Inheriting a home is a gift, but it is never easy. You’re dealing with grief, family dynamics, and if you’re the trustee, a long to-do list to go along with your already busy life! Here are some initial steps I recommend. Note that this pertains to California property and that taxes and laws vary by state.
Step 1: Locate the trust
The trust is usually found in a large estate planning binder. If there is no trust, try to find the will. Call a trust and probate attorney (also known as estate attorneys) within a couple of months of the passing. Trust sales are typically simple and straightforward. You do not need to hire the same attorney who drafted the trust; it might be better to get a new attorney to help administer the estate. If there is no trust, the estate will go through probate, which requires court oversight, takes longer, and incurs higher fees.
Step 2: Check for a reverse mortgage
If there is one, you may need to pay off the balance or sell the home within 90 days. Reverse mortgage lenders often start foreclosure quickly when a borrower dies.
Step 3: Keep paying the bills
Continue paying the mortgage, insurance, taxes, utilities (water, garbage, gas/electric), and HOA dues, if any. These need to be kept current through the sale and close of escrow.
Step 4: Determine if any heirs or beneficiaries want to buy the property
They will likely need to consult a financial advisor and mortgage broker to see if they can afford to buy the home from the rest of the family. If a beneficiary wants to move into the family home as their primary residence, they may be able to preserve the older, lower property taxes. Confirm this with your legal and tax advisors. It is also often helpful to pay for an appraisal to help establish fair market value so that the family can agree on the purchase price. If the family wants to keep the home but turn it into a rental, note that it will be reassessed, and the property taxes will increase.
Step 5: Be prepared for solicitations from people wanting to buy the property
This almost always happens, but it’s rarely a smart idea to sell to the first bidder. You might get a letter in the mail, a text message, a knock at the door, or a neighbor approaching you while you are cleaning out the house. As tempting as it may sound, you almost always leave money on the table selling this way. Talk to us about how to maximize your sale price while ALSO keeping things easy and “as-is” if that is important to you.
We are here to help you and your family. Helping families sell inherited residences and rental properties is one of our specialties, and we’d be happy to guide you through the process.
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