The recent death of legendary singer-songwriter Aretha Franklin initially posed a quandary for her four surviving sons. Because she didn’t leave a will, her $80 million fortune – including Franklin’s numerous real estate holdings – likely will take longer to divide, and the process could become complicated.
Although Franklin’s sons appointed her niece to execute the estate, the situation brings to mind 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. Many newfound executors can face uncertainty and feel stress when inheriting a property after the death of a loved one.
Inheriting a property can come as a shock and may feel like an insurmountable obstacle. Especially in the wake of a family tragedy or death, being the executor of an estate can be challenging. And usually the biggest asset in an estate – and the most difficult to resolve – is a house.
There are a number of important decisions an executor might face when a house is part of an inheritance.
To 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. 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? When considering keeping the property in the family, the executor needs to be objective about the beneficiaries’ dependability. Would you choose the other beneficiaries to be your partners in any long-term investment? Could they get divorced, go bankrupt or bring other entanglements? And if you decide to rent the property, there are issues to consider such as the local market for rentals and your ability to maintain the property.
Establishing value of the property. If one heir or beneficiary wants to buy the house, the estate must determine the market value and get a fair price for the heirs and beneficiaries. One way is to get two appraisals, and to look at estimates from a real estate website such as Zillow. 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.
Repair and renovate? The executor must make sure the house is maintained in good condition, necessary repairs are carried out, and that it’s kept insured. An executor can be personally liable for failure to maintain a property that results in losses for the heirs. 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, when the property goes on the market, thinning out the furnishings will help it show better. Nine out of 10 buyers first see the home in online photographs.
Being an executor is a high-responsibility, time-consuming, and often thankless job that people often take on while grieving. It’s up to the executor to assess not only the physical assets of an estate, but also the people and emotions involved.