A case in point is when an investment property costs more to maintain than its rental or sales value. Basically the inheritance has a negative value.
However, if the property is bequeathed jointly to son and daughter (to give a simple example) and one individual wants to sell or rent; and the other does not, then the inheritance can end up costing each of the heirs a monthly “shortfall” of income.
But there is another issue with inheriting property, specifically land/real estate.
If the inherited property has been used for a business involving petrochemicals, this can prove to become a major headache for heirs who inherit the land and decide to sell it.
Businesses such as gas stations; vacant lots where chemicals have been stored and even dry cleaning stores may have significant costs to clean up the site designated as toxic.
On a grander scale there was a large commercial site that had to remain un-leased/vacant until local and federal toxic clean-up guidelines had been taken care of – a delay of many years with significant costs!
There is also the inheritance of a timeshare. I wrote a separate article about this topic titled: Timeshare. Beware!
Not every timeshare contract is the same and sometimes your heirs can be 'locked into' an expensive timeshare that they don't want or can't get rid of.
Before you purchase a timeshare, have legal assistance to review the contract and ownership documents.
Disclaim
There is also a method to disclaim the inheritance or gift. A beneficiary can refuse (or disclaim) the gift.
Why would someone disclaim a gift or inheritance?
One reason is to reduce the impact of estate taxes.
Another reason might be to allow the inheritance to pass on to the next beneficiary. (Note: When you disclaim an inheritance you do not get to choose who will then receive the inheritance - the inheritance passes to the next beneficiary.)
There are also rules about disclaiming and critical timing issues when making a disclaimer.
It is beyond the scope of this article to identify all possible outcomes.
When planning to disclaim any gift/inheritance it is advisable to obtain the advice of a qualified attorney.
When devising an estate planning strategy, these issues should be discussed and remedies sought before inheritance problems surface.
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