Is your real estate still a good fit for your lifestyle?

By Jeff Stewart, CCIM

An old friend and client recently called and asked for a favor. He was concerned that his family would be unable to handle his real estate in the event something happened to him, and he wanted permission to state in his will that I was to assist them in deciding what to do with the properties. It is not an unusual request, and I am happy to help if needed.

Yet, my first thought was that it is better to develop a plan now, instead of forcing heirs to deal with it unexpectedly. Unfortunately, we postpone the uncomfortable. People’s reasons to avoid dealing with their changing real estate needs probably vary: “I do not want to pay capital gains taxes.” “My kids may want it someday.” “I promised Uncle Alfred I would never sell the farm.” “What do I tell the neighbors?” The circumstances are as different as the families and the properties. Perhaps you have been procrastinating because you have a few reasons of your own. Accumulating real estate required years of hard work and planning.  Doesn’t that justify having a well-thought-out plan for the future, too?

The first step in devising a plan for your holdings would be an open and frank discussion with your family and accountant. Some important questions might be:

  • What are the likely tax scenarios involving this property?
  • Who can manage it if I am unable?
  • Will I need additional income in my later years?
  • Do my heirs want the property, and can it be split easily among heirs?
  • Is the property close to where my heirs live?
  • Is the property being maximized? (Do we still use the lake cabin?)
  • Have my needs or interests changed in regard to the property?
  • Is the property well-maintained? (Is anyone caring for the lake cabin?)
  • If I leave the property to my heirs, will they use it or sell it?
  • Is anyone willing to step up and help me maintain/manage the properties?
  • What is the current and future cost of maintaining a particular property?

A trained, experienced, caring real estate professional can assist you with discovering these answers and possible solutions. The key is listening to all the parties involved.

If a greater cash flow is needed, several options should be considered. A lease vs. sale analysis might be appropriate. If the property is essentially an unused asset, selling the real estate in a manner that minimizes capital gains taxes should be considered. If the heirs have expressed a lack of interest in a property, perhaps the time is right to explore alternative investments rather than saddle them with something they care nothing about.

The goal is to discover what works best for you . . . and the people you care about most. If you have the need to make changes and have been hesitant, now is the time to call a professional who can help you formulate a plan that works for you and your family.

Jeff Stewart, CCIM

Stanberry & Associates





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