Selling an inherited Nantucket home: a guide for heirs

A Nantucket house that has been in a family for decades is rarely just an asset. It's also where everyone learned to swim. When it passes to the next generation, the practical questions arrive at the same time as the hard ones, and the family usually has to answer both while living far from the island and from each other. None of what follows is legal or tax advice. It's the map, so you know what to ask the attorney and the CPA who will do the real work.

Nothing can be listed until someone has the legal authority to sign. Who that is depends on how the house was owned.

• If the house was in a trust, the trustee named in the trust acts, usually without the probate court.
• If it was owned in a person's own name, the Probate and Family Court appoints a personal representative, the role most people still call an executor.
• If it was owned jointly with a surviving owner, that owner usually holds it now.

While that's being sorted out, the house needs looking after. Tell the insurance company the house is unoccupied, because many policies change their coverage when a home sits empty. Keep the caretaker, the heat and the utilities going, and have someone walk through after every storm.

Most families don't start with "sell." They start with whether anyone can afford to keep it, whether renting it would carry the costs, and whether the people who use it most are the people who can pay for it. The guide to keeping the house in the family covers that side. If the honest answer is that the house no longer fits the family, selling isn't a failure. For many families it's the fairest way to treat everyone the same.

It helps to have a current, honest number on the table before that conversation, because every other option gets measured against it.

From a trust. The trustee signs the listing agreement and the deed, following the trust's terms. There's no court step for the sale itself, which is one reason island families use trusts so often.

Through probate. In Massachusetts a personal representative can sell real estate in two situations: the will gave them the power to sell, or the court has issued a license to sell. If there was no will, the license is required. Your estate attorney will know which applies within a few minutes of reading the will. The practical point is timing: a house can be prepared and even shown while the appointment is pending, but the agreement needs a signer with authority.

The estate tax lien. When an owner dies, Massachusetts automatically places a lien on the real estate they owned, alone or jointly, and a release is needed to give a buyer clear title. It applies to owners who lived out of state as well; their estates file a nonresident affidavit with the return. The release normally follows the estate tax return. When a sale comes first, the Department of Revenue has an application for releasing the lien once there's a signed purchase and sale agreement. Massachusetts taxes estates above $2,000,000, and the median single-family sale on Nantucket over the last three years was $3.7 million, so most island estates will be dealing with this. Raise it with the estate attorney at the start, not at closing.

It's common for one sibling to want the house and the others to want their share. A buyout works when the number is one everyone trusts. That usually means an independent opinion of market value, from comparable sales and not from the Town's assessment, which runs far below what island houses sell for. Some families get two opinions and agree in advance how to settle any gap.

Put the terms in writing: the price, the timing, who pays the carrying costs until it closes, and what happens if the financing falls through. Ask the attorney how the Land Bank fee applies to a transfer between family members for money. The family guide explains the exemptions.

Many inherited houses were last renovated when the family was young. That's fine. On much of the island, buyers are paying for the land and the location, and an untouched house on a good lot draws both the family that wants a project and the builder who sees the lot.

What doesn't work is pricing the memories. The market will pay for the lot, the location, the condition and what can be built there, and nothing for what happened in the kitchen. Most families are better served by selling as-is at the right price than by starting a renovation from another state. Do the inexpensive things: clear it out, clean it, fix what's broken, and open it up so it shows the way it felt in July.

The contents cause more family friction than the house does. A few things help.

• Walk through together, or on video, before anything is removed. Let each person name what matters to them.
• Decide what sells with the house. Many island sales include most of the furnishings, which spares everyone the cost of shipping them off the island.
• Write it down. Whatever stays goes into the purchase and sale agreement, so the buyer and the family agree on what's included.
• Leave time. Clearing a house of fifty summers takes longer than anyone expects, and it's hard to do in the week before closing.

The stepped-up basis. Under federal rules, the tax basis of inherited property is generally its fair market value on the date of death, not what the family paid decades ago. When heirs sell reasonably soon after, the taxable gain is measured from that stepped-up value, so it is often small. The CPA will want a date-of-death valuation, and it's worth getting one early.

The Massachusetts withholding at closing. On sales of $1 million or more, the state now requires a certification from every seller, and an estate or a trust counts as a seller. Estates of Massachusetts residents and resident trusts can certify that they're exempt. Others should ask their attorney how the rule treats them before closing week.

The septic inspection. Title 5 doesn't require an inspection when a house passes between parents and children. It does when the family sells to a buyer, if the house is on a septic system.

If your family is facing this