Inherited Property: What Do You Do Now?

You have just inherited a house. The feelings are complicated: grief, gratitude, confusion, and perhaps a small, unwelcome spark of anxiety about what this means financially. You are not alone in that response. Inheriting property is one of the most common ways people come to own real estate, and yet most people are unprepared for the decisions that follow.

The Emotional Side First

Before making any financial decisions, acknowledge the emotional weight of what has happened. This was your loved one's home. It holds memories, and the decision to keep or sell it is not purely mathematical. Give yourself time, but do not let grief delay action on time-sensitive legal and financial matters.

Step 1: Find the Will and Legal Documents

Your first practical step is locating the will, if one exists. Check the deceased's safe deposit box, filing cabinet, attorney's office, or personal safe. In Maryland, the original will must be filed with the Register of Wills in the county where the deceased lived within 30 days of death, even if no probate is expected. Delays in filing can raise questions with the court and among beneficiaries.

Beyond the will, gather these critical documents: the death certificate (order at least 10 certified copies, you will need them for everything from banks to the DMV to the title company), the deed to any real property, recent mortgage statements, property tax bills, insurance policies, and the most recent tax returns.

Step 2: Secure the Property

Before making any decisions about selling or keeping the property, secure it. Change the locks if you do not have all the keys. Neighbors, friends, or even distant relatives may have copies. If the property has a security system, make sure it is active. Notify local police that the property is vacant and provide a contact number. These steps may feel extreme, but I have seen too many cases where a property was stripped of valuables or vandalized because the family waited too long to secure it.

Step 3: Notify the Mortgage Company and Insurance Provider

If there is an existing mortgage on the property, notify the lender that the owner has passed away. The lender needs to know who is now responsible for payments and that the property is in probate. Under federal law (the Garn-St. Germain Act), the lender cannot demand immediate full payment just because the owner died, as long as the heir or personal representative continues making payments.

Insurance is even more urgent. Call the insurance company the same week you become responsible for the property. Ask whether the existing policy covers a vacant property and what the vacancy timeframe is before coverage changes. Many standard policies reduce or cancel coverage after 30 to 60 days of vacancy. If the policy does not cover vacancy, you need a vacant property endorsement or a separate policy.

Stepped-Up Basis: What Maryland Heirs Need to Know

One of the most important financial concepts for inherited property is the stepped-up tax basis. When you inherit a home, the IRS resets the property's cost basis to its fair market value at the time of the original owner's death. This means if you sell the inherited property, your capital gains tax is calculated from the date-of-death value, not the original purchase price. For properties that have appreciated significantly over decades, this can represent substantial tax savings.

In Maryland, state inheritance tax and estate tax add another layer. Maryland is one of the few states with both a state estate tax and an inheritance tax. As of 2026, the Maryland estate tax exemption is $5 million, and anything above that is taxed at rates up to 16%. The inheritance tax applies to property passed to non-lineal heirs at a rate of 10%. If you are inheriting significant property in Maryland, a conversation with a CPA or estate tax attorney is essential before you make any decisions.

A Step-by-Step Action Plan for New Personal Representatives

Week 1: Order certified death certificates. Locate the will and file it with the Register of Wills. Notify the insurance company. Change locks and secure the property.

Week 2: Meet with a probate attorney to open the estate. Apply for letters of administration. Begin gathering financial documents for the estate inventory.

Week 3: Schedule a property appraisal. Contact a probate real estate specialist for a market analysis. Begin evaluating the keep-versus-sell decision with real numbers.

Week 4: Open an estate bank account. Notify known creditors. Begin the inventory filing process with the court.

Verify Property Insurance

If you are not moving into the inherited house immediately, verify that property insurance is in place and notify the insurer that the property is now vacant. Standard homeowner's policies often reduce or cancel coverage after a property sits unoccupied for 30 to 60 days. Lapse in coverage is one of the most common and most preventable mistakes in estate property management.

The Keep vs. Sell Decision: A Financial Framework

There are legitimate reasons to keep inherited property: sentimental value, rental income potential, or a belief that the property will appreciate further. But there are also real costs: mortgage payments, property taxes, insurance, maintenance, and management. The decision should be based on a clear-eyed assessment of the property's condition, the carrying costs, and your own financial situation.

I recommend running this simple calculation: estimate the net proceeds from selling the property today (sale price minus commission, closing costs, and any repairs needed). Then calculate the annual carrying cost (mortgage, taxes, insurance, maintenance, HOA fees). Compare that to what you could earn by investing the net proceeds. If the property's annual appreciation is unlikely to beat what your proceeds could earn in other investments, selling is usually the better financial choice for Maryland families.

Maryland Probate Tip

Marc's Advice

If This Were My Family

If You Decide to Sell

Selling inherited property during probate requires court approval in most jurisdictions. The process is more structured than a standard real estate sale, but it is manageable with the right professional guidance. A probate real estate specialist understands the court timeline, the appraisal requirements, and the fiduciary standards that apply.

For a complete walkthrough of the probate process, read the Complete Guide to Probate in Maryland. If you are the personal representative, the Personal Representative Guide covers your duties step by step.

If you have inherited property and need guidance on your options, reach out for a consultation. Marc Cormier can help you understand the tax implications, the probate process, and the best path forward for your specific situation.