An Even Split
Karen lost her father in 2008. His house wasn't paid off, so she moved into the house and kept paying the bills. It just sold, and she has a sister who lives out of state. How do they split the $42,000 in equity?
QUESTION: Karen in Boise lost her father in 2008, and she was moving to Boise at the time. She and her husband decided to wait and see what the state of the estate was. The house wasn’t paid off, so they moved into the house and kept paying the bills in order to sell it. It just sold, and she has a sister who lives out of state. How do they fairly split the $42,000 in equity?
ANSWER: You lived in the house during this time too. You’d have to offset that with rent. What I would do is say what market rent is during the time and charge that against anything you have paid. Let’s say you added up all the expenses you paid for the estate—I’ll just make up a number—and it was $12,000. You added up market rent, and it was $10,000. Then the estate would owe you $2,000 back. Then the sister would be owed her money back—whatever she’s paid in. Then, after all the money is paid back for the expenses that have been paid by someone else, whatever’s left is split. That’s perfectly fair. Everybody got their money back, and then everybody gets their half of what’s left.
I think it’s a fair trade for everybody to get reimbursed before we do our splits.