Posted by Greg Schultz on November 20, 1998 at 19:10:26:
Thank you very much Irwin.
Estate Stettlement in Michigan - Posted by Greg Schultz
Posted by Greg Schultz on November 19, 1998 at 10:20:26:
I need help with finding a way to buy my Mothers estate from the rest of my brothers and sisters.
Appraised @ $154,000 comprised of 80 acres, one 3x1 brick ranch house, barns and out buildings on the 80. There are 26 acres across the cornor that one of my brothers lives on and wants to buy. I think he could qualify for a conventional on it, FMV 26K.
It is not included in the 154K. Mother was killed on 1-8-98 and according to the lawyers her estate has to be settled within one year from that date. Maybe it can be streched out to 15 months, I don’t know. Is this written in stone?
There are eight of us… so I figure that my equity in the house and farm, is about 20,000 minus 4,000 that I have borrowed to live on due to the cancer.
Everyone of my brothers and sisters (including the executor), wants me to stay and buy the 80 and the house and are willing to work with me on the pruchase. (Great Family)
I will need to put together some unconventional or creative ways to make the deal because as I have said I am just coming off a very serious bout of kidney cancer and lost everything due to no insurance for catastrophic costs like that. I will need another month or two to begin to build enough of a cash flow to make payments.
I understand their concerns that I might not be able to do that and if I can’t, and default, then they can liquidate it and…so be it, I tried.
Their major concern, is that of, family being my banker which can lead to bad feelings, etc.
What I need from all of you great people is some creative ways to put a deal(s) together. If I have different options to show them on Thanksgiving, when we will all be together, it would help me a great deal.
So please if you have any thoughts or ideas… please do not hesitate to post here or contact me directly.
The brother that wants the 26 acres across the cornor is willing to co-sign or do whatever it takes to keep the family home and farm in the family. I thought that if he does buy the 26 acres than the estate taxes can then be paid and it will buy me some time to put together a working real estate investment plan to begin making money. I haved faced the fact the at 48 with cancer and a artifical rigth knee the chances of me getting a decent job are out of the question.
Is there a way to use my 15k equity and a trust or some other way…anyway…to buy me some more time? We do not want to split up the farm, it is in PA116.
FMV of the farm and house is about 135K
Can anyone help me with suggestions, ideas, methods…? They will all be greatly appreciated!!
Sorry about the long post…
Re: Estate Stettlement in Michigan - Posted by Irwin
Posted by Irwin on November 20, 1998 at 07:13:51:
I’m afraid I can’t come up with a concrete plan for you, because there are far too many variables to consider. But, here are a few general thoughts that I have. I’m assuming that the farm that you want and the other 26 acres are the only assets in the estate, and the estate isn’t subject of Federal Estate Tax.
I don’t see why the farm has to be sold now. Also, I don’t understand why the farm, which you say has a FMV of $135k is appraised @$154. The estate appraisal ought to be kept as low as possible, both for MI Inheritance Tax purposes (which I know -0- about) and for the sale to you. Since everyone agrees they want to keep the farm in the family, a very low valuation shouldn’t be a problem for anyone to accept.
Will any of your siblings consider renouncing their shares in the estate? This would increase your share and reduce what you have to pay for it? Or, will they sell to you at a very reduced price. After all the fmv isn’t $154, it’s $135, and there would be selling expenses of about $10k, for brokers, survey etc… Each share might be worth only $14k or perhaps less.
If you brother can mortgage the 26 ac that should provide more than enough cash to meet estate needs, although you didn’t say what the debts and expenses, and costs of administration are. The farm could then be distributed to the heirs and not liquidated (sold) by the estate. This would provide the time you need to work out an arrangement to buy the others out over a longer period of time. While this does make them your banker, I see no other way. They can either give you their interests, or sell them to you with them carrying the financing short term until you can pay them off. Consider using a family partnership to hold the mortgage, so you can make one payment instead of seven separate ones.
Whatever financial deal you make, be sure to get title to the farm deeded in your name. If you leave title in all eight of you, and someone dies, or gets divorced, you could have serious problems.
Estate closing dates are usually target dates for payment of taxes and filing final accountings; however, most Probate Courts are very flexible on that. Estates often pend for years when there are complicated problems to resolve. I don’t think any Court would force an unwanted or unnecessary sale of property just to close an estate
If I think of anything else, or if you have any questions, you can e-mail me.