What Should You Do With Your Parents' Home After They Have Passed?

The house holds more than equity. Knowing your options helps you make decisions you can live with.

When a parent dies, the house is usually the last thing you want to think about and one of the first things that needs attention. The mortgage or property taxes do not pause for grief. The insurance company does not know your mother is gone. The furnace still needs to run in January whether anyone is there or not.

And at some point, between the funeral arrangements and the paperwork and the waves of missing them, someone asks: what are we going to do with the house?

This guide is for the person sitting in that question right now. If you have inherited your parents' home in Montana, or you are about to, here is an honest look at the legal process, the financial picture, the emotional weight, and the three real paths forward. You do not have to decide today. But understanding your options will help when you are ready.

What Legal Steps Come First in Montana?

Before you can sell, rent, or move into your parents' home, the estate needs to go through the legal process that transfers ownership. In Montana, that process is probate, and understanding how it works removes a significant source of anxiety during an already difficult time.

Probate begins when someone files a petition, the original will (if one exists), and the death certificate with the district court in the county where your parent lived. The court then appoints a personal representative (sometimes called an executor) to manage the estate.

Montana offers several tracks depending on the estate's size:

Small estate affidavit: For estates valued under $50,000, Montana allows a simplified affidavit process that can begin as soon as 30 days after death. No formal probate required.

Summary administration: For estates valued at $100,000 or less, this streamlined process typically takes 4 to 8 months.

Informal probate: The most common path for estates with real property. Takes 6 to 12 months on average. The court filing fee is approximately $100, but attorney fees for straightforward informal probate typically run $2,500 to $5,000.

Formal probate: Required when there are disputes, unclear wills, or complex assets. Can take a year or longer and cost $5,000 to $12,000 or more in attorney fees.

One important note: if your parent had a transfer on death deed (TODD) recorded with the county, the property passes directly to the named beneficiary without going through probate at all. Montana recognizes TODDs, and they are an increasingly common estate planning tool. If you are unsure whether one exists, check with the county clerk and recorder's office where the property is located.

During probate, you cannot sell the property until the personal representative has legal authority from the court. But you can (and should) take steps to secure and maintain the property, get an appraisal, and consult with a broker so you are ready to act when the time comes.

What Are the Tax Implications of Inheriting a Home in Montana?

Montana does not impose a state inheritance tax or estate tax, which simplifies the picture considerably for most families. You do not owe the state anything simply because you inherited property.

The federal estate tax only applies to estates exceeding the current exemption threshold (approximately $13.6 million in 2026 for an individual), which means it affects very few Montana families.

The tax concept that matters most for inherited homes is the stepped-up basis.

Here is how it works: when you inherit property, the IRS resets the home's tax basis to its fair market value on the date of death. This eliminates the capital gains that accumulated during your parents' lifetime.

A practical example:

Your parents bought the home in 1995 for $85,000. At the time of your mother's death in 2026, it was appraised at $420,000. Your new tax basis is $420,000, not $85,000.

If you sell the home six months later for $430,000, your taxable capital gain is only $10,000 (the appreciation since inheritance), not $345,000. At the federal long-term capital gains rate of 15% for most filers, that is $1,500 in tax instead of potentially $51,750.

This stepped-up basis is one of the strongest financial arguments for selling relatively soon after inheriting. The longer you hold the property, the more potential gain accumulates above that stepped-up basis.

If the home was your parent's primary residence and you also lived there for at least two of the last five years, you may additionally qualify for the IRC Section 121 capital gains exclusion (up to $250,000 for single filers, $500,000 for married couples filing jointly).

Talk to a CPA before making any decisions. The tax picture can change depending on whether the property was jointly owned, whether a surviving spouse is involved, and how the estate is structured. A broker can help with the real estate side, but tax strategy deserves specialized guidance.

What Are Your Three Main Options?

Once probate grants the authority to act, you face the same question every heir faces: sell, keep, or rent. Each path has real consequences, and the right choice depends on your financial situation, your family dynamics, and what you honestly want.

