- More than $32 billion in U.S. property may be affected by issues that can interfere with transferring homes from one generation to the next, according to estimates.
- A situation known as heirs’ property happens when homeowners die without a will and informally leave property to multiple descendants.
- Those heirs may be more vulnerable to foreclosures, tax sales or investors who try to acquire the homes for below market value.
- A new philanthropic commitment from JPMorgan aims to help tackle this estate planning gap.
Owning a home can provide a way to build wealth that will transfer from one generation to the next.
But more than $32 billion in assessed values of U.S. property in 44 states and Washington, D.C., may be affected by issues that can interfere with that wealth transfer, according to estimates.
One such issue, known as heirs’ property, happens when homeowners die without a will and informally leave property to multiple descendants.
The non-formal ownership may make it difficult to pass on property, access government assistance in the event of a natural disaster and to qualify for property tax relief, according to research from JPMorgan Chase.
Those homeowners may also be vulnerable to foreclosures, tax sales, or investors who try to acquire the homes for below market value.
JPMorgan Chase on Tuesday announced it is providing more than $9.6 million in philanthropic commitments to organizations that help preserve homeownership by addressing heirs’ property issues, appraisal bias and the undervaluation of homes.
“As interest rates and mortgage costs are rising, the path to sustainable homeownership has become increasingly difficult,” Heather Higginbottom, head of research policy and insights for corporate responsibility at JPMorgan Chase, said at a Tuesday event hosted by the firm in Atlanta.
“For many existing homeowners, including many here in Atlanta, high rates of heirs’ property and appraisal bias have made it challenging to maintain homeownership and benefit from the equity of their property,” Higginbottom said.
Both heirs’ property and appraisal bias disproportionately affect communities of color.
Estimates have found that as much as half of the property owned by Black Americans is owned as heirs’ property, according to the National Consumer Law Center.
“It’s clearly disproportionately a Black and Brown problem,” said Thomas Mitchell, a professor at Boston College and director of the Initiative on Land, Housing & Property Rights. “But it’s not exclusively, by any stretch, just a Black and Brown problem.”
Meanwhile, persistent undervaluation of homes in communities of color encourages a racial wealth gap.
Homes in Black neighborhoods are valued at approximately 21% to 23% less than comparable homes in non-Black majority neighborhoods, according to research from the Brookings Institution.
JPMorgan’s philanthropic commitment will focus on preserving homeownership in targeted locations in Georgia and New York, as well as Jacksonville, Fla., Pittsburgh, and Washington, D.C.
The money will go toward organizations working to combat heirs’ property and appraisal bias issues through estate planning clinics, legal services, research and market innovations.
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That includes:
- $3 million to be granted to Catapult Greater Philadelphia, a community-based nonprofit that is providing a clinic to help people who do not have a legal title to their property in their name;
- $2.3 million to the Brookings Institution and Economic Architecture, two organizations that are partnering to address the devaluation of homes in Black neighborhoods;
- $2 million to the Initiative on Land, Housing & Property Rights at Boston College to produce research and policy recommendations to improve property rights in underserved communities;
- $889,000 for Center for NYC Neighborhoods, a community-based nonprofit that raises awareness among Black homeowners and provides free estate planning services;
- $500,000 for LISC Jacksonville, an organization from the Community Development Financial Institutions Fund, to expand heirs’ property and family wealth creation programs;
- $500,000 to Howard University’s legal clinic, which provides estate planning and heirs’ property legal services;
- $300,000 for the Alcorn State University Foundation, which will conduct research and provide recommendations for the ethical use of public heirs property data;
- and $150,000 to the Federation of Southern Cooperatives/Land Assistance Fund to expand legal assistance to rural homeowners in the Southeast U.S.
