Nationally, the current gap between Black and white homeownership (29.4%) is wider than it was in 1960 (27%). Geographic segregation further perpetuates the racial wealth gap. Homes in predominantly Black neighborhoods are valued at almost $50,000 less than those in majority white neighborhoods. Heirship properties contribute to this loss, but with outreach, education, and estate planning, heirship properties can help build Black intergenerational wealth.
Understanding Heirship Properties
Heirs’ properties are the antithesis of family wealth creation: instead of building upon themselves to create more opportunities, they set off a domino effect of negative impacts. When a property owner dies without a will or designated heir, probate courts designate these properties as “heirs’ properties” as heirship is then divided across relatives. Properties can then have any number of heirs who may or may not know their partial claim to the property. Transferring ownership of the property requires the approval of all heirs. Without a proper transfer, even if family members continue to occupy the property, they remain off the property’s title.
Heirship property occupants also can’t qualify for loans that use properties as collateral or access government-funded programs for homeowners, including disaster relief. As climate change and natural disasters continue to disproportionately impact people of color, further wealth gaps could emerge if properties occupied by people of color are without access to disaster relief.
Heirs’ properties, along with appraisal biases, are contributing factors to the loss and devaluation of Black intergenerational wealth. Homeownership is a primary method for family wealth generation and accumulation. Without clear ownership, heirs’ properties are not eligible for assistance, cannot facilitate wealth generation, and, given their instability, can lead to housing insecurity. When properties fall into property tax delinquency, they risk being lost.
Image courtesy of LISC Jacksonville website.
Addressing Heirship Properties
Reducing the number of heirship properties requires both preemptive and reactive approaches. Preemptive actions center around reducing potential future heirs' properties through education and estate planning. A different set of approaches are needed after a property falls into heirship.
Only 24% of Black or African American adults have wills, which preserve and guide transfers of wealth, compared to more than half of white adults. Gallup finds that “over the next 25 years, approximately $70 trillion in intergenerational wealth will be transferred among and across families, one of the largest transfers of wealth in history.” Lack of estate planning makes properties that would otherwise contribute to family wealth creation vulnerable to becoming heirs’ properties lost to foreclosure or predatory investors. Wills, as relatively inexpensive investments that secure substantial wealth, can protect these properties and secure the generational transfer of assets.
Preemptive actions include:
Outreaching to older adult-led households to inform them about the need for estate planning and predatory “We Buy Houses” tactics.
Securing pro bono estate planning clinics or offerings from legal firms.
Connecting older adults to legal services to secure their estates.
Once courts deem properties in heirship, both outreach and intervention are needed to secure housing. In order to move from heirship status to standard ownership, all heirs must be informed and reach consensus on an executor. Additionally, all debts must be addressed in order to avoid the property falling into arrears.
Heirship actions include:
Contacting all heirs
Naming an executor
Applying for the Homestead Exemption
Addressing any outstanding debts
Transferring ownership and creating estate plan
In recent work with LISC Jacksonville, Fourth Economy built a targeting tool and map that can assist community partners in strategizing outreach by identifying clusters of likely heirship properties. The targeting tool included several risk indicators that, in combination, identify likely heirs’ properties as well as those potentially at risk. Indicators used in the targeting tool include:
Missing Homestead Exemption flags
Senior Exemption
Estate owned
Vacancy
Liens
We also mapped these indicators across neighborhoods in order to understand geography clusters. Additional indicators mapped include price per square foot, LLC owned, and LLC with more than fifty properties. We also included historic redlining maps, black homeownership concentrations, opportunity zones, job centers, and schools (including pupil size and test scores) for additional spatial context.
This targeting tool and maps serve both high-level and specific strategy creation. At a high-level, community partners can see how these indicators overlap and interact. Specifically, groups can use these resources to undertake block-level engagement strategies in order to reach both the most vulnerable households as well as those most proximate to development pressures.
Image courtesy of LISC Jacksonville website.
Heirship Outreach in Action: LISC Jacksonville
LISC Jacksonville is working to prevent further loss of Black intergenerational wealth through heirship property prevention and outreach. LISC Jacksonville supports economic mobility of Jacksonville residents through its Family Wealth Creation Program, which helps “transfer generational wealth by assisting with financial and estate planning, probate, clearing titles, and consolidating property ownership.” LISC and Project Evident’s Theory of Change narrative considers the historic exploitation, exclusion, and trauma of Black Americans.
Using the targeting tool as a start, LISC is now working with the Duval County Property Appraiser office to develop an algorithm to identify zip codes with the most senior exceptions. LISC performed targeted outreach to these geographies during late fall 2023.
Additionally, during the past year, LISC Jacksonville engaged a variety of community development corporations (CDCs) and other community groups to help increase broader awareness of the issue of heirs’ property. By arming community partners with a toolkit of resources, these groups are ‘hitting the pavement’ in several urban core neighborhoods to educate and connect residents with resources. LISC is also engaging community members and partners in this effort in order to address holistic housing needs.
To date, all of these efforts have collectively helped nearly 200 families resolve their heirs’ property issues, obtain legal titles to their homes, and develop estate plans. LISC Jacksonville is a national leader in resolving heirship and can serve as a model for other communities looking to correct tangled titles and support housing security.
Consider adding heirship outreach to your organization’s affordable housing strategy. Contact Fourth Economy or LISC Jacksonville to discuss what this might look like in your community.
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