Inheriting a house or a car can feel like both a blessing and a responsibility. Whether it’s a family home with sentimental value or a vehicle that comes at a time of need, knowing what to do with inherited assets is key to navigating legal, financial, and personal considerations.
When you inherit a house or a car, certain rights and obligations come into play. You may be able to sell, transfer, or keep the asset, but there are often tax and legal factors to be aware of. This guide will cover what you can and can’t do when you inherit these assets, so you can make informed decisions.
Inheriting a House
When you inherit a house, you gain ownership of the property, but it’s not always as simple as taking the keys and moving in. Here’s what you can and can’t do with an inherited house:
What You Can Do When You Inherit a House:
- Sell the House
You can choose to sell the inherited property. Once the estate is settled and any necessary probate processes are completed, you have the legal right to list the house for sale. This can be a good option if you don’t plan to live in the home or don’t want the responsibility of managing it.
Keep in mind, selling the house may come with capital gains tax if the value of the property has increased since it was originally purchased. However, inherited properties often receive a stepped-up basis, which adjusts the property’s value to its market value at the time of the original owner’s death, potentially reducing the amount of taxable gain.
- Rent the Property
If you don’t want to sell the house, but don’t plan to live in it, you can choose to rent it out. Renting the home can generate passive income and allow you to hold onto the property as an investment. Before doing so, ensure the house is in good condition, meets local rental regulations, and that you’re prepared for the responsibilities of being a landlord.
- Move In or Use the House
You have the option to move into the inherited house, making it your primary residence or using it as a vacation home. If you take up residence, you may qualify for certain tax benefits, such as homestead exemptions, which can reduce property taxes. If multiple heirs inherit the house, you may need to work with them to either buy out their shares or come to an agreement on how the property will be used.
- Transfer Ownership
You may choose to transfer the ownership of the house to someone else, such as another family member or even a charitable organization. This can be done through a quitclaim deed or other legal transfer methods. Before transferring ownership, be sure to understand any tax or legal implications involved.
What You Can’t Do When You Inherit a House:
- Ignore Outstanding Debts
If the house has a mortgage or other liens, you cannot simply ignore them. When you inherit the house, you also inherit any associated debts. The mortgage will need to be paid off, either by continuing payments or by selling the house and settling the debt with the sale proceeds. In some cases, the mortgage company may allow you to assume the loan, but you’ll need to contact the lender to confirm.
- Sell Without Probate (in Some Cases)
If the house was solely owned by the deceased and not held in a trust or joint tenancy, it may need to go through probate. Probate is the legal process for distributing a deceased person’s assets. You won’t be able to sell the house until the probate court grants you permission, which can take several months. However, some states offer simplified probate processes for smaller estates.
- Avoid Property Taxes
Once the house is in your name, you are responsible for paying property taxes. Failure to do so can result in liens against the property, which could complicate any future plans to sell or transfer the house. Be sure to verify the property tax status upon inheriting the home, especially if the deceased owner was benefiting from any senior or veteran tax exemptions.
Inheriting a Car
Like inheriting a house, inheriting a car comes with specific rights and responsibilities. Whether you decide to keep, sell, or transfer the vehicle, certain legal and financial factors must be addressed.
What You Can Do When You Inherit a Car:
- Sell the Car
You can sell the car after you legally transfer ownership into your name. Selling an inherited car can be a simple process, but be sure to check the vehicle’s value and any outstanding loans before doing so. If the car has a loan, you’ll need to settle that debt before completing the sale.
- Transfer the Title
If you want to keep the car or give it to someone else, you’ll need to transfer the title to the new owner. The exact process varies by state, but generally involves completing a title transfer application, paying transfer fees, and providing a copy of the death certificate and probate documentation. If the car was jointly owned, transferring the title may be easier.
- Keep and Use the Car
You are free to keep and use the car as your own. This can be beneficial if the vehicle is in good condition or holds sentimental value. Just be sure to update the registration and insurance in your name. If the car has a loan, you may be able to assume the loan or continue payments, depending on the lender’s policies.
What You Can’t Do When You Inherit a Car:
- Ignore Outstanding Loans
If the car was financed, the loan does not disappear with the owner’s death. You cannot sell or transfer the car without first settling the loan. This can be done by paying off the balance or by working with the lender to transfer the loan into your name. If the loan isn’t settled, the lender may repossess the vehicle.
- Avoid Probate for High-Value Vehicles
For high-value cars, especially classic or luxury vehicles, the car may need to go through probate before you can take ownership. If the car is part of an estate that exceeds certain value thresholds, probate court may be necessary to distribute the vehicle according to the deceased’s will.
- Drive Without Transferring Ownership
Until the car’s title is transferred into your name, you should not be driving it. The vehicle’s registration and insurance must be updated before you can legally operate the car. Failing to do so can result in fines or legal issues if you are involved in an accident or stopped by law enforcement.
Navigating Inherited Property with WaveCrest Legal
Inheriting a house or a car can come with many legal and financial complexities. Whether you’re looking to sell, transfer, or keep these assets, it’s important to understand the steps involved and any potential obligations. At WaveCrest Legal, we specialize in guiding families through the inheritance process, ensuring that your rights are protected and all necessary legal steps are followed.
Contact WaveCrest Legal today to schedule a consultation and receive personalized advice on how to manage your inherited assets. We’ll help you navigate the legal landscape and make the best decisions for your future.
