The decision of whether to leave the property to someone in your family can be difficult because it’s something that can potentially create conflict among those who inherit it as well as those who don’t. On the one hand, if you decide against passing on the property, you might have more time and money left over for yourself later in life. At the same time, if someone else inherits the house, they might benefit from an increase in equity that will otherwise go straight into a stranger’s bank account.
To help make this decision easier, here is some helpful information on this decision.
1. What Is the Definition of Inheritance?
Inheritance is a process where the assets of a person who has died are given to another individual or group. This can be a will or a trust, and the recipient is called a beneficiary. Property within an inheritance can be anything from land to books, depending on what you want to leave behind.
2. Why Pass on Your Rental Property?
There are several reasons you might want to leave your rental property for your children or grandchildren to inherit. For example, your children might benefit from the rental income generated by this property, or they might appreciate having a place to live in when they’re older and need the assistance of senior living. Your grandchildren might also appreciate having a place to live while attending college or finishing their postgraduate studies.
3. Which Children or Grandchildren Should You Leave Your Rental Property To?
It’s important to consider that leaving your rental property to your children or grandchildren means that you are choosing one individual over another, even if there’s nothing inherently wrong with this.
For example, you might want to leave your rental property to your daughter, who is a stay-at-home mom, because she will appreciate the assistance of a second income or because she can use the property in her planned relocation to a city with a lower cost of living. On the other hand, you might want your son to inherit the property because they recently purchased a house and will welcome the opportunity to use your rental income to pay for their new mortgage.
4. What Are the Benefits of Passing on Your Rental Property?
If you pass on your rental property to your children or grandchildren, they will derive several benefits. First, they won’t have to rent or buy a house right away. Instead, they can wait until the property is free and clear from mortgages before they begin making changes. Second, they might benefit from an increase in equity as the property appreciates over time. Finally, they can use the rental income to pay for college or as a supplement to their income.
5. Guidelines for Passing on Property to Family Members
When you’re planning to pass on your property, remember that this is a gift that will affect several people. Therefore, it’s vital to keep family harmony in mind as you make this decision. Consider the following guidelines:
- If you decide to pass on your rental property to family members, then consider passing on a family heirloom as well. This will help family members feel more connected to each other, and it will help your family members feel closer to you even after you die.
- Before you pass on the family heirloom, have family members tell you which family heirloom they would like to have. This will prevent family conflict and ensure that every family member gets a family heirloom that they can cherish.
- Before you pass on your properties, consider making sure that family members are financially stable enough to take care of that. For example, family members who are going through a divorce or experiencing a financial setback might not be able to take care of your rental properties.
6. Make Sure You Have an Agreement in Place
Before you divide your properties, make sure you have an agreement in place with each family member to whom you’re passing on the property. This agreement should state that family members will take care of the property and that each family member will not encroach on each other’s boundaries.
This family agreement will help family members learn to respect each other and ensure that they don’t become upset with each other. To make this agreement official and written in your will, you need to consult a family law firm; it can create a document that will be beneficial to all parties involved.
It can be tempting to want family members, such as your children or grandchildren, to inherit all of your properties and assets. But it’s important that they are financially stable enough for this responsibility and that the family agrees on who will take on these responsibilities.