You just found out that a parent or relative passed away and left you a house — but not in the way most people expect. Instead of a will going through probate, you’re being told the home is coming to you through their revocable trust. The successor trustee (often a sibling or another family member) is handling distribution, and you’re on the receiving end.
This is actually good news, in the sense that the process will be dramatically faster and cheaper than a probate-based transfer. But it comes with its own set of things to understand. Here’s a walkthrough of what to expect and what to do in the first 90 days.
The First Question: Who Currently Owns the House?
This is worth establishing clearly at the start. Before the deceased passed away, the home was owned by their revocable trust. Now that they’ve died, the trust has typically become irrevocable, and the successor trustee has the authority to distribute trust assets according to the trust’s instructions.
Until the trustee formally distributes the home to you, the trust still owns it. Understanding who owns the property in a revocable trust — and how that ownership transitions after death — is critical for knowing what your rights are during this administration period. You’re the beneficiary, but you’re not the owner yet.
The Distribution Process
The successor trustee has some work to do before distribution can happen. Depending on the trust’s terms and state law, they may need to:
Provide formal notice to beneficiaries. Pay any outstanding debts of the deceased. File a final personal tax return for the deceased. Obtain an EIN for the trust (if not previously obtained). File a fiduciary tax return for the trust covering the period after death. Obtain appraisals of trust assets (including the home) to establish date-of-death values for tax basis purposes.
Once these administrative tasks are complete, the trustee can execute a trustee’s deed transferring the property from the trust to you. This deed is recorded with the county register of deeds, and at that point, you are the legal owner.
The whole process typically takes 3-9 months for a well-organized trust, though complex estates can take longer. Compare this to probate, which often takes 9-18 months for a comparable estate, and the efficiency advantage becomes clear.
Tax Consequences You Need to Know
Here’s some excellent news: you almost certainly owe no taxes on receiving the house. Federal estate tax only applies to estates above approximately $13 million (the exemption changes periodically), so most estates fall well below the threshold. Michigan has no state inheritance tax. You won’t owe income tax on the inheritance itself.
Even better, you receive a stepped-up basis. The home’s tax basis in your hands is the fair market value on the date of death — not what the deceased originally paid for it. If the deceased bought the home for $90,000 in 1980 and it’s worth $350,000 when they died, your basis is $350,000. If you sell immediately, your capital gain is roughly zero.
This stepped-up basis is a major benefit that would be lost if the home had been gifted to you during the deceased’s lifetime. The trust structure preserves it.
Insurance, Utilities, and Immediate Logistics
In the period between the death and the formal transfer, the trust still owns the home. The trustee is responsible for maintaining insurance, paying property taxes, and keeping the property secure. As the incoming beneficiary, your job is to communicate with the trustee and make sure nothing gets missed.
Once the home is transferred to you, you need to:
Get your own homeowner’s insurance policy. The trust’s policy won’t cover you as an individual owner. Change the utility bills to your name. Update the property tax billing address. If you plan to live in the home, file for any available homestead exemptions or principal residence designations. Consider whether to assume an existing mortgage (if any) or refinance.
If You Plan to Sell
Many inherited homes are sold rather than occupied. The stepped-up basis makes this relatively painless from a tax perspective — you’ll likely owe little to no capital gains tax on the sale, even if you sell months or years after inheriting.
One consideration: selling through the trust before distribution can sometimes be more tax-efficient than distributing and then selling, depending on the state and the specific situation. If this is a meaningful sale (large amount or complicated circumstances), it’s worth a conversation with the estate planning attorney or CPA handling the trust administration.
If You Plan to Keep It
Whether as a personal residence, a rental, or a vacation property, keeping an inherited home requires you to take on the responsibilities of ownership: mortgage payments (if any), property taxes, insurance, maintenance, and capital improvements. Make sure the numbers work for your budget before committing emotionally to the decision.
If multiple siblings are inheriting together, figure out the ownership structure before the deed is issued. Joint tenancy with rights of survivorship is rarely the right answer for inherited property among siblings — it creates complications on the next death. A tenancy in common or a limited liability company is usually better.
Work With Professionals
Don’t try to navigate this alone. The trustee is likely working with an estate planning attorney and a CPA — coordinate with them. If the situation is simple (clear trust, one beneficiary, straightforward home), you might not need your own attorney. If it’s complicated (multiple beneficiaries, disputes, substantial assets), get your own representation.
The cost of good professional advice in this situation is small relative to the value of the inheritance. Don’t skimp.
The Takeaway
Inheriting a home through a trust is significantly easier than inheriting through probate. The process is faster, cheaper, and more private. But it’s not automatic — there are real administrative steps, real deadlines, and real decisions you’ll need to make as the beneficiary. Stay engaged, ask questions, and work with professionals. Your inheritance will be in much better shape for it.
