Seniors often find themselves in homes that are functionally obsolescent for their needs. While keeping the dream of passing along the home to heirs, they hold on to their home beyond its peak usefulness to themselves.
Many, though empty nesters, keep their four or five bedroom home for holiday gatherings with children and grandchildren. The two or three story home’s stairs start becoming challenging, or unsurmountable.
Financially, the home’s costs cause depletion of savings and other investments. Maintenance costs grow as the home also ages, and repairs they could do before now require paid help. Even if the home has no mortgage, taxes and insurance costs grow faster than fixed incomes.
Beyond the primary residence, many seniors have invested in real estate. These holdings may include single family homes, but also include multifamily properties, and other commercial real estate. The hassle of the three Ts of investment real estate, (toilets, trash, and taxes) become overwhelming.
As one ages while holding real estate assets, one should begin searching for answers to the following questions. These are also great questions for ANYONE holding real estate assets.
• If I were to pass today what would happen? Is that exactly what I want?
• Are my intentions specifically laid out in legal documents?
• How much of the value of the property(ies) would actually pass to heirs after taxes and other costs?
• Have I minimized inheritance and capital gains taxes for heirs?
• Do the heirs have the desire, knowledge, and skillset to manage the properties?
• Would receiving this (these) property(ies) cause joy or animosity amongst the heirs as each has differing financial needs?
The answers to these questions may be unsettling, yet with the help of your financial and real estate wealth advisor teams, solutions can be crafted to preserve your wealth while preparing to transition assets to your next generations.
The Real Estate Advisor Column
By Richard Lombari
Richard has been in real estate sales for over three decades and is a real estate broker, author, speaker, and coach. To learn more about Richard, visit https://lombarirealestatewealthadvisors.com/about, email Richard@TheLombariGroup.com, or call 310-903-6509.