Dear Commander Bun Bun,
My mother just did her estate planning and she told me she will be leaving us her vacation home. My father is deceased, and I am an only child. Despite her generosity, my family doesn’t want the home, and we told her that in the nicest way possible, but she still insists on leaving it to us. The reason we don’t want it is that there are annual home-owners fees we would have to take on, constant maintenance since it’s an older home, and it’s so far away from us, we will likely never use it. How do you suggest I handle this situation?
Parents often work hard to purchase a vacation home and cherish the idea of keeping it in the family, so their children and their children’s children can travel and enjoy the benefits.
I would suggest you broach the subject again in gentle way. Estate planning documents can be modified if your mother changes her mind.
If your mother insists on leaving you the house, here are some things you can do:
Rent it out:
Make the house a vacation rental to generate income.
Since you are far away, you might need to hire a property management firm, which can cost between 10-30% of the rent, but it can still be worthwhile having the extra income.
Turning the home into a rental provides a big tax benefit, too. The depreciation expense will serve to reduce your taxable rental income. For tax purposes, the house (not the land) is considered a depreciable asset and a certain percentage of its value can be deducted annually. You can also depreciate improvements, like a new roof, provided they add value or will extend the property’s life.
If the house becomes too much to handle and you really can’t do it anymore, you may have no better option than to sell it. However, selling an inherited house isn’t easy. There’s the financial cost of making necessary updates to attract buyers. You will need to take steps to learn the market, educate yourself and have a Realtor who is reliable. You need someone who is going to be empathic and is there to help.
Expect an Emotional Process
The process of renting or selling your family’s vacation home is likely going to be emotional, from the sorting of the personal belongings to the finalization of the sale at the closing table. Expect that, and surround yourself with professionals who will be empathetic and helpful.
For your own estate planning needs, be sure to call an experienced elder law attorney, such as Evan Farr.
Hop this helps!