Option 1: Sell the home.

Selling is the most common choice, and for good reason. It converts the property into cash that can be divided among heirs, eliminates ongoing maintenance and insurance costs, and takes advantage of the stepped-up basis while the tax benefit is strongest.

In the Gallatin Valley, well-maintained homes in Belgrade, Manhattan, and Bozeman continue to attract strong buyer interest. A home that has been lived in and maintained by the same family for decades often has features (mature landscaping, established neighborhoods, larger lots) that newer construction does not.

Selling costs typically run 7-10% of the sale price, including agent commissions, closing costs, and any needed repairs. For a home appraised at $420,000, expect $29,000 to $42,000 in total selling costs.

Option 2: Keep the home and move in.

Some heirs choose to live in the inherited home, especially if it is in a location or school district they value. This makes sense when the heir can afford the ongoing costs (property taxes, insurance, maintenance, and any remaining mortgage), the home fits their life stage, and the property has sentimental value that outweighs the financial benefit of selling.

In Montana, property tax bills in Gallatin County can range from $2,000 to $8,000 or more annually, depending on the home's value and location. Add homeowners insurance, utilities, and Montana-specific maintenance costs (roof snow load, furnace, septic if rural), and the carrying costs add up quickly.

If siblings are co-heirs, the sibling who wants to keep the home typically needs to buy out the others' shares. This requires either cash on hand or a mortgage refinance, and the siblings need to agree on a fair price, usually based on a professional appraisal.

Option 3: Rent the property.

Renting generates monthly income while preserving ownership and allowing the property to continue appreciating. This can work well for families who are not ready to sell but do not want to live in the home.

The reality: becoming a landlord involves tenant screening, lease management, maintenance coordination, and compliance with Montana landlord-tenant law. If you live out of state, you will likely need a property management company, which typically charges 8-12% of monthly rent.

You also need to switch from standard homeowners insurance to landlord insurance, and if the property sits vacant between tenants, a vacant property policy may be necessary. Vacant home insurance premiums run 1.5 to 1.6 times the standard rate.

What Happens When Siblings Cannot Agree?

Inherited property with multiple heirs is where things get complicated, and it is one of the most common sources of family conflict in estate settlement. The emotions are already running high. Everyone is grieving differently. And each sibling may have a completely different financial situation, emotional attachment, and vision for the property.

The first step is always communication. Sit down (in person if possible) and talk honestly about what each person wants and needs. Some siblings need the money. Some want to preserve the family home. Some live nearby and some live across the country. Understanding each person's position before jumping to solutions prevents months of frustration.

If you cannot reach agreement through conversation, there are three escalation paths:

Buyout: One sibling purchases the others' shares at a price based on a professional appraisal. This is the cleanest resolution when one person wants to keep the home and the others want cash. The buying sibling may need to refinance or take out a new mortgage to fund the buyout.

Mediation: A neutral third party helps the siblings reach agreement. Mediation typically costs $3,000 to $8,000 and can resolve disputes in weeks rather than months. It preserves relationships far better than litigation.

Partition action: If all else fails, any co-owner can file a partition action in court, asking a judge to order the property sold and the proceeds divided. This is expensive, adversarial, and slow. It should be a last resort.

One practical step that prevents many disputes: get the appraisal done early. When everyone agrees on the home's value, the conversation about what to do with it becomes much simpler. Disagreements about price fuel disagreements about everything else.

A Real Buyer Story

Consider a family with three adult children who inherited their mother's home in Manhattan, Montana, after she passed in late 2025. The home had been in the family for over 20 years. One sibling lived in Bozeman, one in Oregon, and one in Texas.

The sibling in Bozeman initially wanted to keep the home as a rental property. The sibling in Oregon needed the cash to pay off debt. The sibling in Texas had no strong opinion either way but did not want to be a long-distance landlord.

