Early SS Withdrawal or Inherited home?

[CRLLS]

Certainly a copy of the LLC Certificate of Formation would be in order IMO. Specifically, the Washington LLC Operating Agreement (I would bet there isn't any), the last x years of financial report and IRS form 1065. Sister (a CPA, even if not the CPA hired by the LLC) must know these things are required and should have copies of them. I wouldn't be surprised to find could turn out that sister is the sole owner of the LLC.

It seems like a lot of disconnects and missing info here. It sounds a lot like my MIL & FIL's Trusts and Wills that we just went through to straighten out! Be very cautious to dot your I's and cross the T's. Do not take anything sister says as fact. Require documentation of everything from Sis or from government sites, and keep copies of them for future use. Anything you can get on your own is just that much a lawyer will not charge you time for, and quicker to get some resolution.

 

[nwsteve]

Since it appears that this property is in the Seattle area, I would encourage the OP to go on the King Co Assessor web page and check how the property is listed. (you will need at least the street address). Personally I am not betting there is actually a LLC, If it has been moved to a LLC, it will show on the Assessor records as such. Since King Co is pretty aggressive on keeping property values at market, I would also check the value being used by the assessor
If the LLC does not appear as owner of record, I would visit WA's Sec of State where all LLC are registered.https://www.sos.wa.gov/ and confirm the LLC exists. The task is much easier if you have the formal name of the LLC supposedly registered. If you find the LLC, see how it is registered in terms of ownership and who is listed as Managing Partner/Managing Director Also confirms dates of origination and status.

 

[pb4uski]

^^^^ good advice.

 

[skipro33]

You mentioned the utilities are in the deceased mother's name. That sets off a red flag in my mind if you were unaware of this before. I would check the county's tax records to see who's name is on it and I'd do the same with the title for the house. I say this because my neighbor, after paying out for his wife's Alzheimer's care was left with little assets and was going to loose his house, unable to keep up with the payments, so his daughter offered to buy it out and let him live there rent free. This was in order to keep him from getting a reverse mortgage on the property. He explained to her that the house and her inheritance of said home was going to be liquidated in order to keep a roof over his head. He thought they had an agreement until he discovered she already changed the title over to her name. God only knows how she did this without his signature though, but it sure disappointed him she did that. I'm only the neighbor, but I spend a lot of time with him, he's 83 and I'm 63, and help him out a lot with the home's repairs and now with the virus, I do all his grocery shopping so he doesn't need to go out.

Verify what you think you know regarding your right to the home and your fair share. It can't hurt and it might save you any surprises later. Also, what happens to your part if you precede your sister and/or brother in death? Who gets your share? Don't assume, get an estate attorney and have him ensure you have the asset and make sure your will reflects your wishes to what happens to those.

 

[ivinsfan]

OMG you are so funny. Is there any harm to just cut ties and exit stage right? I mean that I just tell her to get the house appraised and I want to be bought out of my 1/2, period.

There is actually nothing funny about the situation and IMO you are in denial about your sister and what she is up to. How many times do you have to read the word "Later" to realize it translates to F off...

 

[ivinsfan]

If I get the gist, the home is owned in an LLC, presumably formed by OP, sister and brother. Brother did not sign anything agreeing to have sister manage the LLC. Sister opened a checking account in her name. Nephew is/was paying sporadically to sister's bank account. Sister hired a rehab guy who skipped out with 30K. Sister paid for and added labor to partially finish the unfinished rehab. Rent, when it was paid, went to taxes and to pay her back for her rehab costs.

No LLC bank account. The home is the only asset owned by the LLC. No money goes into the LLC. No money goes out of the LLC. Sister is acting as the home is hers. Giving preferential treatment to nephew.

I wonder what the state regulators might say about her CPA license under this situation?
I'm not suggesting you follow through with reporting this situation. It might help you to know this may be an option in case you do not find a mutual agreeable solution. Having leverage can be a great mediator. In the mean time, I hope your Umbrella Insurance is paid up.

You do realize this is the sister's account of what has been going on? It's not worth a hoot.

 

[ivinsfan]

It probably wouldn't hurt to be asked to be bought out and see what she says.

The answer will be "I'll get back to you LATER"

 

[pb4uski]

And the response is that "My lawyer will call you sooner rather than later".

