A Short Guide To Selling Your Inherited Property in Massachusetts.

Deciding what to do with a property you inherit can often be challenging. It comes with a long list of significant responsibilities and if there are siblings or co-inheritors, the challenges can multiply.

Here are some commonly asked questions that surround an inherited property:

Do I have to pay state estate taxes on my inherited property?

If your property is valued at less than $1 million, no. In Massachusetts, for all decedents who have passed after 2006, there is a $1 million exclusion on inheritance, including real estate. There is a graduated tax rate from 0.8% to 16% on property valued over $1 million. For estates exceeding $10 million, there is a 40% flat rate.

What should I do if I decide to keep the property?

You generally have two options: live in the property, or rent it out. Let’s discuss these options in more detail:

Live in the Property:

If you keep the property, you may decide to live or remain in the home. If there are multiple co-inheritors (ex. siblings) it is often unlikely they will all be occupying the home with you. In this case, it may be necessary to purchase the shares of the siblings not residing in the house. (Buy them out) Depending on how amicable the relationships are, costly legal intervention may be required. Some special financing arrangements might also be necessary and thus it is typically recommended you hire legal advisors and/or accounting experts during this process.

If you decide to keep the house you are then responsible for the maintenance, inspections, and taxes associated with the home, and delegating the costs and effort associated with these tasks to your co-inheritors.

Rent it Out:

By renting the property, co-inheritors will potentially be able to share the rental income without the headache of buying out each other’s shares. If there are disputes to be settled, then renting allows the house to generate revenue while you and your siblings come to a more long-term arrangement. It will be necessary for all co-inheritors to agree on a monthly rent, and choose the best approach for managing the property. This could mean managing the rental yourself, as a team with other inheritors, or hiring a property management company. Although hiring property managers can be costly, managing the property yourself also incurs costs of materials and outside hired labor for landscaping, incidental fixes, bookkeeping, rent collection etc.

Travel costs may also be an issue if you are managing the property but living far from the inherited home. Lastly, if the end goal is to eventually sell the property, it's wise to hire a competent real estate attorney to draft your leases. We often see folks stuck with properties they wish to sell because tenants refuse to leave or have left the place in disrepair.

What are my options if my siblings can’t agree on what to do?

If co-inheritors are truly at an impasse, it will likely be necessary to get involved in some complex and costly litigation. One option is to file a Petition for Partition. This enacts a legal proceeding where a judge will force the sale of the house and fairly divide the proceeds among the co-inheritors. In most cases the judge will appoint a representative to prepare the house for sale if the siblings are unable to agree amongst themselves. This representative, along with brokers and accountants managing the division of proceeds, will need to be paid by you and/or your co-inheritors.

There is so much legal jargon in the documents associated with my inherited property, how to make sense of it all?

In most situations, hiring costly legal counsel is one of the unavoidable realities of managing an inherited property. For now, here are a few terms to know (from mass.gov):

Executor: An executor is the person appointed by a will to act on the behalf of the estate of the will maker upon his or her death. An executor is the legal personal representative of a deceased person's estate.

Administrator: When a person dies without a Will then the legal personal representative is known as “the Administrator”.

Domicile: A person’s permanent and principle home.

Intangible Property: Property that does not have value in itself but represents the value such as stocks, bank accounts, insurance, and pensions.

Lien: A legal claim by the Commonwealth that automatically arises on all property taxable in the Massachusetts estate on the date of death

Non-probate Property: Property owned by or in which the decedent had an interest on the date of his or her death and which passes by provisions other than by will or the laws of intestacy such assets held jointly or by a trust, etc.

Probate Property: All assets that were owned by the decedent in his or her name alone or as a tenant in common on the date of his or her death and that pass by will or by the laws of intestacy.

Person in Possession: Any person in actual or constructive possession of any property of the decedent, including probate and non-probate property such as jointly owned assets or life insurance.

Resident: Any person whose permanent and principal home is in the Commonwealth.

Tangible Personal Property: Property that is movable and has a visible existence and a value of its own, such as automobiles, boats, equipment, furniture, jewelry, coin collections, and silver

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Should we sell the property?

It's always smart to weigh all of your options. Click here to compare listing your property with an agent vs. selling directly to Pioneer. We encourage you to look around, but we here at Pioneer are one of the few real estate firms that truly have your best interest in mind. Call us anytime if you want to know more about selling your inherited property, the probate process, where we are in the market cycle, or with any other questions you may have. We'll give you our honest assessment and point you in the right direction, even if it's not with us.

We want to sell but… Mom/Dad/other relative had so much stuff. How can we possibly handle it all?

Traditional realtors will want to stage the house for showing to prospective buyers, passing the cost of the cleanup and repairs on to you. With Pioneer, we will make you a cash offer for your house AS-IS. Just take what you want to keep, and leave the rest behind. We will remove it at no cost to you.

We want to sell but…we are concerned about exorbitant fees and commissions. Any advice?

We understand. We've met with hundreds of owners who decide to sell their house in order to avoid the cost of legal fees, taxes, and maintenance, only to be hit with fees, commissions, costly repairs and months of uncertainty when listing with an agent. When you work with Pioneer, we make you a cash offer and close on the date of your choice. No fees, commissions, or hassles of any kind, ever.

We want to sell... but we are concerned about the complex and costly legal process. Any advice?

If you haven't yet started the probate process, all you need to do is relax and let us do the legal heavy lifting. We utilize a dedicated probate attorney who will help you every step of the way. If you prefer to use your own attorney, we'll work side by side with them to ensure the process goes smoothly and we close on the property in a timely manner.

It really is that easy. We make you a cash offer for your inherited property in AS-IS condition and we close on YOUR timeline without any fees or commissions whatsoever.

If you would like to discuss the sale of your inherited property in more detail, please call one of our knowledgable specialists at 617-575-7188.