After getting an appraisal and sitting down together (over a video call and then in person during the memorial), they agreed to sell. The Bozeman sibling handled the logistics of clearing the home and working with the broker. They gave themselves three months to sort through belongings before listing.

The home sold in Belgrade's spring market for close to the appraised value. Because they sold within seven months of inheritance, the stepped-up basis meant virtually no capital gains tax on the sale. Each sibling received their third of the net proceeds.

The hardest part was not the paperwork or the taxes. It was clearing the kitchen. That is the part nobody warns you about.

Note: This buyer/seller story is a hypothetical composite. Replace with a real client story if one is available.

What Should You Think Carefully About Before Deciding?

Every path has a cost that is not immediately obvious. Here is the honest version.

If you sell, you are letting the house go. This is a real loss on top of the loss you already feel. Selling your parents' home is not the same as selling any other property. The memories are in the walls. The marks on the doorframe where you were measured as a kid. The tree your father planted. Acknowledging that grief is part of the process, not a reason to avoid the process.

If you keep the house, you inherit the maintenance. A home that was well maintained by someone who lived there for 25 years may need significant updates: roof, furnace, electrical, plumbing. Deferred maintenance on Montana homes compounds fast, especially through winter cycles. Make sure you know what the home actually needs before committing to keep it. A home inspection before deciding is money well spent.

If you rent it, you become a landlord. Landlording is a business, not a passive investment. Tenant issues, maintenance calls, vacancy periods, and regulatory compliance are all part of the equation. If you live out of state, property management fees (8-12% of monthly rent) cut into the return. Run the actual numbers, not the optimistic version.

Vacant homes cost money and carry risk. Every month an inherited home sits empty, it costs you in property taxes, insurance, utilities, and wear. Most homeowners insurance policies limit or cancel coverage if a home is vacant for 30 to 60 consecutive days. A burst pipe in an empty Montana home in February can cause $10,000 to $70,000 in damage. Decide and act within a reasonable timeline, not because the law forces you to, but because delay is expensive.

Grief affects decision-making. Research shows that grief suppresses the prefrontal cortex, the part of your brain responsible for clear decision-making, while amplifying emotional responses. You are making complex financial decisions with a brain that is not operating at full capacity. Give yourself grace, but also give yourself a trusted advisor who can see the numbers clearly when you cannot.

What Is the Timeline for All of This?

There is no single deadline, but there is a practical sequence that keeps costs down and decisions clear.

Immediately (first 1-2 weeks):

Secure the property. Change the locks if needed. Set the thermostat to prevent pipe freezing in winter (Montana homes need this). Notify the insurance company of the change in occupancy. Begin collecting mail. Locate the will and any estate planning documents.

Within 30 days:

File for probate (or confirm that a transfer on death deed or trust avoids it). Contact the mortgage servicer if there is an outstanding loan. Begin sorting personal belongings, but do not rush this. Work in short sessions. Photograph items before donating or discarding.

Within 2-3 months:

Get a professional appraisal. This sets the stepped-up basis for tax purposes and gives all heirs a shared number to work from. If selling, begin consulting with a broker about the local market and listing timeline. If keeping, get a home inspection to understand the property's true condition.

Within 3-6 months:

Make the sell, keep, or rent decision. If selling, list the property once probate grants authority to do so. In the Gallatin Valley, spring and early summer remain the strongest selling seasons, but well-priced homes in Manhattan, Belgrade, and Bozeman sell year-round.

Within 6-12 months:

Close the transaction or finalize the rental arrangement. Complete the estate settlement. File any necessary tax returns.

This is a guideline, not a mandate. Some families need more time, and that is fine. The goal is to avoid indefinite delay, which costs money and prolongs uncertainty for everyone involved.

Related reading

• Selling a family ranch when the heirs disagree
• How selling a home in the Gallatin Valley actually works
• Selling a home you have lived in for 20 years

Frequently Asked Questions

Does Montana have an inheritance tax?

