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For people inheriting properties from their family members, the transfer of a home or a piece of land represents an opportunity to provide housing stability and preserve generational wealth.
But not every owner leaves a formal will or legal document certifying these property transfers to their heirs, an issue that’s been investigated in two of Indiana’s largest counties.
A new joint report released earlier this month by the Federal Home Loan Bank of Indianapolis and Black Onyx Management found more than 1,800 heirs’ properties — land or property passed down among family members without a formal will or estate plan after the owner’s death — collectively valued at more than $258 million in Marion and Allen counties.
According to a news release, the report, titled “Turning Legacy into Opportunity: Overcoming Inherited Property Obstacles in Marion County and Allen County, Ind.,” also found the same area is home to 4,706 at-risk properties — defined as properties where at least one listed owner has died between 2011 and 2022, but another listed owner is still alive — with a combined estimated value of $826 million.
Roxy Lawrence, assistant vice president of research and evaluation at Black Onyx, told Indiana Lawyer there are a lot of different consequences for homeowners without a clear title to their property.
Lawrence said those property heirs can utilize equity in their homes, but aren’t able to benefit from homeownership programs if they can’t show title and can’t sell their property.
“To be able to sell your home, your land, you have to be able to show you have title to this home and this piece of land,” Lawrence said.
Lawrence said research shows that often times, property heirs end up losing their homes.
A big issue Black Onyx sees involves partition deals, where an outside investor buys a share of the heir’s property or are able to buy out other heirs at a low cost.
Lawrence said one of the report’s biggest findings is that a lot of people inheriting properties don’t have access to or understand the importance of estate planning.
Legal fees can be expensive for lower-income heirs and there aren’t a lot of legal aid organizations that provide pro bono assistance on heirs’ property issues.
In 2022, Fannie Mae reported an estimated 88,834 likely heirs’ properties nationwide, of which approximately 6,272 are in Indiana; however, until now no comprehensive research into county-level data has been available.
The new FHLB/Black Onyx report is the first major assessment and localized breakdown of housing issues affecting Marion and Allen counties, where heirs’ rights has become an increasingly discussed topic in affordable housing and community development circles.
The report found more than 1,400 confirmed heirs’ properties with a combined estimated value of $194 million, and an additional 3,181 at-risk properties with a combined estimated value of $543 million, in Marion County.
In Allen County, research indicates there are 484 confirmed heirs’ properties with a combined estimated value of $64 million, and an additional 1,525 at-risk properties with a combined estimated value totaling $283 million.
“Homeownership is often touted as one of the most crucial methods of preserving generational wealth and promoting economic stability, but we’re seeing that a portion of the community who are homeowners still can’t take full advantage of its benefits,” said MaryBeth Wott, FHLB’s senior vice president and community investment and strategic planning officer, in a news release. “This report highlights the scope of the problem for several key Indiana communities and allows us to recommend data-driven solutions that target the unique issues facing each of them.”
Erica Petty-Saunders, FHLB’s community investment program manager, said the Indianapolis bank works collectively within a system of 11 regional banks to advocate for affordable housing and supporting homeownership.
Petty-Saunders said for some properties, there are multiple heirs, with one heir sharing property maintenance responsibilities with other siblings.
In some low- and moderate-income communities, there is not always a lot of conversation and education about estate planning and the need to establish a clear title to a property, Petty-Saunders said.
She called the report’s findings “eye-opening,” and said the number of heirs’ properties are only going to grow unless there is more education available regarding estate planning.
Petty-Saunders said FHLB hopes to see support from the housing community and state legislators in addressing the issue.
According to FHLB, the research findings are accompanied by a series of policy recommendations designed to address existing heirs’ property issues across the community. Those include:
- Target neighborhood programs: Provide education and legal support in high-risk areas to help clear titles and resolve disputes.
- Increase access to legal services: Fund more legal aid organizations to provide affordable or free services for families dealing with property issues.
The report further outlined a series of policy recommendations designed to promote community education and bolster resources available to households in an effort to reduce or prevent future issues in higher-risk areas. Some of those recommendations include:
- Public awareness campaigns: Launch campaigns to educate the public about wills and estate planning in simple, easy-to-understand terms.
- Incorporate estate planning into existing services: Add estate planning education to homebuyer programs, real estate transactions, healthcare, and financial services to encourage families to prepare for property transfers.
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