June 9, 2025

Sharing an Inherited House with Siblings: What You Need to Know

When a parent or loved one passes away and leaves behind a house to multiple heirs—typically siblings—it can create a complex emotional and legal landscape. While the intention behind leaving a shared property is often to provide for all children equally, the practical realities of co-owning inherited real estate can lead to disagreement, confusion, or even legal battles if not handled properly.

What Happens Legally When Siblings Inherit a House?

When a house is left to multiple siblings, they typically become “tenants in common”, unless the will or trust specifies otherwise. This means:

  • Each sibling owns a share of the property (often equally, but not always).
  • Each sibling has equal rights to use and occupy the home, regardless of their percentage of ownership.
  • Any sibling can force a sale through a court process called a partition action if there is disagreement.

This setup can work well—if everyone is on the same page. However, co-owning real estate brings responsibilities such as property taxes, insurance, upkeep, and mortgage payments (if any). These costs can create friction if one sibling bears more of the burden than others.

Common Scenarios and Challenges

1. One Sibling Wants to Keep the House, the Others Want to Sell

If one sibling wants to live in or hold onto the house, they can “buy out” the others by paying them their share of the fair market value. This requires:

  • A current home appraisal
  • Agreement on the terms of the buyout
  • Often, legal help to structure the transfer correctly

2. Renting the Property Out

If no one wants to live in the house but also doesn’t want to sell, the siblings can rent it out and split the income. This is common—but requires:

  • Agreement on who manages the property
  • A shared bank account or LLC to manage income/expenses
  • A written agreement to avoid disputes

3. Unequal Contributions

If one sibling pays for repairs or taxes while others do not contribute, it can create resentment and legal claims for reimbursement.

Key Legal Considerations

1. The Importance of a Written Agreement

Even if your relationship with your siblings is close, do not rely on verbal understandings. A legal co-ownership agreement can clarify:

  • Each person’s rights and obligations
  • A plan for repairs and expenses
  • A process for resolving disputes
  • Exit strategies (e.g., how to sell or buy out)

2. Using a Trust or LLC

In some cases, the home may be placed into a trust or LLC, either by the deceased’s estate plan or by the siblings after inheriting it. This can:

  • Help manage liability
  • Streamline decision-making
  • Offer tax and estate planning benefits

3. Taxes and Capital Gains

If the home is sold shortly after inheritance, the “stepped-up basis” rule often reduces or eliminates capital gains tax. But if siblings hold the property for years, future appreciation could trigger taxes when sold. Consulting an estate or tax attorney is critical here.

What Can Go Wrong

  • Disagreements over use (e.g., who gets to stay in the home for holidays)
  • Delayed decisions that create financial strain
  • Neglecting to maintain the home, leading to lost value
  • One sibling forcing a sale, leading to court intervention and legal fees

These outcomes are emotionally and financially draining—but often avoidable with proactive planning.

How an Estate Planning Lawyer Can Help

As experienced estate planning attorneys, we can assist with:

  • Reviewing the will or trust that governs the inheritance
  • Structuring buyouts or sales to minimize tax exposure
  • Drafting co-ownership or management agreements
  • Mediating between heirs to avoid litigation
  • Creating trusts or LLCs to manage shared real estate

We also help our clients prevent these issues in the first place by structuring clear and practical estate plans—especially for those with multiple heirs.

Bottom Line: Don’t Let an Inherited House Tear the Family Apart

What’s intended as a gift can become a burden without the right structure in place. Whether you’re preparing your own estate plan or navigating an inheritance with your siblings, it’s essential to understand your rights, responsibilities, and options.