The WSJ recently had an article titled “In California, About the Only Way to Get a House Is to Inherit One” which doesn’t bury the lede (obviously). For those of us who call this state home, and likely for those watching from afar, this is like stating water is wet. But let’s get into some specifics:
“About 18% of all property transfers in the state last year, representing nearly 60,000 homes, were made through inheritance, according to a recent analysis by real-estate data firm Cotality. That share is a record for California in data going back to 1995, up from 12% in 2019. It is also roughly double the national share of 8.8% last year.”
That’s roughly 1 out of every 6 homes being purchased through inheritance. Why? Again, let’s quote, as they said rather well:
“The state’s high rate of inherited homes reflects California’s unique circumstances: years of skyrocketing home prices, and tax policies that encourage owners to avoid selling their houses before they die. The people who inherit these houses enjoy tremendous benefits. They can move into homes that they otherwise might not be able to buy at current prices, or they can sell them and keep the proceeds without having to pay capital-gains taxes.”
Granted, California may be an outlier, but it is not alone. This is happening across the country, just more acutely in the Golden State. But here’s the thing: without proper planning, paperwork, and process, none of this works. Talking about keeping a home in the family is fun, but ensuring the will, trust, and other estate paperwork is in order requires adulting.
The Great Wealth Transfer is happening. Is your family ready? Have you had the critical conversations? Is there paperwork? Where? Is it ticked and tied? Estates will transfer regardless of whether you’re prepared or not. Isn’t your family worth it? Aren’t Mom and Dad’s legacies worth it? Aren’t the next generation worth it? Let’s move our families forward…