You just inherited land or a home… now what?
By some estimates, baby boomers will pass approximately $68 trillion to their children, and a large portion of that wealth will be in the form of real estate - land and homes.
What to do with a recently inherited asset - lease it; sell it; update it; manage it; move into it - is a consequential decision and one which many people are not prepared to make alone.
After my mother passed away in 2018, my brothers and I inherited her home in the Dallas area. I wish I knew then what I know now. I’ll share those lessons learned in the future, but suffice it to say I’ve experienced this issue from multiple perspectives, including as an heir.
This is a complicated topic, and there’s more to it than what follows. But, here are three things to consider, along with some questions that I ask, when assessing a client’s situation and offering advice in this regard:
1. What is the current condition of the property? Is it a home with significant deferred maintenance - an outdated/unsafe electrical system; an older roof that looks like it might have some damage; termite or other pest issues? If it’s an acreage property, is the agricultural production currently satisfying county ag valuation requirements? Are you able and willing to tackle those issues?
2. If you keep the property, will your current and near-future financial capacity allow for ongoing operating/maintenance expenses, necessary repairs, insurance costs, property taxes, etc? In addition to the financial side of the equation, are you willing to invest the time that’s required to address its ongoing needs.
3. Could the proceeds from the sale of the asset help you to achieve some other personal goal? Is that actually a worthy goal? The latter is for you to decide on your own, but I have an opinion if you’re interested.
Selling something that your parents and grandparents worked hard to build and achieve, starting before you were even born, isn’t a decision that you should make on a whim. Liquidating a home, a rental portfolio, or a family farm in order to support your dream of traveling in Europe for a few months or buying a new luxury car probably isn’t the best decision… or one which honors the legacy of those who came before you. Further still, the easy thing to do isn’t always the right thing. You’re now in a position to conserve, maintain, and grow what your relatives left behind, and maybe that’s the right way to look at this. I’m not a financial planner, a tax expert, or an attorney (although I do have some fantastic referrals for you). I am, however, more than willing to share good advice based on what I’ve seen work well for others who have found themselves in your shoes.