I inherited a house – what do I do now?
ORLANDO, Fla. – Nov. 26, 2018 – Aretha Franklin died without a will, leaving an $80 million fortune and multiple properties. Although Franklin's sons appointed her niece to execute the estate, the situation shows how family feuds and other problems can potentially result when inheritance portions aren't clearly defined or when an executor may be in over their head.
"Inheriting a property can come as a shock and may feel like an insurmountable obstacle," says Alex Lehr, a California real estate broker and author of "The Unexpected Sale: Guidance For The Executor/Administrator Of An Estate." "And usually the biggest asset in an estate – and the most difficult to resolve – is a house.
Decisions an executor might face when a house is part of an inheritance
Keep, rent or sell?
Competing interests among siblings can make the right decision difficult. "Caught in the middle, the executor has to ask the heirs to keep their emotions under control and put the rational facts on the table," Lehr says. "Selling is often the best decision if medical bills, tax issues or other reasons require cashing out. And it produces a specific amount that can be divided equally."
Can you manage a property investment?
If "keep the property in the family" is an option, an executor needs objectively consider the beneficiaries' dependability. "Would you choose the other beneficiaries to be your partners in any long-term investment?" Lehr asks. "Could they get divorced, go bankrupt or bring other entanglements?" And if you decide to rent the property, Lehr said there are issues to consider such as the local market for rentals and your ability to maintain the property.
Establishing property value
If one heir or beneficiary wants to buy the house, the estate must determine the market value and get a fair price to be fair to the other heirs and beneficiaries, and that starts with at least one appraisal. "Alternatively, the executor can put the property on the market with the expressed provision that one of the heirs has the right of first refusal to match the highest offer," says Lehr.
Repair and renovate?
In the time after a homeowner dies and the house sells, an executor must make sure the house is maintained in good condition, necessary repairs are carried out and it's kept insured. "An executor can be personally liable for failure to maintain a property that results in losses for the heirs," Lehr says. "But how much work is worthwhile before putting a home on the market? That's a big question that depends on the property and circumstances."
Furnished or unfurnished?
It's not unusual for an inherited home to be filled with a 30-year accumulation of stuff. In most cases, the property should be cleared out and cleaned up before it's placed on the market, even if the executor decides to keep sell it as already furnished.
"Being an executor is a time-consuming and often thankless job that people often take on while grieving," Lehr says. "It's up to the executor to assess not only the physical assets of an estate but also the people and emotions involved."
Source: Alex Lehr, lehrrealestate.com
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