Inheritance can be complicated, especially if multiple people inherit the same asset and a legal will does not contain explicit instructions for how the property should be managed or divided.

Mike has three daughters; one is married and has two children. His other two daughters still live in the family home. Imagine the disagreements that may ensue if Mike passes suddenly and his legal will or trust does not explicitly state how the house should be shared among his three daughters.

What are your options if you inherit a house with siblings?

A house is typically one of the highest-value assets a family can pass on to loved ones. If you inherit a house with siblings, the first thing to do is consult the will or trust documents to learn whether there are instructions for how the property should be divided.

Only 32% of U.S. adults report having a will, according to the results of the 2024 Wills and Estate Planning Study conducted by Caring.com. If a person dies without writing a will, their state’s probate court will determine what will happen to the property. If there is a legal will but it does not describe how the property should be divided, the executor or trustee will typically exercise their power to make this decision.

The trustee or executor of a will has a fiduciary responsibility to act in the best interests of the estate or trust. Since they may be required to make an unpopular decision, it is important to ensure that everyone’s preferences are heard. Discuss your wishes and concerns with your siblings. A lawyer can assist you and your siblings with communicating your preferences and discussing your options, such as selling the home, buying out one of your siblings, or sharing the home.

What happens if one or more siblings live in the house you inherit?

When one or more siblings live in the house, it can present additional challenges. The will or trust may stipulate that the sibling may live in the house for their lifetime. Siblings not living in the home may regard this arrangement as unfair, since they do not receive the same benefits as the siblings living in the home. One option is to collect rent from the sibling living in the home so payments can be made to the other siblings.

A sibling living in the house you inherit could offer to buy out your share. If more than one sibling plans to buy out other owners, a more involved mortgage process might be required, as many third-party lenders will not issue a loan if a property has multiple unmarried co-owners.

Another option is to force a partition action. If siblings disagree on a course of action, a partition action will force the sale of the house. The judge will terminate the co-ownership of the house and order the property to be sold. Partition actions can be expensive and, therefore, should be avoided if possible.

Mike knew that two of his daughters planned to live in the home long-term. He worked with his estate lawyer to create an estate plan that would take care of the needs of all three of his daughters. The two daughters living in the home were granted title to the home as joint tenants. They owned the home together. Each daughter would automatically inherit the deceased co-owner’s interest in the property. Mike’s married daughter was named as the sole beneficiary of a retirement account that was valued at about one-third of the home’s value.

If you and your siblings find yourselves in this situation, consult with an estate planning attorney to discuss your mortgage and titling options.

What happens if siblings inherit a mortgaged house?

When multiple siblings inherit a house with a mortgage, the simplest solution is to sell the home, pay off the mortgage and other expenses, and divide the remaining proceeds of the sale.

Other options for handling a mortgage on a home include:

• The siblings all pay their share of the monthly mortgage payment.
• One sibling pays the mortgage, and the others pay them back over time with interest.
• The siblings refinance the mortgage to make the payments more affordable.

The executor or trustee will typically make the mortgage payments on the house until the title is transferred to the sibling co-owners. It is important to have a plan in place before the title is transferred to prevent foreclosure.

Points to consider when siblings inherit a house together

When siblings co-inherit a house, it is important to discuss all options and develop a plan. An estate attorney can help with this process by providing options and mediating the discussion.

Additional points to discuss when developing a plan for splitting an inherited home with siblings include:

• Determine each sibling’s fair equity value in the home by having it appraised by a third party and then subtracting the cost of all debts and liens.
• Consider the property’s current condition, maintenance needs, property taxes, and the cost of necessary repairs or renovations.
• Evaluate the current real estate market in your area. This will help determine whether selling the property and splitting the proceeds is the best option.
• Consider who will handle maintenance and repairs on the house and how they will be compensated.

When someone dies without a legal will or trust in place, their property will be divided by following intestacy laws in their state. Dividing family property can cause significant problems for heirs, as there is no single obvious solution to divide property equitably between siblings. Schedule an appointment with your estate attorney to create a comprehensive estate plan.

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