The Inheritance Trap

Why Gen X Needs a Plan for Mom and Dad's Investment Real Estate Before It Becomes Another Job

If you're a Gen Xer, you're already juggling a lot -- your own retirement planning, aging parents, kids who still need you, and protecting everything you've worked to build.

But for many there's another responsibility quietly approaching: taking over the family real estate. As your parents slow down, those income properties that served them well for decades can turn into major stress points.

Many Gen Xers are already getting pulled into their parents' day-to-day property decisions amid an economy and interest rates that have made it a lot more complicated than anyone expected.

The New Reality of "Passive" Real Estate

Even with professional property management in place, things aren't as hands-off as they used to be:

• Management companies are struggling. Since COVID, and exacerbated amid the current immigration battles, it’s increasingly difficult to find employees, which means more problems fall back for owners to handle.

• Contractors have their own staffing nightmares. Getting repairs done quickly and affordably is more difficult since COVID.

• Financing has gotten tricky. Higher interest rates and stricter lending rules make renewing credit terms a real problem. There are no guarantees that anticipated Fed policy changes will provide relief.

• Everything costs more. Post-COVID inflation hit insurance, maintenance, and upgrades hard. Budgets that worked five years ago don't work now.

• Tenants are more complicated. Even "passive" Triple Net (NNN) properties, the ones retirees counted on for steady income, aren't so reliable anymore. When major retailers go bankrupt or consolidate, your property can suddenly have no revenue at all.

These problems don't disappear when you inherit the property. In fact, they often get worse, especially when decisions get divided among siblings who don't agree on what to do next.

Pending Wealth Transfer

According to Cerulli Associates, roughly $124.5 trillion in assets will transfer from older generations to heirs and charities by 2045. About $53 trillion will come from Baby Boomers alone, with $18.5 trillion expected to land in Gen X hands within the next decade. That makes Gen X first in line for a major piece of the Great Wealth Transfer.

But there’s more to this than just inheriting investment accounts. For many families, this wealth is tied up in fee simple real estate -- illiquid, highly appreciated, tax-heavy properties that can't be easily divided and come with capital gains exposure, management headaches, and potential family conflict.

The Real Estate Burden No One Talks About

Parents often hold onto their real estate for decades, deferring taxes with no clear exit plan beyond "pass it to the kids when we're gone."

The properties are often massively appreciated. Selling them would trigger enormous tax bills that could consume a huge chunk of their value and family net worth.

Many parents were wisely advised to hold the property for the estate plan, because when heirs inherit at death, the step-up in basis rules wipe out those deferred capital gains taxes.

But when the burden becomes too much for your parents, children step in. Often not by choice, but out of duty. Unfortunately, prior plans are discarded for taxable sales that quickly solve problems given children simply don’t have the means or bandwidth to assume control.

Meanwhile, inherited properties are frequently held in joint ownership among siblings, which can lead to stalled decisions or outright conflict.

And selling without a strategic plan? That can mean losing the step-up benefit, triggering massive capital gains, and watching family wealth evaporate.

What Can Be Done Instead

Making good real estate decisions gets overwhelming when already stretched thin between your career, your own family, and the distance between you and your parents' properties.

RCX Capital Group provides families and their advisors with time-tested tools to transition out of active ownership --smoothly, thoughtfully, and with purpose. These solutions have the potential to:

• Streamline retirement, estate, and succession planning

• Preserve the step-up basis

• Maintain or enhance cash flow

• Exit all ownership and operational headaches

Most importantly, they help you and your family focus on what matters most in this season of life.

Depending on your situation, the strategies available could include:

• Passive 1031 exchanges allow families to sell appreciated property and reinvest into passive, like-kind real estate while fully or partially deferring capital gains tax.

• Delaware Statutory Trusts (DSTs) let owners exchange into professionally managed, institutional-quality real estate without taking on any direct ownership burdens.

• 721 UPREIT DSTs that intend to convert DST investments into diversified private REIT ownership with the potential for incremental liquidity.

• Tenant-in-Common (TIC) structured private investments can be designed for larger transactions where the property value justifies more customizable solutions, but owners and heirs remain entirely passive, partnered with elite sponsors and management.

• Opportunity Zone strategies can offer additional tax advantages when capital gains need to be realized for other family planning priorities.

You Don't Have to Wait for a Crisis

The Cerulli data shows many Gen Xers are becoming financial stewards of their parents' wealth—yet most still don't have visibility into their parents' real estate holdings, let alone the experience or desire to manage them.

The longer you wait, the fewer options you'll have—and the harder these conversations become. As parents age, they may become less open to change or less able to participate in complex financial decisions. While it’s never too late to consider what’s available, the most robust solution-set of alternatives may require time and clear thinking from everyone involved. Starting these conversations now, while your parents can still engage meaningfully, helps you all avoid confusion, costly mistakes, and unnecessary stress later.

Ready to Find Your Path Forward?

If you're starting to worry about your family's real estate or you're already feeling the pull of responsibility, and unsure what to do next, there is a path forward.

Let's talk about how to preserve what your family built while freeing you from being chained to it.

Contact us for more info on how we help Families, RIAs, CPAs, and other advisors confidently navigate complex real estate decisions with clarity and discipline.

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This is not an offer or solicitation to buy or sell any securities. 

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Some of the risks related to investing in commercial real estate include, but are not limited to: market risks such as local property supply and demand conditions; tenants’ inability to pay rent; tenant turnover; inflation and other increases in operating costs; adverse changes in laws and regulations; relative illiquidity of real estate investments; changing market demographics; acts of God such as earthquakes, floods or other uninsured losses; interest rate fluctuations; and availability of financing. Investments in real estate or real estate securities are not guaranteed and have the potential to suffer losses.

This site provides brief and general description of certain tax strategies including Opportunity Zones, Sections 1031, 1033, and 721 Exchanges. There are various risks related to purchasing securities as part of any planning strategy, including tax complexity, illiquidity and restrictions on ownership and transfer. RCX Capital Group and its representatives do not provide Tax Advice. Because each prospective investor’s tax implications are different, all prospective investors should consult with their tax advisors.