‘I was trapped’: The hidden cost of inheriting the family home

For many Australians, an inheritance arrives in the form of a property. But while it may often feel like an instant financial windfall, unexpected expenses can be crippling.

When Natalie Beveridge lost her mother five years ago she knew she would inherit the family home. What she did not expect was to be left close to $50,000 in debt.

“I remember thinking, ‘Where’s the grown-up that handles all of this?’” she told nine.com.au. “Then it was like, ‘Oh, it’s me.’”

As the only child of a single mother, Beveridge was solely responsible for managing her late mum Jan’s estate.

The home was worth about $550,000. As it was the estate’s biggest asset, there was little available cash to cover the expenses that were mounting in the background.

During a five-year period, Beveridge was forced to watch on as close to $50,000 accumulated across strata fees, rates, utilities, funeral expenses, unfinished renovations and debts held by the estate.

“It was a little bit of a catch-22,” she said. “I had this value right in front of me, but not having immediate access to things that could facilitate [a sale], I just kept being stuck in this loop.”

Even when Beveridge managed to pay down the property’s strata fees, the next bill was never far away.

“It adds up every year,” she said. “A few years ago, I had those strata fees paid down and brought up to date, but they just keep coming.”

She considered selling the home as it was, but unfinished renovations meant it would likely have gone to market in a way that reduced its value. To her, it also felt wrong.

“This was mum’s home,” she said. “I wanted to present it in the best way I could for her.”

She searched endlessly for finance that would allow her to pay the outstanding accounts, finish the work and prepare the home for sale, but she said conventional borrowing was completely unavailable to her.

“I felt like my hands were tied,” she confessed.

Beveridge’s experience is one many continue to find themselves in.

According to a recent report by Deloitte Access Economics, the average executor spends between nine and 12 months dealing with the administration of an estate.

Adding to that, Australia is entering the largest intergenerational wealth transfer in its history, with an estimated $5.4 trillion expected to pass between generations over the next two decades. Much of that wealth is tied up in property, superannuation and other assets rather than accessible cash.

Zinta Harris, principal at Brisbane-based Resolve Estate Law, said asset-rich but cash-poor estates are on the rise.

“Our firm handles hundreds of estate administration files and roughly half involve families who hold valuable property or assets but have very little immediate cash,” Harris said.

Around one-third of the firm’s clients cannot afford the upfront legal costs of administering a loved one’s estate, even though they will eventually inherit substantial assets.

As the population continues to age, more Australians will find themselves facing a difficult gap between when bills fall due and when the estate’s money becomes available, with little assistance available.

Beveridge said she spent five years feeling “trapped” until finding a specialised lender that was able to loan her the funds she needed to “breathe again”.

“It gave me the flexibility to make decisions that were a lot more sensible, less forced because obviously, dealing with financial pressures, grief, a lot of stress, all of that together, there wasn’t a lot of clear thinking.”

Beveridge found estate administration funding through specialist lender JustFund, allowing her to settle outstanding accounts, finish paying for her mother’s funeral and complete the remaining work needed before the property could be marketed.

The company provides specialised lines of credit that can be used by executors to cover expenses including legal fees, funeral costs, creditor demands and costs associated with maintaining or selling an estate’s property.

The loan is typically repaid once the property sells. With any niche financial products, consumers are urged to seek independent legal and financial advice before borrowing.

Beveridge added the financial relief and gratitude are hard to put into words.

“You get used to something when it is constant,” she said.

“Then once it starts lifting, you realise the physical and mental toll it was having on you.”