• Estimates suggest that more than $32 billion of U.S. real estate may be at risk due to issues which can prevent the transfer of homes from one generation into the next.
  • When a homeowner dies without a valid will, and leaves property to several descendants informally, this is known as “heirs’ property”.
  • These heirs are more susceptible to foreclosures, to tax sales, or to investors who attempt to purchase the home for less than market value.
  • JPMorgan has made a new philanthropic pledge to address this estate planning gap.

A potential buyer enters a house for sale at an open-house in Parkland Florida on May 25, 2021.
Tribune News Service

Home ownership can be a great way to transfer wealth from one generation into the next.

Estimates show that over $32 billion of the assessed value of U.S. real estate in 44 states, plus Washington, D.C., could be affected by issues which can interfere with this wealth transfer.

A common issue is heirs property. This occurs when homeowners pass away without a valid will, and leave their property to several descendants informally.

According to JPMorgan Chase research, non-formal ownership can make it hard to transfer property, to access government assistance during a natural catastrophe, and to qualify to receive property tax relief.

These homeowners are also vulnerable to foreclosures or tax sales. Investors may try to buy the home for less than market value.

JPMorgan Chase announced on Tuesday that it will provide more than $9.6 millions in philanthropic contributions to organizations which help preserve homeownership through addressing issues such as heirs’ property, appraisal bias and undervaluation.

Heather Higginbottom is the head of corporate responsibility research, policy, and insights at JPMorgan Chase. She spoke at an event held by the company in Atlanta on Tuesday.

Higginbottom stated that “for many existing homeowners in Atlanta and elsewhere, the high rate of heirs property and the appraisal bias has made it difficult to maintain homeownership or benefit from their equity.”

Communities of color are disproportionately affected by both the heirs property and appraisal bias.

According to estimates by the National Consumer Law Center, up to half the property that Black Americans own is inherited property.

Thomas Mitchell, a Boston College professor and director of Initiative on Land, Housing & Property Rights, said that the problem is disproportionately a Black and Brown one. It’s not just Black and Brown.

Meanwhile, the persistent undervaluation in homes of communities of color contributes to a racial gap.

According to research by the Brookings Institution, homes in black neighborhoods are worth between 21% and 23% less than similar homes in neighborhoods with a non-Black majority.

JPMorgan’s philanthropic contribution will be focused on the preservation of homeownership in Georgia, New York, Jacksonville, Fla., Pittsburgh, Washington, D.C., and other locations.

The money will be used to support organizations that are working on estate planning clinics and legal services as well as market innovation and research.

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This includes:

  • Catapult Greater Philadelphia is a community-based non-profit that provides a clinic for people who don’t have legal titles to their properties in their names.
  • $2.3 million for the Brookings Institution and Economic Architecture. These two organizations are working together to combat the devaluation in Black neighborhoods of homes.
  • Boston College will receive $2 million for the Initiative on Land, Housing & Property Rights to conduct research and make policy recommendations on how to improve property rights among underserved communities.
  • Center for NYC Neighborhoods is a community-based non-profit that provides free estate planning and raises awareness of Black homeowners.
  • LISC Jacksonville (an organization funded by the Community Development Financial Institutions Fund) will receive $500,000 to expand programs for heirs’ property and creating family wealth;
  • Howard University’s Legal Clinic, which offers estate planning and legal services for heirs property;
  • Alcorn State University Foundation will receive $300,000 to conduct research and make recommendations on the ethical use public property data.
  • The Federal Government has committed $150,000 to the Land Assistance Fund of the Federation of Southern Cooperatives to provide legal aid to rural homeowners throughout the Southeast U.S.