A house is more than bricks and sticks on land–it’s a home. It’s memories made, children raised, and everything in between; a home carries A LOT of value to an individual.
I can understand why many folks have a strong desire to leave their home to their children as part of their Will or legacy planning. Here’s the thing: your kids don’t want your home.
Just reading this statement is hard, I get it! Your home has so many emotions attached to it. But when we remove the emotion and look at the facts, it’s easy to see why your kids don’t want your home as an inheritance.
Your home is just that: your home.
Most people spend countless hours and funds to customize their home. From social media platforms like Pinterest to entire television networks like HGTV dedicated to the craft, this endeavor of making a home your home is, well, a thing. Beyond the time being spent is the money. Thousands of dollars go into making a house look and feel the way you want and the ways it fits your family best.
The problem is, these customizations are your customizations for your family. Not customizations for your kids or their family. The dwelling you created, albeit nice, wasn’t created for your kids family. It was created for you and your family.
Home financial value is only real when it’s sold.
People love to boast about their home’s value. “My neighbor just sold their home for $XXX,XXX dollars. That gives me $XX,XXX in equity!” The problem with equity is it means nothing until it’s used. The home must be sold BEFORE your kids are able to get the real value out of it.
No matter what is going on in the neighborhood that is making your home “more valuable,” the real value is what someone buys it for through a real estate sales contract. Getting someone to go in contract on a home is not the most convenient process–one your kids will have to go through to realize the financial value in your home.
In most cases, when children inherit a home, they end up selling it for below market value because they want the sale of their newly inherited real estate to go quicker and smoother.
So what should you do about your home and how can you best bless your children?
Talk about it with humility.
One of the best pieces of advice for proper legacy planning is expectation management. Talk to your children about what you are planning to do, and include them in any parts you’re open to adjusting. Allow them to have a say about what they want to do with your home. This may require you to say something like, “It won’t hurt our feelings if you don’t want to move into the home after we are gone.” It may also require you to accept desires that aren’t in line with what you were thinking.
Either way, a conversation (or multiple conversations) is a great way to determine the best course of action for your home as part of the legacy planning.
Don’t rule out a reverse mortgage.
As mentioned previously, everyone should consider a reverse mortgage. It’s a wonderful way to access equity in your home, making the financial value real, then using this equity while you’re still living to help add more confidence to your financial future, creating additional memories with your kids while you are living, or leveraging your assets for investment to build even more wealth.
Include a real estate professional as part of your estate planning.
Now we recognize, selling a home is a process. Sometimes the process isn’t so bad. Other times the process can be a nightmare. Proper planning can make this process easier. Communicating with a real estate professional to make the sale of your home as easy as possible on your children when you pass is a wise move! The agent should be able to provide a step by step guide on what to do when your kids are ready to sell, a list of do’s and don’ts to make sure the sale goes easily, and their contact info should they have any questions.
What do your kids want?
Chances are the home you designed and lived in to meet your lifestyle is not the home that will best meet your kids’ lifestyle. Your children will likely take the equity, but the process of making that equity real is not always ideal.
The two things your children will likely want are inclusion and flexibility.
For more practical tips on how to leave a lasting legacy for your family, check out the Defining Stewardship podcast episode 111, ”Leaving A Real Legacy.”