Insights: Series 1

What To Do When You Inherit a Home with Siblings

Inheriting real estate together with brothers and sisters is a complicated family matter.

As a very desirable vacation and resort area, Northern Michigan has a relatively high concentration of family owned second homes, seasonal condos and cottages.

This is especially true in areas from Harbor Springs north to Good Hart, and throughout the many inland lakes situated between Walloon to the south and Mackinaw to the north.

Perhaps unsurprisingly, most of the families who own and use these properties also wish to pass them on to their children through trusts upon their death.

But what happens when there are multiple beneficiaries to the estate, and you inherit your parents’ property with your brothers and/or sisters? And how do you and your siblings decide what to do with the property you inherit together?

We’ll answer these questions and more with the help of two local experts who specialize in estate planning law, finance and accounting. Their experience in these family matters will shed some light on what to expect, how to prepare, and what siblings can do to avoid common disagreements and arguments.

Inheriting Real Estate

When parents plan their estate and it includes real property like a house, condo, cottage or land, most will make use of trusts to avoid probate in Michigan.

While there are many types of trusts, a particular type called a “revocable trust” is a favored instrument or arrangement used by parents to convey real estate to their children. A revokable trust also has the added benefit of minimizing taxes for their estate’s beneficiaries, namely, their kids.

When creating a revokable trust, parents usually will transfer ownership of their real estate into the trust where they have named their children as equal beneficiaries.

Then, upon the parent’s passing (thereafter referred to as the ‘decedent’), their children will inherit their property together, usually equally, but always as specifically stated in their will and trust documents.

As you might imagine, or perhaps are already experiencing, inheriting real estate together with a sibling may and frequently does cause some problems. There also may be some family dynamics between you and your siblings that your parents didn’t anticipate or simply weren’t aware of.

Options for Brothers and Sisters

The options available to siblings who have inherited a property together are not entirely different than those available to a single beneficiary (such as an only child).

But complexity often arrises when there are multiple beneficiaries. Unlike when there’s a sole beneficiary who makes all the decisions themselves, siblings will often have equal say in all decisions. This is why cooperation is so important when it comes to inheriting real estate together.

Assuming the property is inherited by all siblings equally, here are the most common options that brothers and sisters may have when inheriting a property together:

  • Co-ownership: If you all agree, you and your siblings can hold the property jointly and make decisions about what to do with it together. This can be a good option if the siblings are able to communicate effectively and make decisions together. But it does introduce another level of complexity, requiring the expertise and guidance of an experienced real estate attorney.
  • Sell: You and your siblings may agree to sell the property and divide the proceeds among yourselves. This can be a good option if you and your brothers and/or sisters are unable to agree on what to do with the property, or if some need the money for other purposes.
  • Buyout: You or another sibling may choose to buy out your shares of the property. This can be a good option if one of you wants to keep the property and your siblings are willing to sell their share.
  • Gift: You or your siblings may simply choose to give your share of the property to the other. This can be a good option if one of you is not interested in the property and wants to avoid the hassle of selling it.
  • Mediation: When you and your siblings just can’t agree on what to do with the real estate you inherited together, it could be time to get the help of a mediator. A mediator can be any third party who hears all sides before offering their opinion. While agreeing on a mediator could present its own problems, you should all agree to select an impartial and professional mediator who has experience with settling such disputes over inherited real estate. And if you’re truly looking for a final settlement, you can all agree to be bound by the mediator’s decision, making it final.
  • Partition: If none of the other options can work for you and your siblings, and all good faith efforts have been exhausted, you may only be left to seek a court-ordered partition. This is a legal process where a judge orders the property to be sold and the proceeds to be divided among you and your siblings.

Regardless of which option you and your brothers and/or sisters choose, it is important to communicate openly and honestly with each other.

In situations where this proves difficult, it may also be helpful to consult with a mediator or attorney to help resolve any disputes that may arise. This isn’t uncommon.

By considering these options and working together, you and your siblings can ensure that the inheritance of a property is a positive and fair experience for everyone involved.

