AAOA is well known for its knowledgeable and helpful customer service team. Throughout the day, they are available to answer all types of questions from AAOA members ranging from “How do I place an order?” to “Can you help me analyze this credit report?”
But one question that is particularly moving is when someone calls and says, “My parent(s) recently died and left me their apartment buildings. I need to find a new tenant and I don’t know anything about being a property manager.”

“While there are many ways to mishandle an inheritance, chief among them is a lack of preparation,” says Forbes. “Parents may spend time and money to ensure that their estate is organized properly, but those efforts may be wasted if they don’t also prepare their heirs to manage the properties they have inherited.

To empower future generations to oversee and sustain inherited wealth, it is necessary to equip them with the skills and knowledge they need to do so.” To help the next generation thrive, take the following proactive steps:

DEVELOP A PROPER ESTATE PLAN
Forbes continues, “It’s easy to neglect estate planning. Aside from the discomfort of facing your own mortality and the thought of your children navigating the world without you, estate planning can require considerable effort and expense.”
That’s probably why only 32% of Americans have created a will—and even fewer people have taken the care to construct a thoughtful estate plan. Nonetheless estate planning allows you to reduce costs and maximize the inheritance for heirs.

Leaving Real Estate in Your Will
Your last will and testament is just one section of your estate plan. It sets out how you want your assets to be distributed upon your death. You can leave real estate in your will, but there are pros and cons to doing so. When real estate is left in a will, the debt on it, i.e., any mortgages or liens, must be paid off immediately. This may or may not be financially feasible for your beneficiaries. Furthermore, if you have left the property to more than one individual, each of them owns an undivided interest in it. It is vital that you appoint a reputable sponsor to assist your heirs in building and preserving your generational wealth.

Leaving Real Estate in a Trust
Setting up a trust is another way that you can leave real estate to your heirs. A trust is a separate entity that can own real estate, which is then managed by a trustee. You can place real estate in a living trust and then act as the trustee to control and benefit from it during your lifetime. Then, upon your death, the property transfers to the beneficiaries of the trust.

Leaving Real Estate Utilizing the Deed
to others can have an impact on you as the property owner as well as your beneficiaries when you are gone. The deed gives specific rights to its parties, both in how they own the property, and, in some cases, at what point they take ownership of it.

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FAMILIARIZE YOUR HEIRS WITH YOUR PROPERTIES
Once you have created your estate plan, it is time to tell your heirs about the details and what is expected of them when they inherit your multifamily properties. You have worked hard to build your portfolio and you want to be assured that it will continue to flourish once you’re gone.

Review Your Holdings and Your Plans for Them
Even if your heirs have visited your investment properties over the years, it is quite another thing to see them through the eyes of a future landlord. Visit the properties with them, introduce them to your tenants and give them as much information as possible about the building as you can, including procedures, problems, maintenance issues, etc. Set up a meeting with your property manager if you have one.

Introduce Your Team
Of course, your heirs would assume that you have an accountant, attorneys and real estate agents to support your financial needs. This is a good time to introduce these experts to those who will be inheriting your multifamily property. Your heirs should also meet your maintenance team, gardener and anyone else who helps you keep your holdings in good shape. When it comes time to replace a tenant, your heirs need to know how to find someone new. In addition to telling them where and how to publicize a vacancy and how to prepare it for a new tenant, they should have your username and password for your AAOA member account. AAOA is a very important part of your team and is ready to help your heirs through the process of ordering a tenant credit check and a tenant screening report and helping them analyze the results

CONCLUSION

It is smart to discuss your wishes with your family in advance, so there are no surprises and everyone is on the same page. It will benefit both the heirs and the property’s tenants and employees. And you can be comforted by the fact that your legacy will continue to flourish according to your wishes.

NANCY ABRAMS, Assistant Editor American Apartment Owners Association

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