My sister and I were trustees for our Mom's estate that was a two family house. For five years that our Mom was in assisted living my sister lived there and collected rent. The rent paid for all house expenses and any needs that Mom required. My sister had also lived there for the past 25 years. All house expenses during that time was paid for by Mom. When Mom recently passed the house became the estate to be shared by both. Rent is $650 per month equaling $7800 per year. Annual expenses cost $3400. That would provide a share of $325 per month or $3900 per year for each of us. My sister says I should pay for half the house expenses. I believe that because she resides in the house the rent will pay for the annual costs and that I should be entitled to my share of $3900. I believe that my paying half the annual expenses is subsidizing her living there. Can you please provide your opinion on what is the proper resolution to this matter? Thank you very much for any assistance you can offer.
It is not possible to provide a very good answer to this question because because it is not very clearly posed and is not specific about the desired remedy. Also, the answer below represents some off-hand views of an economist and, under no circumstances, is to be understood as anything close to proper legal advice.
Are we considering the legality, ethics, or practicality? We do not know the specifics of the mother’s will or her wishes. We also don’t know the resources, constraints, and preferences of the parties involved. The brother probably has legal right to charge his sister market rent and have expenses deducted from the gross proceeds of her rent plus the rent from the second unit. Net proceeds would be split evenly. However, if the sister is “managing” the property including the second unit, there should probably be some compensation/deferred rent for property management. Ethically, the sister was living rent free with Mom for 25 years, so we might interpret Mom’s wishes as that should continue. Personally, I would much rather honor my mother’s wishes than receive a few hundred bucks from my sister, even if I was legally entitled to do so. Finally, practically speaking, this is not a lot of money compared to the value of family harmony. It is probably a larger financial issue for the sister than for the brother. The practical thing might be to be a generous brother and not cause too much fuss over this, so long as his portion of the rent covers his portion of expenses and he is not having to pay out of pocket. If the brother and sister cannot reach a satisfactory conclusion, they may need to consult an attorney, but that will be costly.