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Property and inheritance: making the right call for yourself and your heirs

One of the things all human beings have in common is the fact that none of us are going to live forever. It’s not a comfortable thought at any age, but it can be even more stressful as we approach our later years and are faced with the realities of planning for the day we’re no longer around.

For many people, the focus of these years becomes about protecting the legacy they will leave behind – the savings and investments that will be their last gift to the family they spent their lives nurturing. Sadly, this often comes at the expense of their own quality of life and, ironically, can have the opposite of the desired effect on their assets – especially when it comes to property.

“Unless it’s held by a trust, property is not an easy asset to deal with as part of an estate,” says Elia Theocharis, a sales agent serving the Bishopscourt, Claremont Upper and Upper Kenilworth areas for the Rawson Property Group’s Constantia franchise. “You can’t divide up the bricks of a property between multiple heirs, and you also can’t accurately predict its future value to use as part of an equitable distribution plan.”

Speaking from experience, Theocharis illustrates his point by sharing the story of his own grandfather’s estate.

“My grandfather was fortunate enough to have an investment portfolio which included six properties. He lived comfortably on the proceeds of his investments and planned, on his death, to leave one property to each of his grandchildren – it was very important to him that he was fair in the division of his estate. The problem was, the properties were in different areas, across various cities, and while he had originally bought them for similar prices, they had appreciated very differently over the years.”

“It became a huge source of stress for him,” Theocharis continues, “trying to figure out how to make sure everyone got their fair share. He didn’t want to sell and liquidate his assets, because then he’d be able to spend what he considered his grandchildren’s inheritance. He didn’t realise that knowing he had enjoyed his last years to the fullest, in all possible comfort, would have made us just as happy – if not happier – than whatever we inherited on his death.”

Theocharis has noticed this kind of sentiment come into play regularly, with elderly property owners sacrificing their own comfort for the sake of their heirs.

“I do a lot of market-related property valuations for estate purposes,” he explains, “and it’s heart-breaking how many elderly couples I meet who, instead of enjoying their golden years, are sitting struggling to maintain these huge, empty houses which are falling into disrepair anyway. They’re sacrificing their own quality of life to hang on to a property (that their heirs often don’t even want, as they’ve settled abroad) and they are unintentionally decreasing its value by doing so.”

According to Theocharis, even properties in good condition lose value rapidly when they no longer conform to area standards, particularly in prestigious areas. That means falling 10 or 15 years behind the times can have a huge effect on your home’s value… but who wants to renovate when they’re 80 years old?

“It’s difficult,” Theocharis admits, “and family homes can have huge sentimental value, but when a property no longer suits your needs, and you can’t keep up with the necessary maintenance and updates, holding on to it is a lose-lose situation for everyone. The same thing applies when a property investment portfolio causes more negative stress and admin than the positive value of the income it generates. You have to be objective about when it’s time to let go.”

“Make the call when the market is good, and while your property is still in good repair,” Theocharis advises. “You’ll be able to sell at higher price than if you allow your property to degrade, and you can invest the money in a more liquid asset, that will still earn good returns, provide cashflow in case of an emergency, and still be much easier to divide fairly amongst your heirs when your time eventually comes. Best of all,” he concludes, “you can relax and enjoy your golden years, and give your family a far more important gift than inheritance: your time.”



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