MARKETWATCH: Real Estate Deals with Relatives

June 30, 2022

What is important when agreeing to do personal real estate deals with relatives? Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted in a MarketWatch “Personal Finance” article—by Aarthi Swaminathan, “I’m a recent widow. I’m building a house on my son’s and daughter-in-law’s land. Do I have legal ownership? What if they decide to sell, divorce, or die before me?”—regarding family and real estate questions pertaining to a widow. The article was also picked up by Crumpe and Oxtero in France.

This is where Running Point’s ability to lean on a full suite of backgrounds truly helps. Our senior financial advisor Liz deSousa, CFP®, CDFA® is a Certified Financial Planner (CFP), a member of the Financial Planning Association (FPA), and a Certified Divorce Financial Analyst (CDFA) who has a specialty in working with women experiencing a life transition, such as divorce or the death of a spouse.

Liz wants clients to feel in control of their lives and their finances, freeing them to focus on enjoying life.

The quoted excerpts are below:

“A sublease is when one rents out something that is already being rented,” Michal Ashley Schulman, chief investment officer and founding partner at Los Angeles-based Running Point Capital, told MarketWatch. You’d need a sublease if you rent the home to someone else for income (which you could consider in the future).

You need a ground lease, “where one leases the land, but not the structure on the land.”

The full original quote went into more detail:

“The widower (or mom) should probably consider obtaining a favorable, written, secure, and transferable ground lease for the home she constructs on the land to protect her interests in case her son and his wife divorce, she wants to rent out or sublease the home, or she needs to move and recoup value from the home she constructed.

“It may also be wise to put the home itself in a trust. In situations like these, it is often advisable to reach out to a reputable financial advisor for guidance as well as a solid attorney or real estate attorney for the ground lease and other rights.”

Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. The opinions referenced are as of the date of publication, may be modified due to changes in the market or economic conditions, and may not necessarily come to pass. Forward-looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-22–37