Money and Me: Could your property inheritance leave your children in conflict?

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Best of Live Well, featuring Lance Alexander.

It's not just about money, it's about you, Money And Me, where wealth meets self-awareness. Only on Money FM 89.3.

Lance Alexander (0:19)

Well, let's still talk property, but of a much lower value. Leaving your home to your children may sound straightforward, but what happens if one wants to keep living there, and another one wants to sell?

And edgeprop commentary raises this question. Dividing a property equally can leave children with very different practical needs. One may want to stay, like I said, and the other may say, let's sell. So what happens next? Property succession planning means deciding how your home will be passed on and how that arrangement will work for your family.

How can you leave your family a home without leaving them in a sort of face-off? Clive Chng, Associate Director of Redbrick Mortgage Advisory, joins us now. Clive, good morning to you.

Clive Chng (1:06)

Morning, Lance. Thanks for having me.

Lance Alexander (1:08)

My pleasure. Now, our parents want to do the right thing by leaving us their home.

But what do they tend to overlook when they say, I'll leave the home to my children?

Clive Chng (1:19)

I think the most important thing to understand is that a home cannot be physically split into two, especially when you have multiple siblings, you know, two or three. So the example that I gave is a very typical example that you face in any family homes.

You have two siblings, let's say two sisters, and they've grown up. One of them has married, they've moved out, they have their own mortgage, they have their own kids. And all of a sudden, the parents passes away and they leave them the property in equal shares. So one of the sisters is still staying in the property, while the other one has her own home. So of course, if you are the sister staying in your own home, you'll be thinking, okay, now I have this property, I would like to encash it. I would like to make use of it.

But my sister is staying in there, and she doesn't have any intentions of selling. So you know what? Why don't I approach my sister and get her to pay me some rent? If you are the sister staying in the other home, you would never want to do that. I have half of the house is mine. Why would I want to pay you rent? So that naturally creates some sort of disharmony within the family. And more than often in my line of work, I often see people going to courts because of this.

Lance Alexander (2:30)

Yeah, you don't want a family feud situation, but sometimes it happens.

Clive Chng (2:34)

Yeah, it happens more often than you think, especially when properties are involved, no matter how old you are. Recently, I've been dealing with a case where there are four siblings, and the average ages of the siblings are like 60 years old. And even at 60 years old, they're still quarreling and they're trying to sue each other. It's never ending.

Lance Alexander (2:51)

So how long can these feuds go on for? The legal tussle is the old one, a piece of that property?

Clive Chng (2:59)

It can go on perpetually. I've seen cases that are still going on for four or five years without any sort of conclusion. And I think the people that suffer, it's the relationship between the siblings that suffer. You as a parent, you have planned very well, okay, I'm going to build up all these assets and I'm going to give it to my kids.

But you know, this is the last thing you would want.

Lance Alexander (3:20)

So tell us what happened in the first scenario you gave with the two sisters. How was that resolved?

Clive Chng (3:25)

That current situation isn't resolved yet, currently. But there are some proposals, of course, when I spoke to the daughter, I was telling her, hey, you know what, we can do this thing called a decoupling on the property itself. So yes, you can take over your sister's share formally, right?

And we have to structure it financially. So buying out your sister's share, that's still one of the ways involved. When you can still stay in the property, you don't have to sell it, right? Thankfully, you know, she's working, she's earning good money, she's able to take over the sister's share, buy it out, and then, you know, she's going to, her sister gets the share of the, the half of the share of the property. Okay. So that's most probably going to happen, but currently, they're still coiling over the small things.