No. Montana does not impose a state inheritance tax or estate tax. Heirs do not owe taxes simply for inheriting property. However, if the inherited property is later sold for more than its stepped-up basis (fair market value at the date of death), capital gains tax may apply on the appreciation that occurred after inheritance.

How long does probate take in Montana?

Montana probate typically takes 6 to 12 months for informal proceedings. Summary administration for estates under $100,000 can be completed in 4 to 8 months. Estates with disputes, unclear titles, or complex assets can take significantly longer. The court filing fee for informal probate is approximately $100.

What is a stepped-up basis on inherited property?

When you inherit property, its tax basis resets to the fair market value on the date of death. If your parents bought the home for $120,000 and it was worth $450,000 when they passed, your basis is $450,000. If you sell for $460,000, you owe capital gains tax only on the $10,000 gain after inheritance, not on the full $330,000 of appreciation during their lifetime.

Can I sell my parents' house before probate is finished?

In most cases, no. The personal representative must be appointed by the court before the property can be listed or sold. However, you can begin preparing the home for sale during probate by getting an appraisal, making repairs, and consulting with a broker so you are ready to list as soon as the court grants authority to sell.

What happens if siblings disagree about what to do with the inherited house?

If siblings cannot agree, options include a buyout (one sibling pays the others for their share), mediation (typically $3,000 to $8,000, resolves disputes in weeks), or a partition action where a court orders the property sold and proceeds divided. Mediation preserves relationships better than litigation and is almost always worth trying first.

Should I keep my parents' home as a rental property?

Renting can generate monthly income and allow the property to appreciate, but it means becoming a landlord. You will need to handle tenant screening, maintenance, property management, and landlord insurance. In Montana, you also need to account for seasonal maintenance like winterization. The decision depends on whether the rental income justifies the ongoing time and cost.

What is a transfer on death deed in Montana?

A Montana transfer on death deed (TODD) allows a property owner to name a beneficiary who automatically receives the property when the owner dies, bypassing probate entirely. The owner retains full control during their lifetime and can revoke or change the deed at any time. The deed must be signed, notarized, and recorded with the county before death to be valid.

How soon after inheriting should I decide what to do with the house?

There is no legal deadline forcing an immediate decision, but costs accumulate. Property taxes, insurance, utilities, and maintenance continue whether anyone lives in the home or not. Most homeowners insurance policies limit or cancel coverage if a property sits vacant for 30 to 60 days. A reasonable timeline is to secure the property immediately, begin probate within weeks, and aim to make a sell, keep, or rent decision within 3 to 6 months.

Next Steps

If you have inherited a home in Montana, or you know that day is coming, here is where to start:

Secure the property and notify the insurance company. An unoccupied home needs attention, especially in Montana winters.

Locate estate planning documents. If a will, trust, or transfer on death deed exists, it simplifies the process significantly.

File for probate if needed. An estate attorney can tell you which track applies based on the estate's size and complexity.

Get a professional appraisal. This establishes the stepped-up basis and gives all heirs a shared number to work from.

If you would like a confidential conversation about the home's market value, what the selling process looks like, or how the Gallatin Valley market affects your decision, reach out. This is steady, careful work, and having a broker who has walked beside families through it before makes a real difference.

Nancy Clark
Broker/Owner, AmeriMont Broker Group
Manhattan, Montana
[email protected]
nancyclarkbroker.com

Nancy Clark is the Broker and Owner of AmeriMont Broker Group, serving Manhattan, Amsterdam, Churchill, and communities across southwest Montana. With more than $135 million in closed sales and over a decade of experience in Montana real estate, Nancy brings the care of a neighbor and the skill of a seasoned professional to every transaction. Reach her at [email protected] or visit nancyclarkbroker.com.

This article is general information from a real estate broker, not legal, tax, or financial advice. Nancy Clark is not an attorney or accountant. Probate, tax, and estate rules are complex and change often. Confirm your own situation with a qualified attorney, CPA, or the relevant Montana agency before acting.