Over the next decade or two, members of the silent generation and older baby boomers will be leaving their children and grandchildren $68 trillion, most of which will be in the form of homes.
“More than half of all existing-homes are owned by baby boomers and the silent generation,” according to Mark Fleming with First American Title.
Heirs have several choices as to what to do with these assets. The three most common include:
- Move into the home and live in it
- Rent the home to tenants
- Sell the home
Many of my clients decide to sell the home, splitting the proceeds among the heirs.
While not my clients, the following story is pretty common for people who find themselves having to deal with an inherited house.
Last year when Louise Bishop and her brother Frank Becker inherited their childhood home in a Minneapolis suburb, they entertained all three options.
Going through their dad’s paperwork they learned that he’d fallen behind on payments and the home was in pre-foreclosure. Working with the bank’s attorney, they were able to secure a hold on the foreclosure so that they could sell the home.
Even if it isn’t facing foreclosure, there is still a lot to consider when deciding to sell an inherited home.
Will your pocketbook stretch?
It turns out their dad was a bit of a hoarder, which Becker and his sister learned as they sifted through their late father’s belongings. Faced with more than 50 years worth of accumulated stuff they’d need to sort and dispose of was challenging enough.
Two inoperable trucks, a salvaged boat on a trailer and odds and ends from their dad’s old plumbing business littered the property.
Hiring professionals to remove all the “junk,” clean the home and perform needed upgrades was expensive. Thankfully, Louise and Frank had the funds between them to pay for it.
I’ve worked with other families whose bank accounts aren’t as flush; sometimes it might make sense to have a lower asking price for the home to compensate for the buyer having to remove the stuff.
There also may be liens on the home other than a mortgage. A highly experienced real estate agent can help walk you through your options.
There’s often an emotional toll to pay
Cleaning out a lifetime of memories in a home that you may have grown up in, while still grieving the loss of a parent, is difficult for anybody to go through.
The process can be quite emotional for you and other family members. Remember to take breaks occasionally and get away from the house. Taking a walk and eating a meal can help recharge your spirit during an emotionally draining time.
Take it one step at a time
Other family members swore that Louise and Frank’s father didn’t leave a will (known as dying intestate). This means that state law will determine how and when the property can be disposed of.
Louise, however, clearly recalled her mother telling her that her did, indeed, have a will. Within 30 minutes of rifling through paperwork, the will was found, with clear instructions as to the division of their dad’s property.
The best first step is to locate any paperwork having to do with the house. This includes loan paperwork, letters from the lender, tax information and deeds.
When you hire an attorney (another expense, but necessary), he or she will want to know how title was held, among other things.
Why an attorney?
State probate rules will determine if the home will be included in the probate of the deceased’s will.
Probate is a legal proceeding that determines the legitimacy of the will or, lacking a will, identifies the deceased’s legitimate heirs (according to state laws regarding inheritance).
It can be a long and often expensive process. Thankfully, Becker hired an attorney who agreed to take the bulk of her fee at the close of probate.
Speaking of probate, if you’re facing the procedure, it’s important to get familiar with it. Don’t dispose of anything of value before probate. Anything that might be considered part of the estate must be included in probate.
I am not a lawyer
The information provided is from a layperson’s point of view. I am not a lawyer and cannot give legal advice.
I can tell you that you’ll need professional legal and, perhaps, tax advice and assistance if you plan on selling an inherited home.