A Parent’s Guide to Transferring Property Wealth to Children
The massive transfer of wealth across generations is also triggering a large transfer of real estate. Older generations currently hold close to $25 trillion in real estate that will eventually be inherited, and with that inheritance often comes conflict.
By 2048, about $105 trillion is expected to pass from baby boomers and older generations to their heirs, with real estate making up a major share. While valuable, these properties often become a source of disputes over taxes, costs, and usage. In many cases, the simplest solution is to sell the property and divide the proceeds. But for families who want to preserve their homes, careful planning can reduce financial burdens and family disputes.
Here are five key strategies for passing down real estate successfully:
1. Transfer real estate through a will or trust
Leaving property in a will or trust often reduces the tax burden compared to gifting it during your lifetime. If heirs inherit property, they only owe capital gains taxes based on its value at the time they receive it, not when it was originally purchased. Vacation homes are often the most emotionally charged assets, so a trust or will ensures smoother transitions and tax efficiency.
2. Use LLCs and trusts for protection
Placing property in a limited liability company (LLC) or trust helps shield heirs from lawsuits, liabilities, and creditors. For example, if a tenant is injured on the property, heirs are not personally responsible. LLCs also protect against complications if one heir files for bankruptcy. Additionally, gifting fractional interests in an LLC may lower taxable values, providing more savings.
3. Set clear rules for usage
Families can prevent conflicts by establishing operating agreements for shared properties. These agreements may address who can use the home during holidays, rules on renting it out, or restrictions on transferring ownership outside the family. Without these guidelines, disputes are common, as seen in cases where siblings argued about properties being overused or treated like rentals.
4. Plan for maintenance and expenses
Inherited homes can quickly become financial burdens if upkeep costs are not addressed. Parents can help by leaving behind liquid assets or insurance policies to cover expenses like maintenance and insurance. Trusts can be funded to ensure fairness among siblings, especially when some heirs may not be able to contribute financially. Operating agreements should also include contingency plans if funds run out.
5. Prepare for heirs who want to sell
Even if heirs agree to keep a property, circumstances often change. Some may prefer to cash out due to financial needs, life changes, or lack of personal attachment. Planning ahead with buyout provisions allows heirs to sell their share to siblings or the trust, ensuring flexibility while reducing conflict.
Ultimately, the goal of passing down real estate is to preserve both family assets and family harmony. Careful planning with wills, trusts, LLCs, and clear agreements helps ensure that properties remain a source of memories rather than disputes.
By: Haley CuccinelloI CNBC I August 23, 2025
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