As homeowners surveyed what remained and assessed how to rebuild in the aftermath of Hurricane Katrina, some of those homeowners became mired in even more challenges: They learned that title to their home wasn’t officially theirs.
“Heirs’ property” is a designation used to describe homes that are passed down without proper will and estate planning. An heir may be living in the home, paying the taxes and mortgage, and not realize that without a clear, official title, some of the rights that go with homeownership do not transfer. The federal help made available to many people living in heirs’ properties after Katrina didn’t come. Neither did insurance payouts.
“When they’d go to try and file for federal assistance, they’d be denied because the deed was not in
their name or was never recorded,” said Kimberly LaRosa, president & CEO of Renaissance Community Loan Fund. With no clear title there was also no clear path to rehabilitation. In cases where the heirs couldn’t afford to make repairs, the property declined even further. The property didn’t result in wealth for the next generation – quite the opposite.
A NeighborWorks® America symposium, Building Coalitions for Generational Wealth, will explore this subject and potential solutions Aug. 27 during the NeighborWorks Training Institute in New Orleans. LaRosa, whose Mississippi nonprofit formed as a response to the housing crisis following the wind and flooding from Hurricane Katrina, will speak at the event, made possible by JPMorganChase. Lori Gay (NHS of LA County) and Gail Latimore (Codman Square Neighborhood Development Corp.) will join her to discuss “Sustainability, Disaster Resilience and Recovery: Protecting Heirs’ Property.”
LaRosa has seen all kinds of tangled property cases caused by the absence of a will or clear title. In one instance, two neighbors shared a driveway. When one neighbor died, it turned out there were 21 heirs who inherited that single driveway. “It took us two and half years to clear all of that up in order to sell that home,” she said. Meanwhile, the wealth associated with that home couldn’t help the next family. In another instance, a couple divorced but didn’t change the deed. When the former spouse who occupied the house died, the home couldn’t be transferred to his children and sold. Each case has been slightly different. But at no time has LaRosa seen as many cases as those that followed the devastation of Hurricane Katrina.
Over the years, RCLF has worked with Mississippi Center for Justice and others to help clear titles and protect residents. Providing education when someone first buys a home is also crucial, LaRosa said. Like Carrie Davis of Wealth Watchers, she ensures that estate planning is part of homeownership classes and counseling.
“It’s really changed homebuyer education, how we build it,” LaRosa said.
People with low and very low incomes deal with heirs’ property situations more than those with higher incomes, she has found.
"Sometimes when folks hear ‘estate planning’ they think it only applies to people with mansions and great wealth, but it really applies to any homeowner,” said Molly Barackman-Eder, director of Financial Capability at NeighborWorks America. “It’s important for people to know that people like themselves also need to have an estate plan and write a will if they want to pass their home on to the next generation. They need to hear from housing counselors, their neighbors, and others they trust that making a plan is the step that turns homeownership into intergenerational wealth.”
Laura Ospina Jaramillo, NeighborWorks’ senior manager of Financial Capability, added that the complexity of these issues demands the expertise of multiple partners, making coalition building essential for successful wealth transfer and asset protection. “In cities like Philadelphia, strong collaboration between local government, legal aid and nonprofits has made the process of protecting and transferring assets more accessible and effective, demonstrating the power of collective effort,” she said.
The symposium will highlight such collaborations. Participants will explore lessons learned from Katrina – and ways nonprofits across the country can help ensure that the next generation can build wealth the way the previous generation intended.
