Advice on how to handle inherited property
Snohomish County – Washington – Full Service Law Firm
Advice on how to handle inherited property
Published: Sunday, January 3, 2010
By Eve Nicholas
Special to The Herald
For most property owners, it is relatively easy to decide what to do with investments. They evaluate their personal priorities such as cash flow, lifestyle and living space. They consider the state of the economy and real estate market. Then, based on these factors, they make a decision. Sell the property or hold on to it.
When real estate investments are passed on through wills and estates, real estate decisions may be more difficult. Surviving children, grandchildren, siblings or friends must weigh the practicality of finances and market trends against the sentimentality of family history.
In the state of Washington, when a property owner dies, real estate assets either transfer directly to the spouse (with a community property agreement in place) or they enter a period of probate. Kent Millikan, attorney and partner at Deno Millikan Law Firm, said the probate process is administered by a personal representative designated in the decedent’s will or appointed by the court. This individual locates assets, pays debts, files taxes and makes decisions to buy, sell or hold real estate and personal properties.
It may seem straightforward, but probate can be a tricky process. Following the death of a loved one, emotions can run high. Beneficiaries often have contradictory opinions about the management and distribution of investments. For example, more than one beneficiary may wish to take ownership of a homestead property. Depending on the family dynamic, this situation could lead to a seamless distribution of assets (through cash allocation or a partnership agreement), or it may incite conflict among heirs.
“In the probate process, emotions affect people significantly,” said Millikan. “These emotions can get in the way of dollar-and-cents decisions.”
So, how do you effectively navigate all of these factors — practical and emotional — in order to make sound real estate decisions? Here are a few ideas that may help:
Talk to qualified professionals. “There is no magic formula about the choice to hold on to properties, but the best way to proceed is to get the advice of experienced professionals,” Millikan said.
Find a certified public accountant for information on tax liabilities. Seek out legal advice to facilitate probate activities and resolve disputes. Speak to an accomplished real estate agent to learn about the real estate market and sell properties.
Simplify estate administration. Some estates are especially challenging because of multiple beneficiaries, incompatible viewpoints or complex investments. Since disputes can be expensive and stressful, many personal representatives choose to liquidate assets and divide cash equally among heirs.
When complications arise, try to come up with an evenhanded solution and work together to execute it. If compromises prove to be unattainable, enlist the help of a third-party, such as an attorney or mediator.
Research the property and real estate market. Experienced real estate agents can assist personal representatives and beneficiaries in evaluating the physical condition and value of land and building structures. They may also provide insight into market trends, sales strategies, timing and expectations.
As you move forward, remember that real estate agents are advisers, not decision makers. A good real estate professional will be sensitive to the special considerations that may exist following the death of a family member or friend.
Be honest about emotions. In most real estate transactions, it is best to set aside emotional connections and focus on rational matters including marketing, pricing and deal negotiations. However, many beneficiaries have sentimental ties to old houses and properties. Plus, they may possess strong feelings of grief and loss.
Before making snap decisions about inherited real estate, reflect on the emotional aspects of owning, managing and selling family assets. Consider the needs and expectations of your loved ones and try to make an honest assessment of your own feelings.
In the end, the choice to keep or sell a property remains with the personal representative and beneficiaries. To facilitate the process, find a trusted attorney and real estate agent with experience in dealing with inherited properties. Talk to an accountant about tax responsibilities. Finally, reflect on less practical matters — emotions — to help determine the best strategy for everyone involved.
Eve Nicholas writes a weekly column on getting a job for The Herald and is a freelance writer on Whidbey Island.
© 2010 The Daily Herald Co., Everett, WA