Legal Question in Real Estate Law in Wisconsin

Re: Dealing with shared property

Greetings,

I read your email, and it sounds like a nice problem to have. I can tell you one thing for certain: I do not know exactly what is the best arrangement. This is because more information is needed about the property, the objectives and financials goals of both families, estate plans in the event of death, etc.

I can say that often the best plan is to transfer the property to another entity such as a limited liability company (LLC) or land trust. The terms of the legal documents state how the families will use and operate the real estate. They also state the terms for selling or buying out upon death or otherwise.

Which entity is best, and what the accompanying terms will provide, depends on the facts of your particular situation.

One thought -- off the cuff. Perhaps if one couple cannot afford the maintenance there could be a way to use equity to take care of that. The family bearing the expenses could get an increasing share of equity in the entity, that would eventually be passed along to that family's heirs.

I hope this is helpful. If you need further assistance, feel free to email or call. 920-984-4529. I have considerable experience with estate planning and real estate.

Best wishes, Mark J. Mahoney

Re: Dealing with shared property

You need a comprehensive operating agreement addressing the issues which concern you. A good agreement would allow eventual transfer by each family according to its own estate planning goals under terms acceptable to the other family. This might also include such things as creation of transferable partial shares, buy/sell agreements, rights of first refusal, arbitration clauses, and involuntary transfers (as sanctions for failure to pay expenses). Any experienced estate planning/real estate lawyer will be familiar with such agreements and should be able to show you generic forms allowing the owners to choose between various options. Good luck!

Re: Dealing with shared property

It appears that your present ownership arrangement is a tenancy in common or a partnership. Neither create any protection from personal liability, as an LLC would, but there are advantages and disadvantages to any type of ownership. For example, a partnership provides a way out if the parties no longer want to be in the property together. It is called "partition." It allows either party to ask a court if the property could be divided, and if not, the property is sold and the proceeds are divided, with either party able to bid for the property. If an other entity is chosen, the same result can be achieved, but may have to be done through a written agreement between the parties. If the property is co-owned, and if any of the owners are not residents of Wisconsin, upon the death of any such owner, an ancillary probate would have to occur in Wisconsin. As you can see, the choice of how to hold this property is not that simple, and any simple solution will bring with it additional problems in the future. You should have a consultation with an attorney familiar with these matters who can advise you of the best solution.