The holidays have blessed us once again with the promise of good food, forced cheer, and lovingly awkward moments. Older siblings can ask each other meaningful questions like “Who do you think mom will leave the beach house to?” Or…”What are we going to do with dad’s Patek Philippe?” If these questions sound familiar, count yourself among the fortunate few who expect to receive an inheritance someday. Many find themselves imagining a life-changing windfall that brings financial freedom or long-awaited luxuries.
Within that club of lucky beneficiaries lies a subdivision of slightly “unluckier” heirs who will inherit big headaches along with their treasure. Instead of receiving cash or valuable property, some heirs find themselves tangled in complex legal issues, unwanted business partners, or assets that are more burden than blessing. From inherited real estate in disrepair to family businesses that demand endless attention, not every inheritance is a Hershey Kiss wrapped in shiny cellophane.
So, what are the 4 worst assets to inherit?
Worst Asset Number 1: TIMESHARES
Why they are bad: A timeshare is a long-term contract that lets you use a vacation property for a set amount of time each year. These agreements can last for decades, or even for life, and are very hard to sell or cancel. Timeshares often come with ongoing maintenance fees, special assessments, and little resale value.
Common issue: The beneficiary may inherit the obligation to pay fees without any real benefit, and selling can be nearly impossible.
Worst Asset Number 2: OPERATING BUSINESSES OR PARTNERSHIPS
Why they are bad: Inheriting part of a privately owned family business or partnership can be far more complicated than it seems. Unlike publicly traded stocks, closely held business interests are illiquid – there is no easy way to sell or cash out your share. Valuing the business can also be difficult, especially if financial records are complex or if the company’s worth depends on a few key people.
Common issue: A beneficiary may suddenly find themselves a partial owner of a business they know little about, with no experience, authority, or desire to manage it. If multiple heirs inherit shares, disagreements about management decisions, buyouts, or profit distributions can quickly cause tension. Existing partners might not welcome a new, uninvested heir, and disputes over control or valuation can even lead to legal battles.
Worst Asset Number 3: HEAVILY MORTGAGED OR UPSIDE-DOWN REAL ESTATE
Why they are bad: Inheriting a house or an apartment may sound like a dream, but if the property carries a large mortgage or is worth less than what is owed, it can quickly become a huge financial burden. In many cases, beneficiaries assume they can simply sell the property and pocket the proceeds – but when the mortgage balance, homeowner’s association dues, assessments, property taxes, repairs, or liens exceed the home’s value, there is often little or nothing left after closing.
Properties in poor condition or with significant maintenance needs can also drain cash and time. Until the home is sold or transferred, someone must pay property taxes, utilities, insurance, and upkeep – costs that can add up quickly, especially if the estate is tied up in probate. In most cases, the cost of upkeep on the property is paid out of the beneficiaries’ pockets right away, and later on they can try to get reimbursed if the property has equity and gets sold.
Common issue: Beneficiaries may find themselves stuck managing a property they can’t afford to keep, sell, or easily walk away from. If mortgage payments fall behind during probate, foreclosure becomes a real risk. In some situations, the estate or heirs must decide whether to sell the property at a loss, negotiate with the lender, or on occasion, let the foreclosure process run its course and walk away from the property altogether.
Worst Asset Number 4: “Valuable” Collectibles or Illiquid Assets (Art, Home Decor, Jewelry)
Why they are bad: Whether it is an antique porcelain China set or glimmering Swarovski Crystal Figurines, there is a warm sentimental feeling that comes with seeing your life’s treasures beautifully displayed and then passing it down to your loved ones to enjoy. EXCEPT…not everybody has the same taste in décor.
Another challenge with collectibles is determining their true value. Unlike a bank account, where you can simply check a balance, collectibles require appraisal from a knowledgeable dealer. Without proper guidance, heirs risk undervaluing, or worse, being taken advantage of by unscrupulous buyers. Many people are also unaware that everyday items in their homes could be worth a significant sum. Having each item appraised can quickly become a costly test of patience.
Common issue: Unless the collectible is clearly a Rothschild Fabergé Egg, avoid leaving them to the next generation. Collectibles are very difficult to sell quickly, and professional appraisals can be costly. Hard-to-value items can cause disputes among heirs and trigger estate tax complications.
So, what are the best assets to inherit?
Best Asset Number 1: Cash
Cash is instantly liquid, no appraisal or sale required. Heirs can use it immediately.
Best Asset Number 2: Stocks, Bonds, or Mutual Funds
These types of assets are easily valued, sold through brokerage accounts with the click of a button, and in many cases, heirs receive a step-up in cost basis, minimizing capital gains taxes if sold.
Best Asset Number 3: Real Estate with Positive Equity
A property with no mortgage or heavy assessments is a valuable asset for heirs. The best part? Real estate gives your beneficiaries options: keep it, rent it out, or sell it and potentially watch its value grow over time. It can bring in steady income for years or be sold for a quick cash boost.
Some parting thoughts. There may come a time when you realize that a piece of your inheritance is just not something that you want. Here, know that you are empowered with the option of refusing an inheritance. Gifts made from an estate can be refused for any reason, and you don’t have to explain yourself. This process is called “disclaiming” a gift (a specific asset) or an inheritance (what you have been bequeathed in its entirety.) However, know that once you disclaim a gift, you do not get to control or influence its outcome. It will be passed on to the next beneficiary in line.
Our knowledgeable estate attorneys make passing down your assets simple, fast, and tax-efficient – so your loved ones get what you intend, without the stress. Contact OC Estate and Elder Law at (954) 251-0332 or info@ocestatelawyers.com to get started. Our law firm conducts consultations over the phone or Zoom and facilitates concierge signing of documents right from your home. We speak English, Spanish, and Russian.
