Selling Inherited Property by Heather Hilder on December 30, 2020 “Selling Inherited Property” The Emotional Impact You don’t expect to enjoy very much public goodwill when you choose estate agency as your career. What takes many people aback is the emotional impact of selling an inherited property. Obviously no one would ever claim that helping people to buy and sell homes is as important as being a front-line healthcare worker, a teacher or any number of other jobs that are often underpaid and overlooked in their value to society. However, even though it’s a sad fact that the behaviour of a few bad apples taints the reputation of the rest of us who work hard every day in our own huge sector of business, thankfully all the estate agents I know do really want to make sure that their clients have the best outcomes in all possible ways, not purely just the financial ones. Reasons to Sell People sell homes for a great many reasons, some happy and some sad. Helping someone buy their first home or move up the property ladder to a bigger house brings immense joy and satisfaction to all involved. On the flip side though a sale which comes about due to unwelcome life changing circumstances, such as the death of a loved one, a divorce or severe financial difficulties means it can be a very different situation indeed. The sensitive area of bereavement is perhaps the most challenging of all for someone in my line of work, as selling an inherited property means dealing with a range of emotions and sensitivities that really need a uniquely thoughtful and caring approach. That’s why a good estate agent must be a real ‘people person’ – someone who can empathise with the situations that their client finds themselves in, can understand their reasons for selling and the emotional turmoil they may be going through. When it comes down to it, it’s my job to help people get through what can be a very difficult and challenging process. Five Stages of Grief In her book ‘On Death and Dying’ which was published in 1969, Elisabeth Kübler-Ross first proposed that there are five distinct emotional stages which almost everyone goes through when suffering grief from loss. Although she did not claim that every single person would experience all five emotional states in the same order, the concept has proved to be so accurate that it is now used across a whole range of disciplines outside of healthcare. Relationship break-up counselling and post traumatic stress treatments sit alongside commercial corporate training courses and various educational programmes in their use of the Kübler-Ross concept. From my own personal experiences and those gained from working with people who have inherited property, I’ve seen the way in which the ‘five stages’ really do affect the experience and behaviour of clients. It stands to reason that being aware of this process can give an insight into potential problems and offer ways of avoiding adding more stress to an already difficult period of life. Below is a checklist that applies the Kübler-Ross emotional stages to different scenarios that might occur when you inherit property. I hope that you find the information useful if you are affected by the loss of a loved one. Here is some practical and helpful professional guidance about property matters. The 5 stages Kübler-Ross identified are: 1. Denial Denying the reality of any situation that is unwelcome and outside of our day to day ‘normal’ life is a simple mental defence mechanism. It is designed to limit the effects of immediate shock. For most people experiencing grief through the loss of a loved one this is a temporary response along the lines of “this can’t be happening” and is a totally a normal reaction in the face of overwhelming emotions. 2. Anger The pain of loss is often harder to deal with if it comes out of the blue. As the buffering effect of denial wears off intense emotions come to the surface and anger can be the hardest to deal with. Whether it is aimed at yourself or at others, anger always has a destructive potential that must be faced down. This is especially so at a time of such heightened emotions when you and everyone around you actually needs love and support instead. 3. Bargaining Feelings of helplessness that accompany grief often lead to a need to regain control. Bargaining in this case means making deals with yourself in order to try and make sense of what has happened to you and to influence what will happen next. When it comes to practical matters such as inheritance this aspect can have very real consequences in terms of making long-term decisions, especially in matters such as property or other financial areas. 4. Depression Depression associated with mourning is another completely natural mental response to loss. For most people the process of grieving gives time and space to deal with this emotional fallout. When you need to make practical decisions about what to do with an inherited property, you might find it harder to let go and move on. 5. Acceptance Acceptance does not equate to happiness. However, it does give weight to the old saying that ‘time heals all wounds’. After going through the emotional roller coaster of the previous stages, at some time the natural grieving process does usually lead to a sense of acceptance. This enables you to move on in what might be called a very personal ‘new normal’, giving what some may call a sense of closure. When formalities involving Wills, probate and inheritance have been dealt with and concluded this can greatly help with achieving this final stage. Checklist This checklist looks at how each of the Kübler-Ross stages might affect someone who has inherited a property as well as the practical implications, potential pitfalls and solutions