Inheriting a parent’s home can be both a financial and emotional challenge. A recent nextavenue.org article (“What to Do When You Inherit Your Parent’s House,” October 2014) provides some pointers for whatever you decide to do with the home.
Selling: Be sure to look at recent comparable home sales to help you price the property appropriately. Ensure that all bills are paid and appropriate insurance is maintained. You will need to pay any remaining mortgage balance and fees associated with a house sale.
Moving in: Moving in will give you additional time to review and make determinations about the possessions left behind. Note that moving in may result in higher property taxes for you.
Renting out: You could also rent the property, but retain the right to use it on desired occasions. Ensure you have the appropriate insurance coverage in place to serve as a landlord.
It is imperative that you plan ahead to ensure your assets--including your home-- are distributed according to your wishes. TIAA-CREF has information to get you started. You have many options, such as designating co-owners of your assets now, or including a “transfer on death” designation (if legal in your state). It’s important that you understand the estate planning tools available to you:
A will enables you to distribute assets, name guardians for minors and name an executor of your estate.
A revocable trust is a financial arrangement by which a third party holds assets on behalf of a beneficiary. It is often used to avoid probate (a court-supervised process of accounting for your assets). It may be altered or revoked at any time by the person who established it, and assets held in a revocable trust are still considered personal assets for estate tax purposes.
An irrevocable trust cannot be altered in any way after it is established, and assets placed in an irrevocable trust are not considered personal assets for estate tax purposes.
If you and your financial advisor decide that a revocable trust is right for you, it doesn’t negate the need for a will, as a will can cover many more areas than a trust. It’s a good idea to work with a professional to choose what works best for you.
Have you inherited your parent(s) home? Share with us.