Jan 27, 2025
Forty-three percent of recent homebuyers have struggled to make mortgage payments on time and 44% have had to take on additional debt to maintain their lifestyle, according to a 2024 survey by Clever Real Estate.
Given the cost of housing and mortgage rates these days, this isn’t surprising. So if you've been helping your parents pay their mortgage and property taxes, you're probably not alone.
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But you were promised a larger share of the home sale profits in return and have now learned that a sale may not happen anytime soon because your sister is going to live in that home permanently.
You decided to stop paying, despite that possibly upsetting your parents and sister alike. But was that the right thing to do?
A matter of motivation
The only people responsible for repaying a mortgage are those whose names are on the mortgage. If your parents signed a mortgage that you're not on, then it's not your financial responsibility to pay it. And if your name is not on the deed of the house, then it's not your property, which means you have no obligation to pay property taxes on it.
So in this situation, it's important to revisit your motivation for paying the mortgage and property taxes on your parents' behalf. Was it to help them out? Or was it to gain a larger share of the proceeds once the home was sold?
If your primary reason for paying was to be of financial help to your parents (perhaps as a thank you for raising you), then the fact that your sister has moved in shouldn’t necessarily stop you. If your main reason was to benefit financially, and you feel that won’t be possible anymore, then instead of paying their mortgage, you may want to start socking money away for a down payment on a home of your own.
However, there may be a way to salvage the situation. Let's say your sister does want to stay in your parents' home on a permanent basis, which means it may not be sold in your lifetime, but you also want to keep helping out. In that case, it may be possible for your sister, over time, to buy out your share of the home. But what you'd want to do in that case is get an agreement in writing to that effect. You can use an attorney to draw one up.
Of course, it’s not unreasonable to suggest that if your parents and sister collectively can’t afford their home without your help, then perhaps they should move to a less expensive home. Whether you’d get anything in that sale, however, would depend on your parents’ desire to uphold any verbal agreement you may have had in place.
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If there’s no written contract stating that you were going to pay the mortgage and property taxes all of those years in exchange for something, then you may not have any recourse.
You’re also your parents’ child, though. So that alone might prompt them to do the right thing. They could, for example, pay you back for the payments you made once they sell the home.
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Open conversations about estate planning
The issue above, at its core, boils down to poor communication and estate planning on everyone's part. Had there been a written agreement from the start, there would perhaps be no conflict or confusion now.
Only 32% of Americans have a will, despite 64% saying having one is important, according to Caring.com’s 2024 survey.
Estate planning can be an uncomfortable topic — as can money in general — and some families may prefer not to discuss it. More than a third of Americans (35%) do not plan on discussing transfer of wealth with their families, according to research from Edward Jones.
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So the best thing to do is have an open conversation as a family about the assets that may be available as an inheritance, and how they’ll be distributed. And from there, it’s a good idea to work with an estate planning attorney as a family to make sure things are property documented.
In a situation like the one above, an estate planning attorney might advise the family to place the home into a revocable living trust. But Rocket Mortgage warns it can be difficult to change your mortgage terms by refinancing after you’ve put your home in a trust.
Doing this can also be advantageous for a couple of reasons.
First, if the home isn’t part of a will, it means it won’t be subject to probate. Probate is a potentially costly, time-consuming process that can result in a delay in the transfer of assets. However, like a will, a trust can still be contested after your parents' death.
Secondly, a revocable living trust would allow the parents here to own the home and retain control over what happens to it as long as they’re alive. This would give them the flexibility to decide who inherits it, and by what percentage, based on their children’s respective financial contributions.
The key, either way, is to have these conversations together so that everyone is in the loop and no one ends up feeling bad. And it’s also important to have everything out in the open because if it’s decided that the best way to transfer assets is a will, leaving one beneficiary disgruntled could cause that will to be contested. And that could cause a world of headache and heartache for everyone involved.
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Maurie Backman has been writing professionally for well over a decade. Since becoming a full-time writer, she's produced thousands of articles on topics ranging from Social Security to investing to real estate.