 

[Scrapr]

___________________________________________________________________________________

Well you're not giving me any feedback from your end. I don't want to push anyone to do anything they don't want to do. No hurry.
_________________________________________________________________________

What time frame would you want that to happen?
_________________________________________________________________________________

This is your money question. I would just say I need out by EOY. I'm retiring and need this settled. I don't want any liability to follow me

 

[OldShooter]

This is your money question. I would just say I need out by EOY. I'm retiring and need this settled. I don't want any liability to follow me

No, let the attorney set the deadlines. 6 months is far too long.

 

[Camas Lilly]

Meeting with brother this morning.

I did find the LLC on the web site. Tax payer is sister, owner is the LLC. Everything looks like it has been paid on time and is up to date.

 

[ivinsfan]

Meeting with brother this morning.

I did find the LLC on the web site. Tax payer is sister, owner is the LLC. Everything looks like it has been paid on time and is up to date.

That's good news for you if you did end up getting a lawyer the info you can give them the less money you will spend on fees.

 

[rothlev]

That's good news for you if you did end up getting a lawyer the info you can give them the less money you will spend on fees.

I would try to work on an amicable solution. Family is family. Give her the opportunity to buy you out. Or sell whichever she chooses.

Make sure she knows this is what you need to have happen. You need to pull your cash out. It sounds like she wants to hold the house for her son so let her have it, and take a fair offer. Only if she totally refuses to work with you would I use a lawyer.

 

[OldShooter]

... Only if she totally refuses to work with you would I use a lawyer.

I agree but I think that has already happened. From the tone of the OP's comments, though, she will probably make at least one more try. Maybe she will get lucky.

 

[lhamo]

I would suggest getting an independent appraisal be part of whatever you do to wrap this mess up. I live in one of the less expensive parts of Seattle, and even teardowns here are going for 400k+. The only things that list for under 400k in Seattle these days are typically small condos in less-desirable areas (e.g. you have I5 or Aurora Avenue right next to you) or vacant lots that are pretty much unbuildable due to steep slope or wetlands on the property.

 

[rothlev]

I'm also wondering who gets tagged with depreciation recapture when the house is sold. I don't know the answer but maybe someone else here does.

I suspect that she is not declaring income or depreciation. She is "renting" to family at below market costs, or not renting at all, with her son occasionally pitching in to cover expenses. So it is simply a 2nd family home, not a rental at all. she is paying the expenses on it, so I do not see this as her getting some economic advantage. she may be losing money or breaking even at best. I would not go in with an adversarial affect. it won't help.

 

[rothlev]

A realtor should be able to determine fair market value, and then divide by two , subtract whatever money she put in the house for improvements, ( not upkeep) from your half and call it a day.

I would be inclined to give her the benefit of the doubt if you think she is exaggerating her improvements costs. just get it off your plate. It is not worth a family rift.

you asked her for a lot of information, but she may still not be clear as to what you exactly want.

 

[rothlev]

While I would also suggest OP find a way to get out of any ownership position in this inherited house, expecting to get half of today's fair market value is not a reasonable expectation or a likely outcome IMHO.

OP has owned half the house for a decade. Her sister has been managing the house. Her sister's son has been living there for the past five years with a questionable "rent" situation. (His sporadic payments might be hard to prove and a claim he's been a "house-sitter" and has been adding sweat equity to his mother's $50k remodeling investment could be made.) Bottom line: sister could reasonably claim she's been paying for remodeling and covering the other expenses for years with no/little offsetting income.

Timeliness is a factor and lack of it may cost OP some money now. It's been ten years since she should have acted and since then has apparently been complacent in the situation.

In her position, I'd ask for 50% of today's fair market value as an opener. But I'd be prepared to eventually accept a lower offer from sister if she comes forward with some justifications regarding expenses she's covered and the lack of income in recent years. Plus, of course, some fee for managing and being responsible for the property.

If OP is willing to accept an offer from her sister for some amount less than a full 50% of today's fair market value, it solves a lot of issues.

