My father in law passed late last month, leaving 15 C level rental properties that range from single family homes to an abandoned boarding house. Clearly we understand that we need to speak to an attorney, but due to delays in paperwork, the estate hasn't even been established as of yet.
The problem as you can imagine, is that rental life goes on. Most of the repairs and other issues we've figured out a system until everything can be established and resolved. However, we've got a problem I'm not sure how to deal with. Yesterday, we found that instead of paying their rent, tenants at one property were loading a uHaul and leaving. We need to keep these units rented in order to maintain the expenses. Question is, we're about to list this duplex for rent again, but who do we list as landlord? Obviously it can't be my father in law because he has passed, can't be "estate of" because that doesn't exist yet.
Anyone that has any tips on this situation or on inheriting rental properties in general are greatly appreciated. My wife and two brothers have been raised in the landlord lifestyle so we are planning on keeping everything we can, just need some short term assistance while we learn some things and rearrange our lives. Thanks.
@Jon Behlke Is your wife going to be the personal representative (PR) for her dads estate? If so list her as the landlord. I think I would list her as landlord either way unless she has a sibling that wants to do it.
Also is she due to solely inherit everything?
Check and see if the bank is going to lock down your father-in-laws bank account where all the rental income is likely being deposited. You may need to check with your probate office and see how the PR can have access to be able to deposit any rental income as well as have money to maintain the rentals. They should be able to help you with this.
You might have to open up another bank account in the name of the estate to handle this if the bank locks down your father-in-laws accounts.
If your wife is on her dads accounts she may want to move out some operating funds to a separate dedicated account in case they do lock down her dads accounts. Check with the probate office.
Planning to keep everything is OK but it is essential that you have a lawyer draw up a detailed partnership agreement. There is no way things are going to automatically run smoothly. You need defined and detailed guidelines for all operating decisions. Nothing should be left to interpretation or personal decision. Every business practice needs to be in place including how to buy out or break up the partnership down the road.
Trusting things will "work out" will never work. Being related opens the door for a family breakup. Assign management responsibilities in a partnership agreement and do not cross over responsibilities. Establish a system to vote out/buy out partners. To be successful you leave the family relationship at home. Business first, family second.
I appreciate the feedback to this point, and I'll expand a little bit further at this point. My wife is to be the executrix of the estate. Her and her brothers have already sorted out who is going to be responsible for which properties and when the estate is settled, those properties will be inherited by those taking responsibility. So my wife and I will end up with 5 rental properties that we will drop into an LLC. What her siblings do with their inheritance is up to them. The only joint ownership will be a 35 acre lot with gas well which will go into a separate LLC owned equally by all three siblings.
So basically we're fairly confident to this point that the long term settling of the estate will be resolved, our concerns have been the immediate collection of rents, costs of repairs, and renting to new tenants.
@Jon Behlke . I’d get a property manager involved but make sure you have your legal paperwork in order first
As the executor of the estate your wife should be in full control of the financials at this point in time. She should be working hand in hand with your lawyer to insure everything is done properly. She should have full signing and decision making authority over the estate. You lawyer should be retained by the estate to oversee.