that I’ve learned through my own years of experience. It Can’t Be Happening When you are grieving for the loss of a loved one your whole world can feel as if it is falling apart. Dealing with the reality of the situation not only involves the emotional impact but often means looking after practical and legal matters too. It’s easier to go into denial about what needs to be done, especially if you are trying to manage the situation on your own. Avoid the Back Burner The natural mental defence mechanism of denial can lead to a certain amount of putting things ‘on the back burner’ but there are many important duties and responsibilities that follow on from a death of which many often carry legal implications. The impulse to worry about it later isn’t always a good idea. Deciding what to do with an inherited property shouldn’t be at the top of anyone’s agenda. However, it is something that will need to be looked at sooner rather than later. If neglected for too long, unnecessary costs can build up. Emotional Selling The emotional shock that accompanies the death of a loved one can quickly turn to expressions of anger. Although that might seem a strange emotion to encounter when you are deciding whether or not to sell an inherited property it is something you may have to deal with. There are many ways in which it can become a problem. This is especially true, particularly in situations where property has been left to more than one person. Financial matters that concern siblings, other relatives or close family friends can often be strained and this is no different in what can be a highly charged emotional atmosphere of bereavement. How to Deal with Anger You can avoid angry exchanges over differences of opinion. Everyone needs equal time to state their case during calm conversations. Recognising your own anger under difficult circumstances is one of the ways in which the ‘five stages’ process can help you gain an understanding. Having an impartial ‘third party’ clearly set out options can be the easiest way to avoid personal conflicts in times of heightened emotional stress. I understand how difficult the process of selling a bereavement property can be. I have a great deal of experience in explaining the ins and outs of the process clearly. Helping to make sure personalities don’t clash and become a problem can take time and patience. Sell or Keep? When you inherit a property it usually comes at a time of deep emotion. As a result, it’s hard to make difficult decisions with a clear mind set. Different practical and legal arrangements can be involved. This is even more true when an inherited property is part of the equation. When the time comes to decide what will happen to a property under these circumstances, the first question will be whether to sell or keep it. Owning a house or flat that isn’t your main residence can be a long term source of income particularly if there is no outstanding mortgage or other charge on the property. However, some people find the idea of strangers renting what was previously their family home difficult. If the idea of rental income is something that appeals, the best option can be to sell the inherited property. By so doing, you can use the proceeds to buy a completely separate investment property to rent out that is free of any emotional attachment. Sibling rivalry On many occasions siblings or other relatives might end up jointly owning inherited properties. This situation can present a unique set of problems. Different ideas on what should happen can cause problems. This happens particularly if one party wants to sell and another keep it and rent out as above. Another common scenario is that someone might want to actually live in the property themselves and need to ‘buy out’ others in order to do so. The best thing to do in these cases is to talk to a professional as soon as possible. Everyone concerned needs to gain a clear understanding on each option and of course an accurate valuation of the property. In my own career as an estate agent I’ve come across almost every situation you can imagine. Helping recently bereaved people deal with the practical matters surrounding inherited property is what we do. Emotional bargaining The word ‘bargaining’ in terms of property usually means a potential buyer putting in an offer. The seller can then accept or reject the offer, depending on whether he is looking for a higher value. When it comes to a property that is now owned through bereavement, there are many other aspects and choices that might not have been considered. Dealing with other family members is usually the main area in which problems can occur. Therefore, having an impartial third party offering advice based on experience is often the best way to find a solution. Sadness of Selling An essential part of an estate agent’s job is understanding the emotional strain of anyone selling a property. Especially so if they have recently lost a loved one. Being a natural ‘people person’ was one of the things that attracted me to the role. Understanding the unique needs and requirements of each individual client and putting yourself in their shoes when it comes to the reasons for selling a property is paramount. When someone asks me to help them sell a property they have inherited, it means that someone close to them has died. Often that is a parent, partner or other close family member. The emotional strain this involves is hard enough to go through. When you add that it might involve saying ‘Goodbye’ to a home that will have a lifetime of happy memories of their lost loved one it takes on even greater significance. Closure When Kübler-Ross wrote about dealing with sadness and depression following on from bereavement her final stage of five was ‘acceptance’. Although it might be difficult to realise at the time that someone is going through the process, there is a positive side to achieving a sense of closure. It allows the celebration of the lives of those who are no longer with us. When inheriting a property, remember that the person/s who left the inheritance did so wanting the benefits to be used in ways that could have the most beneficial and positive effects possible. How Do I Sell? Selling an inherited property involves different procedures and practicalities that might not usually occur in any other type of sale. Selling a home you own and live in is usually fairly straightforward in terms of paperwork and legalities. When you have inherited a property things can be a little more complicated. Wills and probate are part and parcel of inheriting a property. Outstanding charges on the deeds or other debts payable by the deceased’s estate can all complicate the picture. Making sure that you get professional advice as early in the process as possible is important. When it comes to selling property that means choosing the right estate agent. Being Practical Keeping a home safe and secure should come naturally to all of us. However, when someone passes away it is just as important. Leaving a property unoccupied needs certain practical steps. It may sound obvious but grief can make it easy to overlook so called basic ‘admin’ duties: Lock doors and windows; Turn on any alarm systems to alert you and your loved ones’ neighbours of any intruders Remove items of value, both financial and emotional, for safe keeping Turn off electrical or gas appliances along with any running water Admitting to yourself that a loved one has gone is never easy. Informing the relevant authorities and organisations of their death can be one of the most difficult things to do. Unfortunately many insurance policies become void when the holder dies. Therefore, your first step is to contact the insurance company and find out whether it is still insuring the property. Inheriting a property with a mortgage means you are liable to make the monthly payments. This is irrespective of whether or not you choose to live there. The Will If the deceased left a Will and it names you as sole owner of the property things are always easier. Shared ownership, for instance with siblings, is common. Approach matters calmly and take into account the possible effects Kübler-Ross’ five stages of emotions may be having on you. Then, there shouldn’t necessarily be too many problems. However, if a person dies without a Will, the person is ‘intestate’. Then, the situation can become more complex. Inheritance law generally determines the next of kin as the Administrator. The ‘Administrator’ is the person deciding whether a Grant of Letters of Representation is needed. Some people inherit part of a property whilst another owner still lives there. Sometimes, the property may be a rental with a tenant. In either case, the other person needs to be factored into the equation with dignity and respect. The rights of another owner may be set out in the Will. If not it will need to be formally agreed under what terms they will continue to reside there. If you inherit a tenanted property you will find yourself automatically becoming a landlord. As such you’ll have responsibilities. You will need to take on board the legal rights of the tenant if you wish to sell. Probate An Executor of a Will receives legal authority to act on behalf of the deceased by a legal process. This legal process is Probate. The granting of probate usually takes around six to eight weeks. From then on, it depends on the size of the estate as to how quickly things such as the sale of property can get moving. HMRC will require an accurate figure of the value of property for probate purposes. For this reason, it can be a good idea to involve a surveyor in the process as soon as you feel ready. Delays can be costly. Suppose a significant amount of time passes between having the property valued and it being put up for sale. You may find yourself in a situation where the property is actually sold for a higher price. Usually that would be cause for celebration. However, in this case it could mean that you are liable to pay Capital Gains tax (CGT). Inheritance Tax The situation regarding inheritance tax is subject to many variables, not least the latest changes to thresholds and allowances as set by Government from time to time. The spouse or civil partner of a deceased person won’t have to pay inheritance tax under normal circumstances. Depending on the residential status of the property, Capital Gains Tax might be due. You might decide to move in rather than sell straight away. By making the property your permanent home for at least a year generally means that this doesn’t enter into the equation. You should always, always take professional advice on these matters. Professional Advice What do people often cite as one of life’s most stressful experiences? Selling your property. When you are selling under the emotional strain of bereavement it stands to reason that it can be particularly difficult. In order to make sure everything goes smoothly taking professional advice is once again an absolute must. A solicitor and surveyor will be able to help in specific ways. However, they can also be costly if you employ them at the ‘wrong’ time. An estate agent generally gives free advice on whether, when and how to sell. This is a lot less expensive than jumping in at the deep end. As an estate agent I have helped many clients through this challenging and emotionally difficult process. Feel free to get in touch – drop me an email or give me a call on 01273 735237 for an informal confidential chat whenever you feel ready.