If you imagine it realistically for a moment, your heirs have immediate financial needs that will likely take precedence over long term investment.

The choir is singing, your beloved family and dear friends are all gathered ‘round, huge cascades of blossoms draping your gleaming, er, final container… Yes, this is how you picture it as you vigilantly prepare your real estate legacy for the next generation to inherit.

Cut to the next scene – the dour executor of your estate, appropriately Dickensian in his starched collar, takes measured pains to manage your assets with the highest professional skill. His centuries old and reputable firm at some point generations from now will ultimately yield top dollar from these long cherished and nurtured fruits of your real estate investing career.

Cue the scratching record sound effect. Hey wake up! You are not living in a financial services commercial! The dourest person in the scene is you because you’re, uh, well not in the best shape.

With few exceptions, everyone else is probably a complex jumble of emotional sorrow at your loss combined with relative apathy toward your life’s work. Try this shocking test – if they didn’t pay much attention to it while you were alive, chances are they’ll be even less interested when you’re dead.

Once everyone is done the worst part of grieving, they will eventually turn their focus to cashing in your bountiful gift to their future, but in most cases not on the timeline or with the dexterity you envision.

Their watchword will in all likelihood be not “care” but “dispatch” because unless you trained a successor carefully, I’m sorry to be the one to inform you that they don’t have the time, the expertise, or the inclination to do it right.

Your heirs are probably a lot younger, crazy busy with their lives, their jobs, their children. They may not yet be preoccupied with financial security and retirement and all other those other wise lessons you learned later in life.

Which means their plans for your goodies probably have more to do with living in the present day than earning for tomorrow.  If you imagine it realistically for a moment, your heirs have immediate financial needs that will likely take precedence over long term investment.

Almost nobody wants to manage property they didn’t kill themselves to acquire and cultivate, especially if it involves unplugging, ugh, toilets and collecting rents. Sure they could hire somebody to do all that, but that concept requires a second level of thought about the whole thing that nobody is working on.

They could faintly realize somewhere in the back of their brains that these things may be worth more some day, but right now they have credit card bills, car payments, college tuitions, durable goods to buy, and that bigger house they’ve been wanting (hey – at least it’s a real estate investment!)

Here’s how they’ll do it. (Caution – may be too difficult for some readers!) They need to sell a dead relative’s property, which is unsavory in and of itself, so their haste may even be accelerated.

They will likely hire the first real estate agent they come across, someone with a sign in their neighborhood or someone their co-worker recommended.

Because the agent was chosen randomly, and not qualified as a particularly high performer, odds are the agent will be average. They will list ALL the properties with this one agent, even though the agent may be unfamiliar with the neighborhoods the assets are located in.

The agent probably touted the high end of retail for a sales price when they got the listings to sink the hook, so the properties are probably overpriced.

The minimally attended listings will then sit on the market for 30 days, during which the beneficiaries have been fantasizing about paying their bills, their wide screen TV, cruise vacation, etc.

At the 30 day mark, they will become impatient, and demand action from the agent. The agent will then suggest a slash in price to move the assets quickly. Good idea – they’re sick of thinking about it, sick of waiting, it’s all free money anyway, let’s price to sell!

Voila, contracts materialize one after the other and the spoils are divided. Your lifetime of investing, all your hard work is gone in a flurry of paperwork. A year or so later, your legacy is spent, and in all honesty, probably all but forgotten.

This doesn’t have to happen to you. If you have the ability to envision a real world outcome ahead of time, there are a couple of ways to avoid it.

If you’re lucky enough to have a worthy candidate, teach someone you love to manage your assets to their fullest potential after you’re gone.  If not, maybe the best thing to do is to divest the assets yourself on their behalf before you can’t. Don’t let your fantasies of future value cloud your judgment, because it may never be realized. 

Consider using your expertise to get the best value out of the assets today, and it will probably be far more than the anemic results of your non-professional heirs.  You can then tuck the money into a less hands-on investment vehicle for your heirs that they are more likely to let sit and grow.

Bottom line is, in your mind right now everything will be done the way you dream, but a realistic look at human behavior says it might be closer to your nightmare.  An early sober look and smart planning could give your dream the fighting chance it deserves, and everyone will benefit.