Estate Executors Have To Balance Family Needs And Best Options
At An Emotionally-Charged Time
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,”
says Alex Lehr (www.lehrrealestate.com),
a real estate broker and author of The
Unexpected Sale: Guidance For The Executor/Administrator Of An Estate.
“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.”
Lehr provides a
list of important decisions the 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,” Lehr says. “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?” asks Lehr. “Could they get divorced, go bankrupt or
bring other entanglements?” And if you decide to rent the property, Lehr
says 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,” Lehr says. “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,” Lehr
says. “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,” Lehr says. “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,” Lehr says. “It’s up to the executor to assess
not only the physical assets of an estate, but also the people and emotions
involved.”
