Inheriting a home can feel like a gift-or a burden. In 2025, more Americans are receiving family property due to rising life expectancy, generational wealth transfer, and aging baby boomers. But most heirs don't realize how complex the process can be until they're facing questions about ownership, probate, taxes, and disputes.
Whether you're keeping, selling, or sharing the home with siblings, understanding your legal and financial responsibilities is critical to avoid costly mistakes.
Contact us by either using the online form or calling us directly at 414-253-8500 for legal assistance.
Step 1: Determine Who Legally Owns the Property
The first step is figuring out how the home was titled before the owner's death. This determines whether probate is required, or whether the property passes automatically.
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Joint ownership with rights of survivorship - Passes directly to the surviving owner
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Transfer-on-death deed (TOD) - Bypasses probate and transfers to the named beneficiary
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Trust-owned property - Transfers according to trust instructions, outside of probate
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Sole ownership with no TOD or trust - Goes through probate and is distributed under the will (or state law if there is no will)
If probate is required, the property will be tied up in court until the estate is formally settled. Learn more about how to streamline this process on our how to avoid probate page.
Step 2: Understand Probate Requirements
If the inherited home must go through probate, heirs should expect:
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A court-supervised process that may take 6-18 months
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The home cannot be sold or refinanced until probate is complete
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A personal representative (executor) will be appointed to manage the estate
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The court may require a property appraisal and creditor notifications
If there is no will, state laws of intestacy will determine who inherits the property-which can lead to disputes among siblings, stepchildren, or unmarried partners.
At Heritage Law Office, we assist families in navigating probate and resolving ownership issues with real estate. Don't wait until conflict arises-speak with a probate attorney early.
Step 3: Address the Mortgage and Property Expenses
Inheriting a home doesn't always mean a "free" house. Often, there are ongoing financial obligations such as:
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Mortgage payments - If the loan isn't paid off, someone must continue payments or refinance
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Property taxes - Due annually and may increase if ownership changes
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Utilities and maintenance - Must be managed during and after the transfer
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Insurance - Coverage must stay active and may need to be updated to reflect the new owner
If the estate can't afford the expenses, the property may need to be sold-or the heirs must come to an agreement on how to share the costs.
Step 4: Know the Tax Implications of Inheriting a Home
Inheriting real estate comes with distinct tax considerations, especially in 2025 when property values have increased in many markets. Here's what to know:
Step-Up in Basis
Most heirs benefit from a step-up in cost basis, which adjusts the home's value for tax purposes to the fair market value at the time of the owner's death. This means:
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If you sell the home shortly after inheriting it, you may owe little or no capital gains tax.
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If you keep the property and it appreciates further, you'll pay tax only on the gain from the date you inherited it-not from the original purchase.
Capital Gains Tax on Sale
If you sell the property later, capital gains tax will apply to the difference between the sale price and the stepped-up basis. If multiple heirs own the home, taxes and sale proceeds must be divided accordingly.
No Federal Inheritance Tax for Most Estates
In 2025, the federal estate tax exemption is over $13 million per individual. Most estates do not trigger federal estate taxes, though state-level estate or inheritance taxes may apply depending on where the property is located.
We help families minimize tax liability through trust-based planning and coordinated asset transfers. Visit our estate planning for real estate page to learn more.
Step 5: Watch for Medicaid Estate Recovery
If the deceased owner received Medicaid benefits for long-term care, the state may file a Medicaid Estate Recovery claim against the home to recoup costs. This often surprises families and can:
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Prevent or delay the transfer of the deed
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Force the sale of the home
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Reduce or eliminate the value of the inheritance
Using a Medicaid Asset Protection Trust or other planning tools during life can avoid this. But after death, the best course of action is to consult an attorney immediately to assess the claim's validity and explore exemptions.
Learn more about protecting a family home from long-term care costs through our Medicaid Asset Protection Trusts resource.
Contact an Attorney for Help With Inherited Property
Inheriting a home is a significant event-financially, emotionally, and legally. From navigating probate and tax filings to resolving title issues and family disagreements, you don't have to do it alone.
At Heritage Law Office, we help heirs, executors, and families handle inherited property the right way. Whether you plan to sell, keep, or rent the home, our experienced team can protect your interest and avoid legal pitfalls.
Call 414-253-8500 or contact us online for a consultation.
Frequently Asked Questions (FAQs)
1. Do I have to go through probate to inherit a house?
Not always. If the home was held in a trust, jointly owned with rights of survivorship, or had a transfer-on-death deed recorded, it may pass outside of probate. However, if the property was solely owned and not included in a trust or TOD deed, probate will likely be required to transfer legal ownership.
2. What happens if multiple heirs inherit the same house?
When multiple people inherit a home, they become co-owners, unless otherwise specified. They must jointly decide whether to keep, sell, or rent the property. Disagreements can lead to partition actions, which may force a sale. A clear estate plan or trust can help prevent these conflicts before they start.
3. Are there taxes when I inherit a house?
You typically don't pay inheritance tax at the federal level, and most states don't impose one. However, if you later sell the home, capital gains tax may apply. The good news is you receive a stepped-up basis, meaning you're taxed on the increase in value after you inherited it-not since it was originally purchased.
4. Can I live in the house I inherited right away?
If you were the named beneficiary of a trust or TOD deed, you may have immediate rights. But if the home is going through probate, you may not be able to take full legal control until the process is complete. Living in the home without title transfer may complicate insurance, mortgage, and tax issues.
5. How can an attorney help with inherited real estate?
An estate planning or probate attorney helps by:
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Reviewing the title and determining whether probate is needed
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Assisting with deed transfers or property sales
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Advising on tax and creditor issues, including Medicaid liens
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Preventing or resolving disputes between heirs
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Structuring your own estate to avoid future problems for your family