Wealth management Boston

Getting Started After Inheriting a Home

Checklist: Deciding what to do with an inherited home

The specific issues at play after inheriting a house will vary for each person. However, many of the general considerations will remain consistent in most situations. As you face the difficult practical and emotional decisions at hand, this checklist can help guide your thought process as you determine what is best for you and your family. Receiving an inheritance can be an emotional and complicated time. If you would like help navigating the decisions you are facing, please contact us to speak with an advisor.

As you work through the guide, answer each question that applies to you. There is no magic score that can tell you how to proceed. This decision guide is designed to provide some structure to your thought process and illuminate any considerations that may have gone overlooked.

JUST THE FACTS

  • Does the house have a mortgage?
  • What are the carrying costs for the home? (Mortgage, insurance, taxes, maintenance.)
  • What is the real estate market like in this location? Stable? Growing? Volatile?
  • If you were to sell the property today, what does a real estate agent estimate the market value is?
  • Can you sell the home without major renovations or repairs? If not, what are the cost estimates?
  • What is the rental market like in the area? What kind of rental income can you expect?
  • What is your stepped-up basis in the home for tax purposes?
  • Based on your stepped-up basis in the home (valued at the date of death) and the current market value of the property, what do you anticipate your share of the pre-tax gain (or loss) to be?
  • Would using the home as a rental be worth the additional wear and tear?
  • What is the home’s equity? (Current market value less the outstanding mortgage.)

OTHER BENEFICIARIES 

  • Are you the sole beneficiary? If not, who are the others?
  • Are you likely to go into business with your co-beneficiaries?
  • Are you in a much better financial situation than your other beneficiaries?
  • Do you know what the other family members would like to do with the home?
  • If you keep the home, who will step up to be the point person on the home’s care and maintenance?
  • If you use the home as a rental, who will be responsible for the logistics?
  • Is your relationship with the other beneficiaries a good one?
  • If all the beneficiaries intend to use the home periodically, how will you resolve conflicts during popular vacation times?
  • If you wish to buy out the others, do you have the cash available to do so?

PRACTICAL + FINANCIAL ISSUES

  • Would you like to own a similar home in this location if not for the inheritance?
  • Do you have sufficient cash flow or other liquid assets to cover the additional ongoing expenses and maintain a safety margin?
  • How does owning this home fit into the rest of your financial goals?
  • Will the associated expenses of the house disrupt your other savings strategies? (Retirement, education, travel, and so on.)
  • How will owning this home impact your lifestyle, both financial and otherwise?
  • What are your short and long-term plans for this property?
  • Are you (or a co-owner) able and willing to care for the property? If not, are you able to hire someone?

NEXT STEPS

Before making a decision about what to do with the home you’ve inherited, speak with a financial advisor and tax advisor to ensure all the factors have been addressed. Finally, take your time as you make this potentially irreversible decision.

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Information on this website is for informational purposes only and should not be misinterpreted as personalized advice of any kind or a recommendation for any specific investment product, financial or tax strategy. This is a general communication should not be used as the basis for making any type of tax, financial, legal, or investment decision. Disclosure