An estimated $124 trillion will pass from older Americans to their heirs by 2048, according to Cerulli Associates. Real estate represents a significant share of that transfer, with 38% of Americans reporting property as part of their inheritance. Yet in a Fidelity Investments 2025 Family & Finance study, 68% of parents had not discussed what their children would inherit or when. For families whose wealth is concentrated in rental properties and multifamily investments, that silence carries consequences far greater than an awkward holiday conversation.
The Stakes for Real Estate Families
Inheriting a diversified stock portfolio requires a login and a phone call to a financial advisor. Inheriting rental real estate requires knowledge of tenants, leases, insurance, property management, local tax obligations, maintenance reserves and, in many cases, complex ownership structures. Heirs who are unaware of what they stand to receive cannot prepare for these realities.
The data underscores the gap. A Trust & Will survey found that 36% of future heirs who expect to inherit property say they plan to keep it as a rental, yet only 17% of those who actually inherited property did so. That 19-point divide between intention and outcome often reflects a lack of preparation rather than a lack of interest. Further, only 18.6% of younger Americans feel prepared to maintain an inherited property, according to a LegalZoom survey, even as 62% of older adults expect to leave real estate to their families.
The reluctance to discuss these matters is deeply human. Parents worry about spoiling motivation, creating entitlement, or confronting their own mortality. Among families surveyed by Fidelity, 97% acknowledged the importance of estate planning conversations, yet nearly half had not begun them. As Timothy Habbershon of the Fidelity Center for Family Engagement has observed, the willingness to discuss estate planning, long-term care, and family decision-making often decreases past age 70, precisely when the conversation matters most.
What Heirs Need to Know
For the Gen X, millennial, and Gen Z heirs who will receive trillions in real estate over the coming decade, preparation is not optional. Inherited rental properties arrive with mortgage obligations, property tax liabilities, tenant relationships, insurance requirements, and ongoing
Maintenance responsibilities. In states like California, Proposition 19 means inherited investment properties are reassessed at full market value, potentially raising annual tax bills by thousands of dollars.
Heirs also benefit from understanding how mechanisms like the step-up in basis work. When property passes at death, its cost basis resets to fair market value, effectively eliminating years of deferred capital gains. This is a meaningful planning tool, but only if the next generation understands it and factors it into their decision about whether to hold, sell, or exchange the property.
Investors who hold interests in vehicles such as Delaware Statutory Trusts or operating partnership units through 721 exchanges are in a comparatively stronger position. Unlike direct property ownership, these structures are passively managed by a real estate investment sponsor or institution, and heirs who inherit them receive quarterly distributions without taking on tenant, maintenance, or operational responsibilities. Still, the next generation benefits from understanding what they own, how the structure works, and who the sponsor or fund manager is.
Starting the Conversation
Families who have these conversations report better outcomes. Fidelity found that parents who actively discuss plans with their children are significantly more likely to feel confident that those plans will be carried out as intended. The conversation does not need to start with dollar amounts or account statements. It can begin with values: what role has real estate played in building the family’s financial foundation, and what are the principles that guided those investment decisions?
From there, the discussion can become more practical. Where are the documents stored? Who are the property managers, attorneys, and tax advisors involved? Are there co-investors or institutional partners the heirs should know about? What are the existing estate planning structures, and are they current?
For advisors, CPAs, and estate planners, the opportunity here is significant. The 57% of families who cite emotional or relational challenges as the primary barrier to these discussions need a
professional to help set the table. Framing the conversation around preparedness rather than mortality, and around stewardship rather than entitlement, can make the difference between a family that transitions wealth effectively and one that does not.
The Bottom Line
Real estate wealth is built over decades of disciplined investing, and the families who have done it well deserve a thoughtful transition plan. The greatest risk to generational wealth is not market volatility or tax policy. It is the conversation that never happened.
