Co-Heirs

The concept of an undivided interest is the most misunderstood aspect of shared inheritance because it provides each owner with a legal right to occupy and utilize every square inch of the property. This lack of physical boundaries means that an heir with a minor ten percent share has as much right to enter a residence as an heir with a ninety percent share unless a formal judicial partition has been finalized. 

This legal structure frequently leads to ouster claims where one party attempts to exclude others from the premises, triggering a requirement for the occupying party to pay a fair market rental value to the excluded owners. We focus on clarifying these rights early in the process to prevent the physical confrontation and emotional distress that often follows the death of a patriarch or matriarch.

Every individual in a shared ownership structure bears a proportionate responsibility for the carrying costs of the estate including property taxes, insurance premiums and necessary repairs to prevent waste. If one person unilaterally pays these expenses to protect the asset from foreclosure or tax sale, they possess a legal right of contribution against the others which can be settled during the final distribution of the estate. 

Failure to manage these obligations collectively often results in the accumulation of liens that can eventually exceed the equity in the property, destroying the financial value of the inheritance for everyone involved. Our firm assists in establishing formal management accounts and contribution schedules to ensure that the estate remains solvent and protected from third party claims during the transition period.

The requirement for unanimity acts as a double edged sword that protects minority owners from being exploited by the majority but also prevents the estate from responding to market opportunities or financial crises. When a deadlock arises, the parties are often forced into mediation or arbitration to find a middle ground that respects the interests of all participants. 

If these private resolutions fail, the only remaining path is to seek judicial intervention through the probate court or a civil court of general jurisdiction. We provide the strategic guidance needed to navigate these negotiations, utilizing the threat of judicial partition as a catalyst to compel unreasonable parties to accept a fair market buyout or a voluntary sale.

In many families, one individual is designated as the primary manager of the inherited assets due to their geographical proximity or professional expertise in finance or real estate. This person occupies a position of high trust and is legally bound by fiduciary duties of loyalty, care and full disclosure to their siblings and other relatives. They are strictly prohibited from self dealing or utilizing estate resources for their personal benefit without the informed consent of all other participants. 

Any breach of this duty, such as taking an undisclosed commission from a sale or failing to provide transparent accounting records, can result in personal liability and the immediate removal of their management authority. We represent heirs in enforcing their right to transparency, demanding formal accountings and pursuing damages when a managing party has mismanaged or misappropriated the collective wealth.

A partition in kind is most appropriate for large tracts of undeveloped land or agricultural acreage where the terrain can be split into parcels of roughly equal value and utility. However, for a single family home or a developed commercial building, the court will almost always find that the property is indivisible and order a sale. 

This process involves the appointment of a neutral referee or receiver who handles the listing, marketing and final closing of the sale to ensure that the process is conducted in a commercially reasonable manner. We aggressively represent our clients in these proceedings to ensure that the method of sale maximizes the return on their investment and that the selection of the referee is conducted with total transparency.

Before the final proceeds of a partition sale are disbursed, the court must perform an equitable accounting to adjust the shares based on the historical contributions of each party. This involves a detailed review of who paid the taxes, insurance and maintenance costs versus who enjoyed the exclusive use of the property during the period of co-ownership. An heir who has invested significant personal funds into the improvement of the property is entitled to a credit for the increased value, while an heir who has occupied the premises to the exclusion of others may be charged a rental offset. 

Our firm specializes in reconstructing these financial histories and presenting the forensic evidence needed to ensure that our clients receive every dollar they are owed under the principles of equity.

• Filing of a lis pendens to notify the public of the pending litigation and prevent unauthorized transfers.
• Utilization of independent appraisers to establish a baseline for buyout negotiations or court ordered sales.
• Coordination with title companies to resolve existing liens and ensure a clear transfer of ownership.
• Seeking the recovery of attorney fees and court costs when a co-heir has acted in bad faith during the litigation.

Heirs who receive voting shares in a corporation or membership interests in an LLC gain the right to participate in the election of directors and the approval of major corporate actions. If the ownership is split in a way that creates a voting deadlock, the company may find itself unable to secure financing, approve budgets or renew essential contracts. 

We work to resolve these governance crises by drafting voting trusts or temporary management agreements that allow the business to function while the heirs negotiate a permanent solution. Protecting the operational integrity of the business is our primary goal, as any perception of instability can dramatically decrease the valuation of the shares and the overall wealth of the family.

The most effective way to manage a shared business inheritance is through the implementation of a post mortem buy-sell agreement that provides a clear path for active participants to acquire the interests of passive heirs. These agreements establish an objective valuation methodology and a structured payment plan that prevents the business from being crippled by a sudden demand for a cash buyout. 

We guide our clients through the process of creating these exit strategies, ensuring that those who wish to lead the company have the power to do so while those who prefer liquid capital receive a fair and equitable price for their shares. This proactive planning is the only way to prevent a family business from becoming a casualty of the probate process.

The step up in basis is a powerful wealth preservation tool that ensures heirs are only taxed on the appreciation of an asset that occurs after they take ownership. For example, if a decedent purchased a property for one hundred thousand dollars that is worth one million dollars at the time of their death, the heirs receive a new basis of one million dollars.

We coordinate with professional appraisers to establish this value with precision, providing our clients with a vital shield against future tax obligations when the property is eventually sold. This strategy is particularly important for families who intend to liquidate the estate quickly to fund other financial goals or to resolve a partition dispute.

In the Eyes of the IRS, a fifty percent interest in a property is often worth less than fifty percent of the total value because of the lack of control and the inherent difficulty of selling a partial stake. This allows for the application of fractional interest discounts, sometimes ranging from fifteen to thirty percent, which can significantly lower the value of the estate for tax purposes. These discounts are based on the reality that a third party buyer would demand a lower price for the burden of dealing with other co-owners. 

We work with specialized valuation experts to justify these discounts, utilizing empirical data and current case law to protect our clients from overpaying on their federal and state inheritance taxes.

• Application of minority interest discounts to reflect the lack of control in corporate and real estate holdings.
• Utilization of lack of marketability discounts for assets that cannot be easily sold on an open exchange.
• Coordination with tax professionals to file necessary estate and gift tax returns within statutory deadlines.
• Analysis of the impact of state level inheritance taxes which may differ from federal regulations.