What Happens When a Beneficiary Is Living In an Inherited House? (2024)

FAQs

Can I live in the house I inherited? ›

You can live there permanently, sell, or put it up for rent. Factors like your financial situation, other beneficiaries, and current living situation will play a role in your decision.

If one sibling is living in an inherited property and refuses to sell, a partition action can potentially be brought by the other siblings or co-owners of the property in order to force the sale of the property. In general, no one can be forced to own property they don't want, but they can be forced to sell.

Con: Illiquidity limits options and adds risk

This lack of liquidity poses a challenge for heirs, especially if the market experiences a downturn when they plan to sell the home. Unlike stocks or cash, a home isn't easily divisible or sell-able in parts to provide funds as needed—it's an all-or-nothing situation.

When a house is transferred via inheritance, the value of the house is stepped up to its fair market value at the time it was transferred, according to the IRS. This means that a home purchased many years ago is valued at current market value for capital gains.

Can Siblings Inherit a Home? It's absolutely possible for multiple siblings to inherit the same piece of property from their parents or someone else. That can happen when the property owner – again usually a parent – drafts a will or trust specifying that the home should be shared between the siblings.

Inheritances are not considered income for federal tax purposes, whether you inherit cash, investments or property. However, any subsequent earnings on the inherited assets are taxable, unless it comes from a tax-free source.

It depends. There are many factors involved in determining whether a child can live in a deceased parent's house after they die, including the terms of the will or trust, whether your deceased parent's spouse is still alive, who inherits the house, and the discretion of the personal representative or trustee in charge.

Unless the will explicitly states otherwise, inheriting a house with siblings means that ownership of the property is distributed equally. The siblings can negotiate whether the house will be sold and the profits divided, whether one will buy out the others' shares, or whether ownership will continue to be shared.

Options for Resolution. You should always try to resolve things within the family first, but if this isn't working, you need to contact a probate attorney or a mediator to help you come to an agreement. Another option is to simply liquidate all the assets and split the proceeds equally among the siblings.

If there is more than one beneficiary, often it is better to sell and divide the proceeds between beneficiaries to avoid any conflicts. If converting the inherited house into a rental property is not economically beneficial or location is not rent desirable, it is better to sell.

Can I keep an inherited mortgage in the deceased's name? ›

A deceased person's mortgage becomes the responsibility of the person inheriting the home. The heir has several options such as moving into the home and assuming the mortgage, buying out other heirs if they also inherited a portion of the property, or selling the house and using the proceeds to pay off the mortgage.

When you inherit a house with no mortgage, the asset is still considered part of the deceased person's estate and you need to go through probate before ownership can be transferred. This process ensures that the property is distributed according to the deceased's wishes and resolves any disputes among beneficiaries.

Refinancing an inherited property with a probate or estate loan is necessary when the inheritance is an estate. A probate administrator will need to be named and approved by the court. This individual will be responsible for acting on behalf of the estate.

If you inherit a home with a mortgage, you have the right to “stay and pay.” However, rightful heirs often encounter difficulty when dealing with the mortgage servicer to obtain information about the mortgage loan or learning about their options as an heir.

If there is more than one beneficiary, often it is better to sell and divide the proceeds between beneficiaries to avoid any conflicts. If converting the inherited house into a rental property is not economically beneficial or location is not rent desirable, it is better to sell.

A house cannot stay in a deceased person's name, and instead ownership must be transferred according to their Will or the State's Succession Law. Once the new owner is determined, that person must file for a new deed for the home with the county recorder's office.

But if just one co-heir wants to sell, that person can force the sale through a legal process called a partition action, no matter what the other beneficiaries want. The process is complicated and pricey, typically costing up to $25,000 or more in legal fees and related expenses.