What important moves and considerations should those inheriting property be making right now?
Inheriting property isn’t like winning the lottery. It is a very sensitive issue. Beyond the stress of the situation, it can create a huge burden on surviving heirs. This is true whether inheriting a vast real estate empire or a more modest single-family home. So what are the critical steps heirs need to be taking, and how can they best manage what is left?
Start Early: While no one wants to appear money motivated in these circumstances, it is very important to move swiftly. There are holding costs incurred every day a property is held onto. In some cases, real estate can be rapidly devalued if not settled fast. That isn’t just a loss of monetary value for the individual, it also detracts from a lifetime of hard work. Acting sluggishly may only diminish it.
Find Out Where You Really Stand: Uncertainty generally makes matters worse in these situations. Remaining completely free of expectations for long periods is difficult, and the mind often fills in the blanks by itself. Some seriously underestimate the value of an estate and do themselves a serious disservice. Others vastly over estimate what they may be entitled to, and then make horrible financial mistakes over a period time. Find out where the estate really stands, who really has ownership to different pieces of property, and get to understand the processes and timelines involved.
Understand Title and Debts: Those new to real estate ownership and rights can can find them to be very confusing. Inheriting a piece of property isn’t anywhere near as straightforward as you would imagine. There can be multiple owners, multiple mortgages, housing associations, and other liens involved. A title search can help identify these items, provide more clarity, and can help facilitate a streamlined process.
Understand Taxes: Taxes can play havoc with inheritances if not accounted for. There can be sizable estate taxes when succession occurs. Other tax debts may also need to be settled in the process, and there can be increased taxes for the recipient as well. Talk to a tax pro and find out what the liabilities are and how to minimize them in advance.
Get an Accurate Property Evaluation: Some may flippantly remark that “the market value of a property is what someone is willing to pay for it.” This is simply a little too vague. Unfortunately online home valuation tools have been found wildly inaccurate too, and there is always the concern that real estate agents might just be telling you what you want to hear in order to get another listing inked. So speak with at least several local property professionals, or even consult a local appraiser to get a more accurate idea of what any real estate might be worth. You don’t want to be sitting on it for months or years because you have it drastically overpriced.
Weigh Your Selling Options: There is more than one way to sell an inherited property or real estate investment portfolio. The best choice really comes down to the individual situation. For some there may be no pressure to sell, and heirs may have the luxury of listing a property with a Realtor for years, and may not even feel all of the money flowing out to hold onto it and maintain it during that time. Others might find they can easily market the property themselves as a ‘FSBO’. Many may find they are best served by selling homes fast to expert real estate investors for cash who have experience with inherited property. This may be especially true when there are multiple properties involved. Those that have experience in this area may even cover many of the costs involved in selling, and can often help with concierge services to make the entire process a little easier.
Get Help Sorting: One of the most significant burdens of even dealing with inheriting a modest single-family home is all of the stuff. Often a lifetime of things has been accumulated and just needs going through. This can take a whole team weeks. There can be family heirlooms and real treasures to be discovered, but often lots of items not worth anything. You don’t want to accidentally give away a priceless piece of art, or waste items that others might desperately need. A little pro help can come in handy with moving, organizing garage sales or putting items on eBay, or shipping off donations to charities.
Get a Head Start on Your Own Estate Planning: This is also the perfect time to revisit or get started on your own estate planning. Don’t wait for “the perfect moment.” It never comes. Now the insights will be fresh in your mind, and you’ll know some of the things you may do to make it easier for your spouse and the next generation when it is their turn. Perhaps you need to start a trust or write a will. May be you even need to use the proceeds of this inheritance to invest in your real estate education and start investing to build up a nest egg and legacy of your own?