Why property may not be the best thing to leave behind for your children

When I wrote a few years ago that leaving behind a house, land or property to children is wrought with hassles, I got mixed reaction. Some felt that the problems I described were real and it was practical to sell and leave financial instruments instead; others felt that selling a house might be difficult and would make the elderly vulnerable and, perhaps, subject to exploitation by children. We are living through a phase of unprecedented intergenerational wealth transfer across the world. It’s a good time to be an inheritor of wealth.

However, I choose to return to the question about what to leave behind and why property might still be a poor choice. There were at least three different situations of wealth transfer that I happened to discuss with friends, and we could not agree on what to do with the land and house in all the three cases. At the same time, I read a story about how a large estate of an ace photographer was turned over to a trust, to be converted into a museum of her work, a small library and cafe, and a natural park for visitors to relax and walk about. There is a lot that can be done with hard-earned wealth, if one pauses to consider the choices from a position of power, rather than choose the default option of leaving it behind for the children.

White elephant

In the first case, the children lived abroad. The elderly parents continued to live in the house they owned. They had friends nearby, reliable household help to take care of their needs and a stable pension income. Everything was fine until the building they lived in came up for redevelopment. The parents wanted the new flat that would be allotted. The children worried about the parents moving and living on rent while the house was being constructed, and wanted the shares in the housing society sold. They did not want or need the property. Even if it was renovated, they had no plans of returning to India. They also expressed the view that they would buy a house of their choice, if they decided to return. However, the parents felt that a reconstructed house was better and the children should have it.


The father, however, passed away before the redevelopment could be finished. The family is now struggling to sell a house that is not even complete. The mother wants to live in a retirement home, but the children are hesitant to buy another property in India.

Those who want to give something to someone often view the transaction from their own perspective. Being the giver, they believe they must have a say in what to give and how; they expect children to graciously accept it. However, the children may not truly need what is being offered. They may not be in a position to spend the time and effort to access it. Significant amounts of wealth remain locked in wasted assets that are not used, but simply passed on.

Sibling rivalry

In the second case, the elderly mother was living in the house after her husband’s demise. She, however, depended on her two children for income. The older child lived close by, and the younger one, in another city. The elder son and his family took care of her needs, and spent a significant sum every month on her care. His younger brother sent a monthly allowance, which the mother chose to keep in the bank.

The woman wants to write a will that leaves the house and bank deposits to both the children. The older brother resents this. He needs money to start a business that he had been planning for long. However, she cannot sell and divide the proceeds in her lifetime as she lives in that house. There is no other asset, financial or physical. An asset as chunky as a house, with no scope of dividing it or to will it as desired, makes property a difficult resource to transfer to one’s progeny.

Dissatisfied heir

The third case involves parents, who decided to leave behind one property each for their two sons. The couple lived with the older son in one of the properties and rented the other, the income from which they used for miscellaneous expenses. The mother saved a portion of that income and gave gifts to the children of the son they were living with.

Following the father’s demise, when the will was read, each son was bequeathed a house as decided earlier. However, the second child resented the fact that his house was valued lower, and that the rent had been consumed by the other sibling. The older child resented that the second one got the house earmarked for him without having to participate in the care of the parents.

The mother feels alienated in the process. She is uncomfortable living with the elder son without contributing to the household. She cannot live with the second son whose wife is reluctant to care for her. She cannot claim the other house that her husband had bought because the will does not grant her its rights after his demise.

Property is hard to split equally, as its value depends on location, amenities and market forces. Financial assets, on the other hand, are easier to divide; they’re valued in monetary terms, can be sold or transferred quickly, and involve lower transaction costs. The benefits of financial assets are well known, even to those who invest in property. Yet, the social prestige of owning multiple properties can be heady. Transferring them to the next generation, however, is often tricky, cumbersome and exhausting. Which is why it bears repeating: love your kids, but don’t leave property as proof of that love.

The author is Chairperson, Centre for Investment Education and Learning.