Creating an estate plan may include the ability to update it any time and for any reason up until your death. If you discover that your adult children prefer to not inherit a valuable asset, you may revise your plans to avoid potential problems.
As noted by Kiplinger’s Personal Finance, sibling heirs may have a difficult time sharing their current residence or vacation home. By not selling it, siblings may also have shared liability for a property’s expenses such as maintenance, insurance and taxes.
Heirs may take on responsibility for mortgage payments
If you die while your home has an outstanding mortgage, an heir needs to agree on assuming the loan. According to the Consumer Finance Protection Bureau, federal law requires your mortgage servicer to honor your heir’s loan assumption even if he or she does not have a stellar credit rating.
If heirs cannot afford to take over mortgage payments, they may prefer to not find themselves named as beneficiaries. In some cases, you may expose your heirs to a potential issue in probate court.
Cash reserves may allow an heir to afford a home
Conversations with your adult children about taking over a mortgage may help you to determine whether a financial issue creates any hesitancy with regard to inheriting your home. You may find other assets to sell, which may then generate sufficient cash to leave your heirs so they may afford the property. Selling valuable heirlooms and collectibles, for example, may provide the needed funds.
By liquidating those assets your heirs have expressed no interest in maintaining, you may increase your cash reserves. If you wish to pass on certain items or properties, your estate documentation may also include a charitable organization that reflects your values. Certain assets may serve as a philanthropic gift that your heirs may not have a use for.