When it comes to family homes, making fair decisions is rarely as simple as it seems. Many parents hope to treat their children equally, but well-intentioned estate plans sometimes create more friction than harmony. One increasingly common scenario unfolds when a parent leaves the house to two or more children, especially when one is living in the property. What appears equitable on paper can quickly become a complex, emotional, and expensive puzzle to solve.
This post explores the challenges of joint home inheritance, focusing on what happens when one sibling is both a co-heir and a resident, the practical and tax complications that may arise, and the expert steps families can take to avoid long-standing disputes.
What Joint Home Inheritance Really Means
It is not unusual for a parent, keen to treat their children fairly, to divide their main asset—that is, the family home—in equal shares among their children. This might look straightforward in a will, stating
“I leave my house to my daughters, Mary and Sarah, equally.”
But what happens if Mary lives in the property and Sarah does not? What if Mary cannot afford to buy out Sarah’s share when the time comes?
This arrangement can set the stage for serious complications:
- The house becomes a jointly owned asset, with both heirs holding equal legal rights.
- One sibling, often the resident, wishes to continue living in the property.
- The other expects, quite reasonably, to access their share of the inheritance, typically as a cash sum.
- If the resident sibling cannot afford to buy out the other, conflicts or financial hardship may follow.
Indeed, even with the best will in the world, this kind of inheritance can drive a wedge between family members.
The Real-Life Dilemma
Consider this scenario, as described in an Irish Times reader’s letter:
“My mother’s will currently leaves her home equally to my sister and me. My mother has minimal alternative assets. My sister lives with my mum. If the home is left jointly to myself and my sister and my sister tries to buy me out, will she be liable for Capital Acquisitions Tax (inheritance tax) on her portion? It is unlikely for my sister to be able to raise the funds to cover the market value of 50 percent of the property.”
This example highlights two core difficulties:
- Can the resident sibling realistically buy out the other’s share?
- Is there a tax burden, and who bears it?
These questions warrant careful examination.
Financial and Emotional Challenges
1. Liquid Assets Versus Brick and Mortar
Inheritance works best when the estate includes diverse assets, such as cash, investments, or more than one property, enabling flexible divisions. When the house is the primary asset, options are limited. The sibling not living in the property may have little choice but to wait, or insist on a sale.
2. The Resident’s Dilemma
The sibling living in the home faces a tough choice:
- Take out a large mortgage or loan to buy the other’s share (not always possible or financially sensible).
- Sell the family home, losing their residence and potentially uprooting themselves or their children.
- Renegotiate the arrangement, potentially surrendering their share of other assets or entering a complex family agreement.
3. Tax and Legal Considerations
Ireland’s inheritance tax, known as Capital Acquisitions Tax (CAT), can further complicate matters. Each recipient (or “beneficiary”) is liable on their individual acquisition, subject to group thresholds (see Revenue.ie for details). Where a recipient inherits a share of property, the value must be declared. If one sibling buys out the other, the transaction must be done at market value.
If the resident sibling is both inheriting and buying, the process can create competing legal and tax responsibilities. Furthermore, if she cannot fund the buyout, the only remaining solution may involve selling the home.
4. Emotional and Relationship Strain
Family tensions often simmer beneath the surface during estate settlements. When one sibling faces potential financial loss or eviction, emotional wounds can linger for years. Even close siblings may disagree about property value, fairness, and what their parent would have wanted.
Practical Problems with Joint Home Ownership
- Indivisible Benefit
Unlike dividing savings or possessions, you cannot split a house in half. If one co-owner wishes to sell and the other does not, the route to resolution is complex and sometimes ends in legal proceedings.
- Upkeep and Costs
Until matters are settled, both heirs may be responsible for ongoing costs like maintenance, insurance, and property taxes—even if only one is living there.
- Market Fluctuations
The market value may change between inheritance and buyout. Disputes can arise over fair pricing, especially if neither party is satisfied with professional valuations or sale outcomes.
Possible Solutions and Alternatives
Given these challenges, seeking professional estate planning advice before finalising a will is vital. Here are several ways to avoid common pitfalls.
1. Open and Early Family Discussions
The best-prepared families start by talking openly about intentions and expectations. If one child hopes to remain in the home, discuss what they can realistically afford and whether this aligns with everyone’s wishes.
2. Life Insurance and Liquidity Options
A parent may take out a life insurance policy earmarked for the child not living in the property. Alternatively, provisions could be made to allow one child to inherit assets equivalent to the cash value of the property, with the home transferred to the resident sibling.
3. Granting a Life Interest
Parents may leave a right of residence, or a “life interest,” to the sibling living in the property, with ownership passing to both children on the resident’s death. This can delay inheritance for the non-resident, but ensures the family home is preserved until the occupant no longer needs it.
4. Establishing Trusts
Setting up a trust can introduce flexibility, particularly in complex situations or where there are vulnerable beneficiaries. Trusts can provide a professional, impartial management structure and help minimise inheritance tax, though they do carry costs and legal requirements.
5. Professional Valuation and Buy-Sell Agreements
Clarity over how the value is established and how a buyout is handled (including timelines and funding mechanisms) helps avoid disputes. Written family agreements, drafted with legal input, protect everyone’s interests.
6. Engage an Expert in Estate Planning
A solicitor with experience in wills, trusts, and succession law can illuminate hidden tax and legal risks. Tailored solutions can protect family harmony and reduce financial pressure.
Expert Help Makes All the Difference
As outlined by HOMS Assist, a leading Irish law firm, the right legal advice can:
- Minimise inheritance tax through careful will structuring and tax planning.
- Provide asset protection strategies for maximum family security.
- Mediate contentious probate or inheritance disputes.
- Offer guidance on international estates or complex family arrangements.
- Ensure everyone’s wishes are respected and translated into clear, workable legal documents.
For more details on expert estate planning and personalised advice, visit HOMS Assist’s estate planning and wills page.
Protect Your Family’s Relationships and Wealth
Leaving a family home to multiple children is an act of love, but it’s crucial to recognise the risks hiding in “equal” solutions. Time spent discussing intentions, seeking professional guidance, and considering creative alternatives can spare your family heartache and costly disputes.
If you or your loved ones are weighing up estate plans involving shared property, reach out to a qualified solicitor specialising in estate planning, wills, and trusts. The best inheritance isn’t just property or money—but peace of mind and lasting family bonds.
