Hot stuffRare old NYC subway photos NYC Outdoor Movies: Every movie showing outdoors Summer 2015
Ask an Expert: How do I bequeath my co-op?
I recently bought a one-bedroom co-op, which I'd eventually like to leave to my sister. What are my options for estate planning?
Leaving a co-op to a sibling should be as simple as putting it in your will, right? Not exactly. While you do have a few options, youll have to get the co-op boards blessing no matter what route you take, our experts say.
The simplest way is, yes, to name her in your will. But check the language in your proprietary lease (the equivalent of a deed for a co-op). Almost all of these agreements require co-op owners, technically known as shareholders, to get board approval before assigning that lease and the corresponding stock in the corporation that owns the building -- commonly called the stock and lease -- to another person.
Many leases exempt the shareholder from such consent requirement when there is a transfer to a spouse or child, but it is not customary to see such exemption for a sibling, says co-op and condo attorney Scott Greenspun of Braverman Greenspun, hence, the advice to check the fine print.
However, most leases prohibit the board from unreasonably withhold[ing] a bequest to a financially responsible member of the shareholder's family, notes real estate attorney Jeffrey Reich of Wolf Haldenstein Adler Freeman & Herz.
If the board rejects your sister, she could still retain the economic value of the apartment -- basically, shed keep the proceeds of a sale, even if she werent allowed to live in the place. You may want to explore this option if your sister plans to live elsewhere anyway.
Another possibility is to sort this out while youre alive by adding your sisters name to the stock and lease and specifying that you are joint tenants with the right of survivorship.
This too would require the review and approval of the board," meaning a full application package and personal interview -- whatever is the building's standard procedure, says real estate attorney Dean Roberts of Norris, McLaughlin & Marcus. "But that would occur now and, if approved, the transfer of the apartment would be assured, assuming the sister outlived the current shareholder."
Since you'd be naming your sister as a joint owner of the apartment, it could be tricky if you have a mortgage, he says.
"If the current shareholder were to add the sister and then die, the bank would have no recourse against the shares, as the interest will automatically pass by operation of law to the now added sister," Roberts explains. "In addition, you would most likely have to get the original stock certificate and proprietary lease from the bank in order to issue new shares. If you were to add the sister, she would either have to guarantee the loan or restructure the loan so that both are borrowers."
Last, you could transfer the co-op to a trust that would benefit your sister, suggests Reich. But again -- are we sensing a pattern here? -- the board would have to sign off.
Leigh Kamping-Carder is the founder and editor of BrickUnderground.com, the online survival guide to finding a NYC apartment and living happily ever after. To see more expert answers or to ask a real estate question, click here.