One house, many heirs? Here’s how to leave behind physical assets

When passing down a house to your children, do not make the mistake of just dividing the property into half and leaving it to your children (if you have more than one child). That is called co-ownership,

Passing on your financial assets, such as bank accounts, mutual funds and shares, to your children/heirs, after you’re gone is always an easy task. Financial assets are valued on a daily basis, so you can divide them as you wish to, say, 50:50 between two kids, and be done with the task.

Problems arise when you want to leave behind your non-financial or physical assets, such as property. King Solomon, renowned for his wisdom, may well have touted it as an equitable solution, but how do you chop a house into pieces and pass it on to your children?

Similarly, passing on your jewellery, artefacts and paintings is also a challenge because you really don’t know what their true value is, on a daily basis. Whatever you do, do not leave these headaches for your kids to resolve. There are solutions you can implement in your lifetime.

Leaving behind a house or two

Say, you have two houses that you wish to bequeath to your children. You could be living in one while another is a holiday home in the hills that you and your family escape to frequently on holidays. It makes perfect sense to pass these on to your children. Assuming you have two, even if one lives in India and the other lives abroad, it’s easy to give them one house each. The problem arises when you have only one house and have to divide it in two.

Experts say that typically the child who lives abroad isn’t interested in inheriting property. “When non-resident Indian (NRI) kids inherit properties in India, they have to take the burden of maintaining the property, paying taxes, and so on. There is often a sense of resentment,” says Sneha Makhija, Head of Wealth Planning at Sanctum Wealth. Makhija suggests that children living abroad can be given financial assets and children living in India can be given property.

Also read: Crucial mistakes that you must avoid, when writing a will

This formula works fine if you have a bit of both to give away. But what if you yourself inherited the property and do not have adequate financial assets to give your other child as compensation in lieu of the house? Here, Rajat Dutta, Founder & Initiator, Inheritance Needs Services, has a simple solution. “The Will should include selling the house and dividing the proceeds equally among your children post the demise of the asset owner.”

Whatever you do, do not make the mistake of just dividing the property in half and leaving it to your children (if you have more than one child). That is called co-ownership, where more than one person is the owner of the property. It’s also one of the biggest mistakes you can make when passing properties on to your children, says Purvi Asher, Partner, Mansukhlal Hiralal & Co., Advocates & Solicitors. “Many parents see this as the ideological way out, assuming that their kids will never fight. But never put anything in joint names unless an asset is divisible,” says Asher. Clearly, real estate isn’t. How do you divide a 3 bedroom-hall-kitchen and distribute it among your children? In Asher’s long experience as a lawyer, she says that nearly 90 percent of such co-ownership ends in trouble.

Safeguarding spouses, single or divorced children

Then, there are situations where one of your children lives with you to take care of you. Your other child or children (if you have more than two), lives elsewhere. If that’s the only house you have and you wish to pass it down to all your children, you might put in a formula in your Will that you would like the house to be sold after you die and proceeds to be divided equally among all your children. But the child who has lived with you is allowed to live there for a few months till he or she finds a home. Unless, of course, you decide to pass on your house to this child, who has lived with you and taken care of you, while your other children get the financial assets. “There is no fixed formula when you pass on your property to your children,” says Gaurav Mashruwala, Financial Planner and author of Yogic Wealth.

Asher says that one more mistake people make when passing down properties to their children is that they forget to provide for their spouses. Often, a couple makes separate wills. If the property is in their joint names, they simply say that it is to be passed on to their children. But parents generally do not tend to pass away together, and therein lies a problem. Asher says that there are cases where the children don’t look after the surviving parent. “It’s the typical mother’s syndrome; they cave in and simply live at their children’s mercy,” says Asher. In extreme cases, children also put the surviving parent in a senior citizen’s home if the deceased parent straightaway passes on the property to the kids, bypassing (even if it is accidentally so) the spouse.

Sometimes, a divorced child might have moved in with you after a failed marriage. Or one of your children who has remained single continues to live with you, while the others are settled elsewhere. In this case, you could either pass on your house to your single child, or, if you still wish to divide it among all the children, you could ensure your single child gets to live in the house through his or her lifetime. To do so, you could insert a ‘right to reside’ clause when drawing up a Will. This means that your single or divorced child gets to live there and your other children cannot force any eviction as long as that son/daughter/non-binary person is alive.

“If your Will states that post your demise your house is to be bequeathed to your spouse, and post her death, it is to be bequeathed to your child, then it is a conditional Will and hence invalid. On bequeathing your house to your spouse on your demise, the house becomes the asset of your spouse. How she wants the house dealt with after her death is at her discretion.” says Dutta.

Talk to your kids, write it down

Inheritance experts, financial planners and lawyers unanimously advise having an open talk with the children. Assess your children’s preferences and priorities. Do they even want your house? Neha Pathak, Head, Trust & Estate Planning, Motilal Oswal Private Wealth, says that if, say, you have a holiday home somewhere in the hills or a popular beach getaway like Alibaug (near Mumbai), it’s possible that one of the children might prefer to go there; the other might just be too busy. Or one might want to put it up as a rental holiday home on AirBnB to generate an income, while the other may not be keen on that idea. And if one moves there, the other one, who cannot, might resent it later. “It makes sense to envisage the various situations that your children might land up in when it comes to co-owning the property you leave behind. Parents must understand that today there is peace and harmony among kids, but that may not be the case in later years,” says Pathak.

In case you want the house sold and your children to share the proceeds, write in your will as to who will sell the house. You might want your children to decide jointly. But if that sounds like another potential conflict zone, “you could decide who will be the final authority. It could be the executor or the elder child or even the youngest child, or a child who lives close to the property, since a sale might involve running around. You could even specify a time within which the property must be sold, so that children don’t bicker over the ‘right’ price,” says Mashruwala.

Whatever you do, do not leave the problem for your children to figure out the best way forward. That's something you should do when writing a will.