Counsel’s Corner ~ Estate Planning For Your Rental Property
Counsel’s Corner ~ Estate Planning For Your Rental Property ~ Southern Residential Leasing
When it comes to estate planning for your rental property, there are a few things to consider. First, proper communication can minimize potential delays for the management company. Keep in mind, upon the death of an owner the management company:
- Has no way of knowing who the surviving family members/heirs are, or
- Who is legally authorized to act on behalf of the deceased owner with respect to the rental property, or
- Whether disputes among surviving family members/heirs exist (or will develop) involving the rental property or to whom rental income should be paid.
Thus, the management company is left with no choice but to await instruction from the Court as to who is lawfully authorized to act on behalf of the deceased owner’s rental property and estate, which can result in delays and frustration for all parties involved.
To minimize or avoid interruptions and/or frustrations involving payment of rental income, property owners might consider adding a desired beneficiary as an authorized signor on the owner’s bank account and ensuring their spouse is named in and signs the management agreement. In addition, there are many advanced legal methods to avoid having the rental property included in the deceased owner’s probate estate upon death; however, such methods are beyond the scope of this article. Owners are advised to consult with their independent legal counsel regarding potential options available based on their individual situations.
In situations where rental property is included in a deceased owner’s probate estate and a surviving family member(s) desires to change/modify where and how rental income is to be paid (i.e., change the bank account or person to whom rental income is to be paid), will likely require an official authorization from the Court based on circumstances involved. Even with a valid Last Will & Testament (which names an authorized Personal Representative), the Last Will & Testament will need to be filed with and admitted (accepted) by the Court in order for the Court to issue official letters of administration designating/appointing the authorized Personal Representative to act on behalf of the decedent’s estate. This takes time.
Upon the death of an owner, the surviving family member(s) or representative of the owner should:
- Notify the management company immediately of the death of an owner
- Provide the case number for any probate or other legal proceedings file
- Provide all documents filed with and/or issued by the Court with respect to the deceased owner’s estate, and
- Keep the property manager informed of all court proceedings and outcomes. Southern is available to work with our owners and their family members to assist during the transition period following the death of an owner.
Disclaimer: This article is not intended as legal advice. Property owners are advised to consult with an independent licensed attorney for legal advice on available options for their individual situations.