Inheriting a property from a loved one is a major life event, both emotionally and financially. However, in many cases, the property may be shared among multiple heirs, and this can make the process all the more complicated.
If you’re wondering what your next step is, here is everything you need to know about receiving a shared inheritance on a property.
How shared inheritance works
When a property owner leaves their home to multiple heirs, each person will receive a share of the asset. The share may be divided equally between all parties, or it may be divided based on the deceased person’s wishes. For example, the property owner may have chosen to leave a larger share to one heir who has been caring for them, or to an heir who is in greater need of financial support.
In some cases, the individuals who inherited the property may choose to sell the home and divide the proceeds fairly. Alternatively, they may choose to keep the property and share ownership – this is known as ‘co-ownership.’
Coming to an agreement
When a property is inherited by multiple people, it is crucial that everyone involved reaches a consensus on its purpose. Will the home be rented out for additional income? Will any of the heirs reside in it? Challenges can arise when one beneficiary is more emotionally invested or has personal objectives for the property. An example of this could be one person wanting to live in the property while others included in the inheritance do not. Resolving such situations fairly requires calm and careful consideration.
Regardless of the chosen course of action, it must be agreed upon by all family members involved. The more individuals implicated in the plans for the property, the greater the difficulty of reaching a consensus.
Considerations for property ownership
If the inherited property is in great condition, it could be a tempting prospect to maintain ownership. However, if the property still has an outstanding mortgage, as the new owners, those who inherited the home will be responsible for continuing the mortgage payments unless all parties decide to sell the property. Speaking to a specialist mortgage broker may help you to find a mortgage to suit your circumstances.
Selling a probate property
For individuals faced with the challenging situation of managing a loved one’s home, selling it quickly and easily can provide some relief from the associated stress.
Estate agents
and solicitors who specialise in probate situations have extensive experience and can offer invaluable advice to facilitate the process.
If you or any other beneficiary cannot envision living in the property, selling it is likely the best course of action. Owning an asset can become burdensome in terms of maintenance, and it is wise to avoid taking on more than you can handle.
Co-Ownership of a Shared Inheritance
In the instance that multiple heirs choose to maintain ownership of the property, they become co-owners and will have equal rights to use and occupy the property. They will also receive the shared responsibility of maintaining the home and paying any associated expenses.
However, it is not uncommon for co-owners to disagree on the use or maintenance of the property. This can lead to disputes or even legal implications. To avoid issues arising, having a clear agreement in place that outlines everyone’s responsibilities and rights is essential.
To sell or to lease?
Many recipients of inherited property will sell the home in order to get on the property ladder or upsize. This doesn’t diminish the emotional challenges of losing a loved one, which often leads to individuals expediting the sale to alleviate some of the stress, regardless of the price they receive. On the other hand, some may find it difficult to let go of the home immediately, as clearing out belongings can be distressing.
When it comes to joint inheritance, harmony between the inheritors is crucial. For instance, if both parties agree to sell, certain issues may arise. What price should be expected? Are they willing to wait until that price is achieved, or are they open to reducing it? If a price reduction becomes necessary, when and by how much should it be lowered? Anticipating and discussing these matters in advance is essential to establish a clear path and timeline that everyone can feel confident about.
Alternatively, renting out the property may be a viable option instead of selling. This can generate a consistent income that can be divided among the inheritors. Renting becomes especially attractive if there is no rush to sell or if the timing doesn’t align with everyone’s prospects.
However, it is important to consider potential updates that may be needed for the property and to ensure that a reputable and expert agent is enlisted to manage it, especially if the inheritors live far away.
For more information about what to do when you inherit a property, get in touch with your local branch.
