How to Inherit Real Estate in Maryland

The process of inheriting real estate in Maryland involves specific legal procedures, tax considerations, and important decisions for beneficiaries.

Whether you're inheriting through a will or as an heir without one, understanding Maryland's inheritance laws and requirements helps ensure a smooth property transfer.

Understanding Maryland Probate Process

In Maryland, most inherited real estate must go through probate, even when a will exists. The process begins in the county where the deceased person lived.

Regular estate administration applies when the estate value exceeds $50,000 ($100,000 if the spouse is the sole heir). Small estate procedures apply for estates below these thresholds.

The typical probate timeline spans 6-12 months, though complex estates may take longer.

During this period, the personal representative manages the estate and handles property maintenance, tax payments, and other obligations.

Types of Property Ownership and Inheritance

Sole Ownership

When the deceased owned the property alone, the entire property passes through probate. The court determines distribution based on:

• Valid will instructions
• Maryland intestacy laws if no will exists
• Legal challenges from potential heirs

Joint Ownership

Properties held in joint tenancy with rights of survivorship transfer automatically to surviving owners.

This ownership structure bypasses probate, though documentation must still be filed with the land records office.

Life Estate

This arrangement allows the property to transfer directly to designated beneficiaries (remaindermen) upon the life tenant's death, avoiding probate but requiring deed updates.

Maryland Tax Implications

Estate Tax

Maryland's estate tax applies to estates valued over $5 million (as of 2024).

The tax rate varies from 0.8% to 16%, depending on the estate's value. Federal estate tax may also apply for estates exceeding $13.61 million.

Inheritance Tax

Maryland levies an inheritance tax of 10% on property passing to non-exempt beneficiaries. However, direct heirs are exempt, including:

• Spouses
• Children and their spouses
• Parents
• Grandparents
• Siblings

Property Tax Reassessment

Inherited properties undergo reassessment by the Maryland Department of Assessments and Taxation. This may result in:

• Higher property tax bases
• Loss of previous owner's tax credits
• New payment obligations

Required Documentation

Essential Papers

Beneficiaries must gather:

• Original death certificate
• Property deed and title documentation
• Recent tax assessments and bills
• Mortgage statements (if applicable)
• Home insurance policies

Legal Forms

Required Maryland probate forms include:

• Petition for Administration
• List of Interested Persons
• Inventory and Information Report
• Final Administration Account

Steps for Property Transfer

Initial Actions

1. Record the death certificate with the Register of Wills
2. File probate petition in the appropriate county
3. Obtain Letters of Administration
4. Notify creditors and interested parties

Property Management

During probate, responsibilities include:

• Maintaining property insurance
• Paying ongoing utilities and maintenance
• Securing the property
• Managing tenant relationships if applicable

Title Transfer

After probate closes:

1. Record new deed with county land records
2. Update property insurance
3. Transfer utilities
4. Register with homeowners association if applicable

Special Scenarios

Multiple Heirs

When multiple beneficiaries inherit:

• All parties must agree on property disposition
• Forced sales may occur through partition actions
• Buyout arrangements require formal agreements

Mortgaged Property

For inherited property with existing mortgages:

• Due-on-sale clauses may apply
• Refinancing might be necessary
• Assumption options vary by lender

Rental Property

Inheriting rental property requires:

• Review of existing lease agreements
• Management of security deposits
• Compliance with Maryland landlord-tenant laws
• Business license updates

Professional Assistance

Legal Support

Consider retaining:

• Probate attorney
• Real estate lawyer
• Title company
• Estate planning professional

Financial Advisors

Seek guidance on:

• Tax implications
• Property management
• Investment considerations
• Cash flow planning

Long-term Considerations

Property Retention

If keeping the property:

• Evaluate maintenance costs
• Consider insurance requirements
• Plan for property taxes
• Assess needed improvements

Property Sale

When selling inherited property:

• Determine market value
• Address capital gains implications
• Consider timing of sale
• Manage multiple heir interests