Emma, 35, lives in Los Angeles, and recently learned her late great-aunt bequeathed her a Brooklyn home in her will. The property isn’t worth much, but Emma was thrilled at the prospect of owning New York City real estate, and she was touched that her great-aunt left her anything at all.
Then reality set in.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
The property needs major repairs, and managing maintenance from 3,000 miles away could mean hiring contractors and lawyers. Not to mention, oversight would be difficult.
And selling a New York property from California? More expensive and stressful than you’d think.
Suddenly, accepting this “gift” is looking like it could turn into a full-time job. Can Emma actually turn down the inheritance? Should she?
Windfall or big inconvenience?
An inheritance isn’t always all it’s cracked up to be, and Emma’s situation may not be ideal to accept hers. The most obvious reason being geography. Emma lives on the opposite coast, and moving or traveling to New York to manage the property would be costly and disruptive to her career and life in California.
The home’s mortgage was paid off long ago, but it still comes with all kinds of expenses. On top of needed repairs, Emma will need to pay the sky-high property taxes, insurance premiums and (possibly) utility costs as long as she keeps the property. Even if she tries to sell it from afar, she’d face all of these costs on top of the expenses involved in selling real estate. And she may not be able to personally check in on progress if she needs to stay close to home.
So, what’s Emma’s best move?
Read more: I’m almost 50 and have nothing saved for retirement — what now? Don’t panic. These 6 easy steps can help you turn things around
Even if she was willing and had the capital to fix up and maintain the property, she needs to decide if it’s worth the expense and stress were she to rent it out or hold onto it long enough for it to appreciate in value. She could sell the property as-is, but it might not be terribly profitable. If Emma feels the home is more trouble than it’s worth, she may want to decline the inheritance.
Doing so means it could pass on to another heir to whom the property would be more meaningful or easier to manage, such as other relatives Emma might have in New York.
Aside from Emma’s situation, for individuals on Medicaid or supplementary security income, accepting an inheritance can potentially disqualify them from benefits, which is another powerful reason to consider saying no.
How to turn down an inheritance
There’s a legal procedure to follow if one wishes to walk away from an inheritance.
If Emma decides she doesn’t want the home, it’s not as simple as saying “no thanks.” To legally ditch it, she will need to file a written disclaimer. This is a document that spells out exactly what she’s giving up, including whether it’s all or part of her inheritance, and it must be signed. Once it’s filed, the deal is done: she will forfeit any rights to that inheritance.
Before making her decision, Emma may want to consult with a tax and estate attorney, ideally one familiar with both California and New York rules. She’ll also need to act quickly, since disclaimers must be filed within nine months of a decedent’s passing, since Emma isn’t a minor.
An inheritance can feel like gaining free assets, but in Emma’s case, a cross-country property can also be a financial and logistical burden. In her case, while disclaiming such a huge gift might be seen as ungrateful, it might actually be the shrewdest move she could make.
What to read next
- Are you richer than you think? 5 clear signs you’re punching way above the average American’s wealth
- Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich — and ‘anyone’ can do it
- This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchase. Here’s how to buy the coveted asset in bulk
- 22 US states are now in a recession or close to it — protect your savings with these 5 essential money moves ASAP
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
This article originally appeared on Moneywise.com under the title: My great-aunt left her NYC home to me — but I live across the country. Is it completely crazy to turn it down?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.