Legal Question in Wills and Trusts in New Jersey
Estate Law in NJ
My mother died and left her estate to be divided equally between 4 of her children, the oldest of which is the executrix. The majority of the value of the estate is in real estate holdings consisting of 2 duplexes and 1 single family home, all of which are, we have learned, listed as a 5 plex, although the property assessments do not indicate this configuration. 3 of the 4 duplexes are currently producing income. The 4th duplex and the main home are unrented. The other 3 named in the will do not wish to sell the properties and want to keep them as rental properties. Their suggestion is to form an LLP, naming the 4 of us as principals of the estate to avoid selling the properties. If neither of the 3 can afford to pay me my � of the appraised value of the estate, am I then forced to enter into this partnership with them? Is this a stalemate based on �majority rules?� Can the executrix on her own, negotiate a home equity loan for repairs to the properties? Are there any time restrictions on me receiving my � of the estate or can this rental business drag on indefinitely? The will has been probated in New Jersey and all properties are located in NJ. Thanks for your assistance.
2 Answers from Attorneys
Re: Estate Law in NJ
Very good question and this is exactly why there is a will. I must review to see what your mothers wishes were and it will clear up a lot.
Re: Estate Law in NJ
Sevyon is correct that the Will must be reviewed to see if there is any language, directions or instructions covering this. My response will presume there are none. By inheriting the property, each sibling became a 1/4 tenant in common as to ownership in an undivided ownership. Each is free to do as he/she wishes with their 1/4 interest. You are not required to become a "partner" with your siblings and could, even as a minority owner, bring an action in Court for "partition of the property. This action either requires you be bought out or the property sold. In this tough economic time, due to the mortgage fiasco, I do not recommend you bring the action at this time, for many reasons, but here are the top ones:
1. There is a possibility that NJ Inheritance Taxes may be due on Mom's estate. Are there sufficient liquid assets to pay such taxes? If not, one of the properties may need to be sold or financed to pay the taxes.
2. Sales are slow now and many properties in foreclosure may be or may soon come on the market. This depreciates the sales value if a property has to be sold, either to pay death taxes or to buy you out.
3. Mortgages are hard to come by now, even if there is good credit rating of the borrower, so financing may also be difficult and could result in further lowering the sales value or price. Mortgages on rental properties have higher interest rates than a residence of a borrower.
4. The property must be appraised as part of the partition action, and this could be costly, running to $1,000 or more. Since you will be initiating thepartition suit, this cost is yours, personally.
My suggestion is to join the "partnership" until the real estate and mortgage crisis is over, but with the understanding, and you may put a reasonable time limit on this, that when things get better, you will be bought out. All agreements should be in writing and signed by all of the siblings so no arguments arise later.
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