- Losing a loved one can be even more emotionally fraught when you inherit property.
- Those who inherit property must decide if they can and should accept or refuse the inheritance, and whether to rent out, live in or sell the property.
- If you inherit a property with other family members or friends, there are more factors to consider.
When you inherit a home or other real estate from a lost loved one, it can be tricky to navigate the emotional waters ahead. Here are insights you can use as you decide how to accept or refuse the inheritance, and whether to live in, rent out or sell the property.
Does the estate need to go through probate?
Before you decide a plan for the property that has been left to you, it’s important that you follow proper legal process. If you have been granted real estate through a will, you don’t automatically become the record owner. You will likely have to go through the process of probate, which requires getting court approval.
There are a few ways to avoid probate, including:
- Joint tenancy, which happens most typically if the deceased is married or partnered to someone who co-owns the home and automatically transfers the property to the surviving owner.
- Setting up a trust which holds or controls the property, instead of the estate.
- Transfer on Death Deed, which transfers the property upon the death of the owner
These decisions must be made before the property owner passes. To determine the best course of action, consult with a lawyer who focuses on probate matters.
Should I accept or refuse the inheritance?
It may seem cruel to refuse an inheritance, but when someone puts you as an heir to their property — whether that property be the family hunting land or a single-family home — the intention is for you to benefit in some way. In some instances, if the deceased owes more on the mortgage than the home is worth or there are other taxes or liens on the property, you could end up losing money by accepting your inheritance.
To make sure that doesn’t happen, you’ll want to work with the personal representative for the estate and a trusted real estate expert to determine some factors about the home, including:
- the condition of the property
- its likely value
- any money that may be owed on the home
Once you understand these variables, you can determine if you want to accept or refuse the inheritance. Keep in mind that there are time limitations and other requirements to refuse an inheritance, so you should consult with an attorney if this is something you want to do.
Selling the property
If you do not plan to live in the home or rent it out, you’ll likely want to list it for sale. In this case, it’s critical to determine if you want to fix the home up or sell it in its current condition.
Inherited homes run the gamut. In some cases, grandma was an interior decorator who updated constantly. For others, dust is collecting on the pillow shams from 1967. And while condition matters, location can make an even bigger difference; even a hopelessly outdated home can stand out on the market if it’s in a hot neighborhood.
Renting the property
If the property is in good condition and you’re not ready to sell, consider renting it out to earn a monthly income.
If you plan to rent a home that you have inherited with others, be sure to:
- Determine an initial rental period.
- Discuss the assumed cost of taxes and maintenance.
- Create a plan for managing tenants and repair requests.
- Reassess when that time period has ended.
- Determine whether the city where the property is located has any licensing or other requirements for rentals.
Living in the property
For some, inheriting a property means they get to live in a home where they have fond memories. If you do move into a home you have inherited, it’s important to get the home appraised so you understand its value. You’ll also want to take a look at the expected annual property taxes — especially if the home was one you wouldn’t have been able to afford on your own.
If you inherited the home alongside other heirs, you’ll have to discuss buying out their share of the home so you are the sole property owner. To do this, you’ll likely want an official appraisal and you may want to hire an attorney to draw up the paperwork (which is usually accomplished by what is called a quitclaim deed). Once the money is exchanged and the deed is notarized, you’ll file the deed with the county recorder’s office.