When a Brooklyn family loses a parent who never funded a trust, the real estate often becomes an immediate source of friction. Picture a multi-family brownstone where one adult child has lived in the garden apartment rent-free for fifteen years. When the mother passes away, that sibling assumes they can simply stay put. The other siblings assume they can immediately sell the building and split the cash. Both are legally incorrect. Until the Surrogate’s Court appoints an official representative, the property sits in a precarious limbo—and no one has the authority to sign a deed or demand rent.
The Fiduciary Custodian of the Home
I constantly remind families that a house does not automatically belong to the children the moment a parent dies. If the property was held solely in the deceased’s name, it becomes part of their probate estate.
Under New York law—specifically EPTL § 11-1.1(b)(5)—a duly appointed executor or administrator is granted the statutory power to take possession of, manage, and collect rents from the deceased person’s real estate. The executor acts as a strict custodian. Their job is not to favor the sibling living in the house, nor is it to blindly follow the demands of the other heirs. Their legal mandate is to preserve the asset, satisfy any outstanding estate debts, and execute the instructions left in the will.
Tenants, Leases, and Family Occupants
The rules governing occupancy depend entirely on the legal status of the individual living in the home. We generally see two distinct scenarios.
If the occupant is a paying tenant with a valid, unexpired lease, the death of the landlord does not extinguish their tenancy. The estate simply steps into the shoes of the deceased owner. The tenant must continue paying rent, but those payments must now be directed to the estate’s bank account rather than the deceased’s personal account. The executor assumes all landlord responsibilities, from fixing a broken boiler to maintaining the roof.
The situation shifts dramatically when the occupant is a family member who has been living there informally. Without a signed lease or a history of paying market-rate rent, this individual is legally considered a licensee. They lack the protections of a formal tenant. If the executor determines the property must be sold to pay off the deceased’s debts, or if the will dictates the proceeds be split equally among multiple beneficiaries, the occupying family member may be required to vacate. If they refuse, the executor has the authority—and often the fiduciary duty—to initiate eviction proceedings.
Carrying Costs and the Financial Reality
Houses consume cash. Mortgages require monthly payments, property taxes come due, and homeowners insurance policies must be updated to reflect that the property is now vacant or estate-owned.
When an individual dies, their personal bank accounts are frozen. This creates an immediate cash flow problem for the estate. If the deceased did not leave sufficient liquid assets to cover the carrying costs of the real estate, the executor faces a difficult choice. They must either demand the occupying family member start paying rent to float the property’s expenses, or they must liquidate the house rapidly to avoid foreclosure or tax liens.
Inherited real estate also carries significant tax implications. When property passes to heirs, it typically receives a stepped-up basis for capital gains purposes, adjusting the property’s tax basis to its fair market value on the date of death. If the executor sells the house shortly after the owner dies, the estate will owe little to no capital gains tax. However, if a family member continues to live in the property for years while the estate remains open, any subsequent appreciation in value could trigger a heavy tax burden when the property is eventually sold.
The Threat of Fractionated Ownership
When a homeowner dies without a will—a status known as dying intestate—New York imposes its own rigid rules of inheritance. Under EPTL § 4-1.1, a single property might be distributed in fractional shares among a surviving spouse and multiple children.
Fractionated ownership is an administrative nightmare. Imagine three siblings inheriting equal shares of a single-family home. One sibling wants to live in the house, another wants to rent it out for passive income, and the third desperately needs cash and demands an immediate sale. Because they all hold title to the property, no major decision can be made without unanimous consent. The sibling who wishes to sell can force the issue by filing a partition action—a costly and hostile lawsuit that forces the sale of the property at public auction, often for pennies on the dollar.
Even if the heirs agree on a course of action, maintaining a house with multiple owners requires flawless cooperation. If the roof needs replacement, all owners must contribute to the cost. If one heir falls into bankruptcy or gets divorced, their fractional share of the family home becomes vulnerable to creditors or ex-spouses. What was meant to be a generational asset quickly becomes a legal liability.
Intentional Generational Stewardship
Relying on the probate process to sort out real estate is rarely a prudent strategy. The delays in Surrogate’s Court can stretch for months, during which time the property remains frozen. Roofs leak, pipes freeze, and mortgage arrears accumulate while families wait for judicial authorization to act.
We approach real estate not just as a financial asset, but as a core component of your family’s legacy. Stewardship. Proper management requires deliberate planning before a crisis occurs. By transferring the property into a living trust, the original owner retains total control during their lifetime. Upon their death, a successor trustee can immediately manage, rent, or sell the property without ever stepping foot in a courtroom. The transition is private, immediate, and entirely bypasses the delays of the probate system.
Leaving a home to your children should be a gift, not a source of litigation. To pass your real estate exactly as you intend, schedule a property succession review with our office. We will examine your current deed, identify potential probate risks, and structure a trust that protects your family’s most valuable asset.
