There’s no such thing as a free lunch can even apply in a context as virtuous as inheriting a home. Parents bequeathing the family home—or generations passing down the ancestral homestead—are intended to be acts of unalloyed generosity. But common to many commentaries on the subject are some common unintended consequences. For homeowners who have ever weighed the idea of passing the family home onto their progeny, it’s a point worth exploring.
The most acrimonious outfalls surface when multiple heirs are involved. Since individuals fare differently as careers develop and life’s opportunities and challenges unfold, the obligations accompanying homeownership present difficulties for some heirs more than others. Given the fact that taxes, insurance, utility bills, and maintenance expenses are ongoing even for a property that is debt-free, the choice of which possible disposition (occupying, renting, or selling) may affect heirs very differently.
Overlaying the financial outfall is the likelihood that the latter two income-generating solutions are bound to raise sentimental issues when clearing the property for sale or new tenants. The emotional stress often causes heirs to avoid cleaning out an inherited property, sometimes, for years. The best solutions seem to result when everyone can summon “their best selves” to cooperate in formulating a precise agreement spelling out how ongoing expenses and obligations will be shared. Another variation is for the donors to engage legal help to create a framework that addresses the specifics in ways designed to minimize discord.
Having pitched and listed a number of estate properties and sat around the kitchen table while the siblings analyzed, thought through and sometimes argued about the best case scenario, here are three guidelines, if you find yourself in this situation and a solution does not seem obvious:
1. Consider A Facilitator: If there are strong opinions with different directions held by family members, bring a facilitator early in the process, to moderate discussions and help keep emotions in check.
2. Have One Point Person: The more accurate, clear and concise communication is between the agent and the inheritors, the better for all. Designate one family member or a third party to be the “voice” for the family and interfacer with the real estate agent.
3. Have a Strategy: Many markets are struggling a bit, and the first list price may not result in an offer or at the offer level that the inheritors planned on. Work with your realtor to have a general timeline and checkpoints to review the marketing strategy, including the price, so that the property listing does not become stale and lose its market presence.