1. OP gets some money.
2. OP is out of the complications involved in being a partial owner of a distant property complicated by family dynamics.
3. Sister is happy because she thinks she got a fair deal and, who knows, perhaps the family situation will evolve to something at least neutral and not an eternal seething hate situation.
4. The fate of the nephew is delivered to his mother with no involvement from his aunt (OP).
5. OP's tone suggests she is not out to vindictively hurt her sister or her son. Demanding a full 50% of today's fair market value without regard to the past decade of events might open a can of worms regarding taxes and other legalities far beyond OP's intentions.

There are different ways OP could proceed. Ask for a full 50% of today's fair market value (as you suggest) and negotiate down. Or, perhaps, present a generous/kind situation by offering to sell at a discount to "help the family." For example: "I know my nephew is out of work due to COVID-19 issues. I'm in need of cash as I go into retirement. Could we solve both problems by transferring my half of the house to you for $X?"

I'm unsure what $X might be. Perhaps 50% of fair market value at the time of the inheritance? Call the intervening decade a "break even?"

#1

 

[ivinsfan]

I suspect that she is not declaring income or depreciation. She is "renting" to family at below market costs, or not renting at all, with her son occasionally pitching in to cover expenses. So it is simply a 2nd family home, not a rental at all. she is paying the expenses on it, so I do not see this as her getting some economic advantage. she may be losing money or breaking even at best. I would not go in with an adversarial affect. it won't help.

I guess you missed the fact her son gets a cut rate place to live...BTW it's not adversarial to politicly ask for details about a house you co- own.

However it might be adversarial to answers such questions with the word..later.

 

[rothlev]

yes, her son got a cut rate place to live. Is that worth a family feud? It was a family member. She wasn't collecting rent and pocketing money. You could state a case that sister owes her "rental" income, I wouldn't go down that road. that is why the 3rd brother wants out of the whole thing. and she should too.

Life is not always fair in family. Her son may be more needy , fallen on hard times, whatever.


End the arrangement. ASAP. -- she does not need to help her nephew any further. Mother can do as she needs .

 

[ivinsfan]

I would try to work on an amicable solution. Family is family. Give her the opportunity to buy you out. Or sell whichever she chooses.

Make sure she knows this is what you need to have happen. You need to pull your cash out. It sounds like she wants to hold the house for her son so let her have it, and take a fair offer. Only if she totally refuses to work with you would I use a lawyer.

potato... potato if someone refuses to give you basic info what are you to do? In fact the sister gains nothing by paying out the OP...she is defacto letting the son have the house without having to pay her sister out of pocket.

 

[ivinsfan]

yes, her son got a cut rate place to live. Is that worth a family feud? It was a family member. She wasn't collecting rent and pocketing money.

Why does it have to be a feud? Actually a third party might help prevent that...now the OP wants to retire, owns half of a pretty valuable home and would like to use that money...the 2 owners have different hopes and plans for what that home represents neither one is wrong or right.

The OP waited 10 years so I think they are pretty patient already.

I sure hope they can work out.

 

[rothlev]

"The OP waited 10 years so I think they are pretty patient already."

Absolutely , she should have spoken up sooner. water under the bridge, but now is when she decided she wanted out , in the mean time the home went up in value so she isn't hurt too badly by waiting.

"Why does it have to be a feud?"

when you get a lawyer involved it can get ugly. speaking from experience my family was broken up when my uncle who was the trustee refused to release my mother's share of an inheritance.

 

[Gumby]

In my view, you're not required to tolerate behavior from a family member that you wouldn't tolerate from a stranger. I'm aware that my view is not universal.

yes, her son got a cut rate place to live. Is that worth a family feud? It was a family member. She wasn't collecting rent and pocketing money. You could state a case that sister owes her "rental" income, I wouldn't go down that road. that is why the 3rd brother wants out of the whole thing. and she should too.

Life is not always fair in family. Her son may be more needy , fallen on hard times, whatever.


End the arrangement. ASAP. -- she does not need to help her nephew any further. Mother can do as she needs .

 

[rothlev]

I guess you missed the fact her son gets a cut rate place to live...BTW it's not adversarial to politicly ask for details about a house you co- own.

However it might be adversarial to answers such questions with the word..later.

I think she was giving partial answers in order to NOT be adversarial, as she may not have had time to pull all that together and did not want to ignore the inquiry. OK - ? possible?