What to Consider When Inheriting Real Estate with Siblings

If your parents have passed and you and your siblings have inherited their real estate as beneficiaries of their estate, it’s import to consider your options and responsibilities.

Every sibling’s personal circumstances will likely be very different from the other. Some may live further away from the property in northern Michigan, have kids still in school, or have job and financial commitments that influence their decisions.

There also may be other circumstances, such as relationship issues with your siblings, that your parents just weren’t aware of when they planned their estate.

Next are a few additional considerations that should be taken into account.


Inheriting a home or cottage in northern Michigan may sound exciting. It brings with it dreams of fresh air, summers on the lake, and roasting marshmallows over a campfire.

But inheriting property always comes with additional costs that may not be part of your dreams.

One of the biggest costs is property taxes, which will likely be much higher than what your parents were paying on the property.

Quite often, beneficiaries are shocked to find out how much the property taxes increase once they inherit the property. This is particularly noticeable when a home was their parents’ principal residence, and it then loses that favored tax exemption (called the “homestead exemption” in Michigan). Property taxes could easily double, triple or more.

If this isn’t planned for, and it takes a long time to sell the property, siblings could be caught in a stressful financial situation.

There’s also additional costs such as association dues and assessments, insurance, maintenance, and repair expenses.

Unless the property is part of a well planned and funded irrevocable trust, which is more usually the case for very wealthy families, all of these expenses must be carefully considered by all involved.

You and your siblings should research and budget for these costs ahead of time, and consider their long-term financial impacts.

Time Commitment

If you’re young, still working, or have children, you may have limited time and resources to devote to caring for and managing a vacation home in northern Michigan. This often is the case when siblings have established their lives in other parts of the state or country.

The time commitment required for owning a home or cottage in northern Michigan could mean needing to hire a property manager to take care of it for you.

As with any other home or property, you will have to find ways to balance the responsibilities of maintaining and managing it along with your other commitments.

Vacation or Rental Use

Depending on the location and amenities of the property, you may be considering renting it out as a vacation home. But you should check whether any local ordinances, licensing or rules are in place that govern renting.

And while the Harbor Springs area is popular with vacationers and tourists, you should research the property’s local market and consider the potential for generating a reliable income from the property. A local real estate professional with experience in leasing can prove very helpful in this situation.

Remember, while the summers here are busy and offer incredibly long days and fantastic weather, they are short and sweet. Most of the year is relatively slow. So unless your property is a viable option for skiers during the winter, you could be faced with it sitting empty for many months.

Family Dynamics

When you inherit real estate together with your siblings, family dynamics can play a big role in decisions about the property.

If you decide to keep the property, each of you should consider how it will be used, who will manage it, and what each person’s financial responsibility will be.

Sometimes, you and your siblings can have different emotional attachments the property, or none at all. Also, it’s rare for every sibling to have the same financial circumstances as the other.

Communication and transparency are key to avoiding conflict and ensuring that everyone is on the same page.

By taking these considerations into account, younger or working heirs, who also may be from out of town or another state, can ensure that they make informed and practical decisions when inheriting a property in northern Michigan.

Remember What’s Most Important

When multiple siblings inherit a property together, it can be a complex and potentially contentious situation. Because each sibling’s personal situation will be different than the other, each one of you should carefully consider your options.

The unique personal relationships and history shared between siblings will play a big and often times stressful role when it comes to inheriting property together. This is why it is important to communicate openly and honestly with each other throughout the entire process.

In these types of situations, for the betterment of your family relationships, you may want to consider hiring a mediator to help you resolve any disputes that may inevitably arise.

If you are unable to reach a resolution together with your brothers and/or sisters, you may need to consider selling the property and dividing the proceeds among your siblings.

All content on this website is for information purposes only. Any information contained herein is not intended to provide legal or financial advice, nor does it create an agency relationship. All information is made available without any guarantee, warranty, or representation of any kind. It is your sole responsibility to seek the services of your own legal, financial, accounting, and real estate professionals prior to any such related decisions or transactions.

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