Retiring on Rentals

[Jules Aton]

Although this probably feels like a million years away here is a cautionary tale for those who plan to retire on the income from rental properties.  Someone I know has been tasked with managing multiple properties that have not been well maintained as their father passes away in hospice.  The entire process has been a mess that is unlikely to be resolved quickly because there are several siblings who are not in agreement about anything. They will also be at the mercy of financial advisors. This is not a legacy it is a nightmare. Please consider liquidating if your spouse and heirs are not interested or capable of handling the burden that rentals can be prior to not being able to manage them on your own. My guess is most of us have or will have enough money from the sale of our holdings to live comfortably for the last 10-20 years. The time to plan for your final years is before you enter your final years. Unfortunately from what I have seen as we age the Dunning-Kruger effect seems to increase exponentially. 

[Greg Scott]

I disagree the premise of your post.  Liquidating your holdings before death may reduce some headaches amongst the heirs, but it creates a different problem.  Liquidating early will create a massive tax bill that could have been avoided.  If you die owning real estate, your heirs get the real estate at a stepped-up basis.

It seems the real problem in your example was poor estate planning.  If they had handed off management to a professional management company and had clear instructions that the properties were to be sold at the end of each active lease, most of those problems could have been avoided while also avoiding onerous taxes.