney, you may be able to avoid compulsory partition by working with the joint owner of the property and their attorney to resolve any dispute outside of court and to conduct the partition voluntarily. Talking with an estate planning attorney will also help you understand your rights and options regarding a compulsory partition.
- Types of Partition Actions
Other than Voluntary and Compulsory Partition, which are how courts will proceed with the partition action, there are two main types of partition actions: "Partition in kind," or "partition by sale."
Partition in Kind
Partition in kind completely ends the situation of joint property ownership. Whenever something is considered "in kind," it means that the parties receive the property in its original form (i.e., real estate and not money). Partition in kind constructs separate and divided ownership interests in real estate, so each party to a partition action receives the property as property and not as proceeds from a sale.
In this scenario, the property is divided among the owners as individuals. As owners to a piece of property which has been divided, the owners can do with that property what they wish without affecting the rights of the other original joint owner. The owner now has the right to use and enjoy the property free from control of the other. So, B can do with his property what he pleases and C can do the same with hers.
Partition in kind is sometimes also known as "actual partition." This is because the parties receive separate interests in land instead of some other form of payment. Partition in kind is most easily created when a piece of land is easy to divide into even plots of approximate value. So, for instance, if B and C inherit 50 acres of land from A in A's Will or Trust, a court can easily divide the land into 25 acre plots for B and C's benefit. B and C can now do with their separate 25 acres what they please.
Partition By Sale
Partition by sale is sometimes referred to as "licitation" or "succession." Partition by sale simply means selling the once jointly-owned property and giving the proceeds of sale to the former joint-owners in equal shares.
Partition by sale most often arises when the property cannot be equitably divided into two separate plots of land of near equal value.
So, for instance, A grants B and C joint ownership of 50 acres in his Will or Trust. When B and C attempt to divide the property between themselves, it is found that B's portion is worth considerably more than C's because there is a gold mine underneath. A court may determine that the best course of action is to sell the property and divide the proceeds equitably between B and C instead of partitioning it in kind between B and C since B's land is worth so much more than C's.
Partition by sale can also occur in situations where dividing the property will diminish the total value of the property overall. Neither party may want this result, but if division lessens the value of the land, they may have no choice. The court will have the final say. In this scenario, the action will be known as a forced sale, since the owners do not necessarily agree that the land should be sold despite the fact that the value of the land would be reduced if the property were divided into two separate properties.
In conclusion, if you are worried how joint ownership might affect your property and your beneficiaries after your death, or if you have any questions about jointly owned property, it is important to contact an estate planning law firm, like The Taormina Firm, to discuss your options.
If you ever have any questions relating to this topic, or to Wills or Trusts in general, please feel free to call the estate planning law offices of The Taormina Firm, or schedule your free consultation today!