Many of us want to leave our home or other real property to our loved ones. But keeping property “in the family” can prove costly. For example, if a the land you own is contaminated by any type of environmental hazard, your heirs may end up footing the cleanup bill. Proper estate planning can help avoid these situations.
Heirs Stuck With Cleanup Costs of Parents’ Land
The New York Times recently reported on this subject of “toxic succession.” The Times discussed the case of a Los Angeles woman who “inherited a few pieces of property when her mother died in 1999.” The property was heavily polluted and ended up costing the woman $2 million between the cleanup and lost rent.
As is frequently the case with toxic succession, the woman inherited land that was previously rented by a gas station and a chemical manufacturing and storage plant. The woman only learned of the environmental contamination after inheriting the land when she tried to sell the property. California law generally requires an environmental report before selling any commercial real estate. Here, the report revealed the extent of the contamination.
In another case cited by the Times, a woman inherited a contaminated property in Southern California from her father. The property was actually held in a trust, which paid for the cleanup costs, but years after selling the land, the woman was named as a defendant in a lawsuit “claiming that residual contamination in the soil had sickened dozens of people who worked in a building constructed on the land.” Although the case was later dismissed, the woman said she still incurred $500,000 in legal fees.
Ways to Avoid Toxic Succession
The best way to avoid a “toxic succession” situation like the ones described above is to take action before you die. If you have any reason to suspect there is environmental contamination on land that you own, you should immediately seek expert advice. You may want to explore selling the land rather than leaving it (and the possible cleanup costs) to your heirs.
Next, if you plan to leave any real property to your heirs, consider forming a revocable living trust. A trust allows you to transfer title to a trustee, who can then administer the property for the benefit of your heirs. In cases of toxic succession, a trust may provide a “firewall” to insulate your heirs from potential legal liability.
There may also be cases where the property is contaminated to the point where it makes no financial sense for your heirs (or even your trust) to clean it up. In such dire circumstances, you should keep in mind that an heir or beneficiary is not required to accept ownership of the property. An heir always retains the right to disclaim an inheritance.
Even when toxic succession is not an issue, real property raises a number of other estate planning challenges. This is why you should always work with an experienced San Diego estate planning lawyer before making a will or trust. Contact the Law Office of Scott C. Soady today if you need to speak with an attorney today.