How would SE posters answer question?

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Hello,

My ex-husband recently passed away in February (cancer) and he left his house to the kids (son 21, daughter 18). Both of them are in college and are getting financial aid plus scholarships. At this time they do not work but instead focusing on getting through school full time.

My son and daughter still live in my home because the cost to dorm is outrageous. Their father never supported them financially and I have been unemployed since 2010. I was actually shocked that he left the house to the kids.

The house is new construction, legal two family in Queens, New York. The area is very diverse and is in walking distance to the park, restaurants, public transportation, etc.

Their father bought the house in 2005 (when all of the house prices were inflated) for $1,015,000.

Right now since we cleaned the house and it is completely vacant the kids decided to put it on the market to see what happens. The highest offer is $1,128,000. The Real Estate wants 4% if they sell the house, which is about $45,000.

There are no liens on the property but there is a $190,000 mortgage....the monthly payment is about $1,900.00. The taxes are $6,000 a year but I think it is included in the mortgage payment (escrow?).

Also, their father does have some bills left that have to be paid such as hospital bills, credit cards, etc but so far no big THOUSAND dollar bill has come in the mail yet....just a lot of hundred to two hundred dollar bills that do add up.

I'd say a safe number would be $30,000 in total for all of my ex-husband's bills.

Both of them talked it over and my son and daughter both decided they want to invest LONG TERM and don't need the money right away.

Now the kids are thinking....what is the best & safest investment?

Selling the house and putting the money into the stock market or trust fund which could be risky? We would have to contact a financial adviser because none of us know about the market.

OR

Keep the house and rent it?

The first floor can be rented for $2,000/month, second floor, $2,500/month.

Since the kids are not working and have virtually no significant credit line they would never be able to buy this kind of house by themselves at least in the near future or get a good mortgage rate like the one that is already in place.

If the mortgage owed was $500,000 then I think they should sell but since the mortgage is so low and can be paid off in 4-5 years via rental income I think they should keep the house for investment.

Please let us know your opinions. Thank you and god bless.

do 2 young adults dealing with college want to be landlords?
do 2 young adults want to have loans for college or just pay for it outright and have money left over?
do 2 your adults who had a bad relationship, as it seems, with their father want to keep the house he bought?
where will 2 your adults come up with $30K to pay off daddy's debts?

i think that they will also not incur any estate taxes and the current time due to limits that may/may not change going forward.

what you think you answer is?

They should live together in half the house and rent out the other half. Then they can take whatever (low-paying) jobs strike their fancy rather than always having to worry about paying rent. That's a wonderful position to be in at such a young age.

"do 2 your adults who had a bad relationship, as it seems, with their father"

Their relationship couldn't have been *that* bad; he left them a million-dollar house! The mother's claim that he "never supported them financially" rings hollow without the husband's input -- plus the father might well have been unable to earn much money, given that he was *suffering from cancer*. And regarding "daddy's debts", to go to one's grave with an nearly-paid-off asset worth over a million against some small, mostly-hospital-related debts totaling a mere $30k is pretty admirable if you ask me.

triple0, i agree with you that not having too much debt and "lots" of assets is admirable. if daddy can buy a $1M house almost cash or cash, but did not want to provide his kids financial support is "as$&le".

with kids not having any credit or assets, where will they come up with $30K????? they are already being saddled with college loans.

Sell, but establish some type of trust. Bad news for young kids to come in to sudden cash like that.

Not having the pressure of student debt will give them freedom to do something they like.

agreed with alanhart on decision based purely on #s. Not sure how being landlords at such an early age, when your not prepared for it, may affect their future goals/ambitions too. I say cash in and structure so all that money is not blown away by two kids who have their whole 20s in front of them. That little sum of money will be quite nice later on

>> Are you serious? $4500/month gross income vs. $1.2 million asset value? What is that, a 3.5% cap rate after expenses? SELL ASAP!

AlanHart, what cap rate would be considered sound enough to consider keeping the house (or buying something similar)?

Now that the kids have an asset worth around $800,000 after the mortgage and other debts are paid off, I doubt that they will legitimately qualify for college financial aid. You didn't mention if the scholarships were academic, athletic or need based, but it does appear that the need just evaporated. Obviously a lawyer needs to be consulted before your kids are put in the position of accepting aid money fraudulently.

If you sell the house, there is no way all that money should be going to your kids. At that age, they are not mature enough to manage that kind of money. That money should go into a trust or in your personal bank account.

Just give them enough money to live on and to pay off the student loans. However, to make sure the money is actually used to pay off the loans and not in some casino, you should personally write the check out to the lender.

If each bill from your husband are just a few hundred dollars, don't pay them. Nobody is going to take you to court for $200.

@ Socialist "If you sell the house, there is no way all that money should be going to your kids. At that age, they are not mature enough to manage that kind of money. That money should go into a trust or in your personal bank account."

Kids are old enough to own property. Also, you can't just put something in a trust unless the testator sets up one.

Dad bequeaths the house to the kids free and clear then done deal.

If you want to try and convince them otherwise, good luck.

"If each bill from your husband are just a few hundred dollars, don't pay them. Nobody is going to take you to court for $200."

Not sure if this is a joke or not. So I will wait.

Dealboy, did the dad have any other significant assets?

There may be no other choice to sell the house to satisfy the claims of the creditors and pay any necessary taxes.

An estate is required to file a New York State estate tax return if the total of the federal gross estate plus the federal adjusted taxable gifts and specific exemption exceeds $1 million, and the individual was either:
a resident of the state at the time of death; or
a resident or citizen of the U.S. at the time of death but not a resident of the state, whose estate includes real or tangible personal property located in the state.

For an individual who was not a resident or citizen of the U.S. at the time of death, the estate must file a New York State estate tax return if the estate includes real or tangible personal property located in the state and the gross estate located in the U.S. exceeds the filing limit. The filing limit is $60,000 reduced by the sum of:
the gift tax specific exemption applicable to certain gifts made in 1976, and
the total taxable gifts made after 1976 that are not included in the gross estate.

http://www.tax.ny.gov/pit/estate/etidx.htm

It doesn't matter if his bills are for ten dollars each. Every single one should be paid. What an incredibly unethical and irresponsible piece of advice.

Every legitimate bill will have to be paid by the estate. It is not a should, it is a must.

You drop dead, you owe money, the estate pays the bills. If the bills are more then the value of the estate, creditors lose. If the bills are less than the estate value, the beneficiaries will get money/assets.

Exactly. We're talking about adults here. If the father was worried about them pissing away the capital he could have put the house in trust. The mother can't now take her children's property and call the shots.

@NWT I agree. All mom can do is teach responsibility, legally she can't do anything because it would go against the testator's wishes.

The estate administrator won't allow the house to be put into a trust because the kids are of age and the testator didn't wish for that.

I also think people who are on financial aid and in college would love to have 300K in the bank and not be on financial aid.

Since when does the law say you have to pay every single bills? I have plenty of unpaid bills and nobody ever sued me. I always make sure the bills are small enough where going to court costs more than the sum of the unpaid bill. Oh, I also have top notch credit since unpaid bills only stay on your credit history for 7 years and the last unpaid bill dates back to 2005. So I win, creditors lose.

I even have an unpaid NYC parking ticket from 10 years ago. The city can't do sh*t since I'm in NJ.

Good troll Socialist, hilarious.

Is any update available on this situation? Just curious