Family businesses with multi-state properties need strategic attention

By Carlo L. Batts, MAI, Rittenhouse Appraisals and The Reduxx Group

When family businesses expand across multiple states, property acquisition often follows opportunity. But when succession time comes, those scattered properties can become a complicated inheritance puzzle for the next generation.

During business transitions, property management can become a shared responsibility among heirs. The heirs now manage real estate spanning multiple jurisdictions, each with its own tax obligations and assessment standards.

It’s at this time when several complications can emerge. As heirs manage urgent matters such as legal structure, tax filing, and operational continuity, property taxes, in contrast, feel routine. The bills arrive and they get paid.

This routine can mask a potential problem. Overassessed properties continue generating higher tax bills month after month. Because property tax payments feel like ordinary operating expenses, heirs may not investigate whether assessments are accurate while they manage other succession priorities.

This results in the heirs losing money they didn’t need to lose. As each state and county has different appeal procedures and deadlines, by the time heirs realize an assessment might be unfair, appeal deadlines may have passed.

Additionally, property values may not be clearly documented. This creates practical problems during estate settlement when values must be established for tax purposes and equitable distribution among heirs.

A Case Study: Multi-State Property Portfolio

A family concrete company owned nine properties across five states. When the owner passed, these properties transferred to the heirs along with the business.

The family worked with their estate attorney and CPA to manage the succession. They engaged our firm to evaluate the nine properties and ensure there were accurate valuations for estate tax purposes. This required understanding each property’s market value across five different states with varying assessment standards.

We provided valuations that allowed them to file their estate taxes accurately and document clear property values for the heirs. The estate settled with documented property values and transparent tax reporting.

The family’s situation is common but is manageable when addressed strategically. All real estate holdings should be audited, to document values, and understand which assessments may be unfair. Once the assessments are corrected, clear records need to be created for the heirs. In this fashion, when succession happens, the next generation inherits organized assets, not surprises.

Documentation & Planning

Succession planning typically addresses legal structure, tax strategy, and leadership transition. Businesses with properties over several states need to add an additional task, and incorporate these considerations into succession planning. When heirs inherit organized records - valuations, assessment histories, appeal procedures - they can manage those properties more effectively. Conversely, incomplete or outdated property information creates confusion during transition and makes future management decisions more difficult.

We encourage all family businesses to ensure their properties are properly valued, assessed fairly, and documented clearly.

Succession planning that accounts for multi-state properties, their valuations, and their tax implications results in smoother transitions and better-informed heirs.

Carlo L. Batts, MAI is the principal of Rittenhouse Appraisals and The Reduxx Group, both based in Center City Philadelphia. He has a B. S. in Urban Planning and Real Estate Urban Land Development from Virginia Commonwealth University and received his MAI designation from the Appraisal Institute.