Inheriting a House in Michigan: Probate, Taxes, and Selling

You inherited a house in Michigan - here’s what actually happens

Take a breath - nothing about the house has to be decided this week. It is not going anywhere, and the mortgage company cannot demand immediate payoff just because the owner died.

Michigan runs estates through the county probate court, and it is one of the more streamlined states: most estates use “informal” probate with minimal court supervision. Whether the house goes through probate at all depends on how it was titled - Michigan is one of the few states where the lady bird deed (enhanced life estate deed) is a common, well-accepted way parents pass a house outside probate, alongside trusts and joint ownership.

One Michigan-specific issue deserves early attention if you plan to keep the house: property tax uncapping. Michigan caps how fast a home’s taxable value can rise while ownership stays the same - and a transfer at death can uncap it, resetting taxes to a much higher level, unless the transfer fits an exemption. More below.

If you live out of state, as many heirs to Michigan homes do, all of this can be handled remotely.

Does it go through probate?

The common paths around probate first:

• Lady bird deed. Widely used in Michigan. The owner kept full control for life; at death the property passes automatically to the named beneficiary. Recording a death certificate completes the transfer - no probate. Check the county register of deeds early for one.
• Living trust. A house titled to a revocable living trust is handled or sold by the successor trustee, outside probate.
• Joint ownership. Property held jointly with rights of survivorship, or by spouses as tenants by the entirety, passes automatically to the survivor.
• No statutory TOD deed. Michigan has not adopted a transfer on death deed statute for real estate - the lady bird deed fills that role here.
• Small estate procedures. For 2026, an estate worth about $53,000 or less (the base amount is $50,000, adjusted annually for inflation) can use simplified transfer: a court petition and order assigning the property to the spouse or heirs, which can include real estate. When calculating the estate’s value, up to $250,000 of mortgage debt on the real estate is deducted - so a modest house with a large mortgage can sometimes qualify even when its sticker price looks too high. There is also a quicker affidavit process for small amounts of personal property.

Everything else goes through probate - but Michigan probate is comparatively gentle. Most estates proceed as informal, unsupervised administration: the personal representative is appointed by the probate register, often without a hearing, and then administers the estate largely free of court involvement.

The Michigan probate timeline

A typical unsupervised estate runs about seven months to a year:

1. Opening (weeks 1-4). Application for informal probate; the personal representative receives letters of authority, often within days to weeks.
2. Notice and inventory (months 1-3). Heirs and devisees get notice; the inventory is filed with the court.
3. Creditor period (4 months from publication). Publishing notice to creditors starts a four-month claims window - the floor under how quickly an estate can safely wrap up. Michigan also requires estates to stay open at least five months.
4. Administration (months 2-10). Debts and taxes paid; the house maintained, rented, or sold.
5. Closing (months 7-14). Most unsupervised estates close with a sworn statement rather than a court hearing.

Supervised administration, will contests, or property that is hard to sell stretch the timeline past a year.

Taxes when you inherit

The headline is friendly: Michigan has no inheritance tax and no estate tax for modern deaths (its old inheritance tax only applies to deaths decades back). You owe Michigan nothing for inheriting.

Federal estate tax touches only estates above $15 million per person (2026) - effectively nobody’s problem here.

The fact worth the most money is the stepped-up basis. When you inherit, the house’s cost basis for capital gains purposes resets to fair market value at the date of death. A house bought for $30,000 in 1978 and worth $280,000 today gives you a $280,000 basis - sell around that soon after, and there is little or no capital gains tax. The appreciation during the owner’s lifetime is simply never income-taxed. Federal law, same everywhere. If you keep the house, only growth after the date of death gets taxed when you sell.

The Michigan trap: property tax uncapping. Proposal A caps annual increases in taxable value while ownership is unchanged, so long-held homes are often taxed on a fraction of market value. A transfer of ownership - including inheritance - uncaps the taxable value to the current market level unless an exemption applies. Michigan law does exempt certain transfers to close family members, but the exemption has conditions (it generally hinges on the class of relative and on the use of the property not changing, e.g. not converting it to a rental) and paperwork - a Property Transfer Affidavit must be filed with the local assessor within 45 days. If you plan to keep the house, get specific advice before you retitle anything; the difference can be thousands of dollars a year. If you are selling anyway, uncapping matters little - the buyer’s taxes were going to uncap at sale regardless.

Can you sell during probate in Michigan?

Yes, and relatively easily:

• Unsupervised administration (the norm). The personal representative has statutory power to sell estate real estate without a court order, unless the will restricts it. The sale looks close to a normal transaction - the PR signs the deed, and the title company wants the letters of authority.
• Supervised administration. Court approval is needed for the sale - a petition and order, adding weeks.
• Lady bird deed or trust property. No probate involvement; the beneficiary or trustee sells as a regular owner once the death paperwork is recorded.
• Small estate assignments. Once the court assigns the house to heirs, they sell as ordinary owners (the assignment order may leave a short window where the property remains liable for certain expenses - title companies handle this routinely).

Sale proceeds during administration go to the estate and are distributed after the creditor period and expenses.

If you live out of state

Michigan expects out-of-state heirs - it is one of the classic “kids moved away” states:

• Non-residents can serve as personal representative; there is no Michigan residency requirement. Practically everything legal is handled through a Michigan attorney by email and e-filing.
• The house needs local hands, and Michigan winters raise the stakes: a vacant house must be winterized (or kept heated) or you risk burst pipes, and standard homeowner’s insurance often lapses or excludes losses on unoccupied homes - call the insurer early.
• Snow clearance and lawn care keep the city and neighbors happy; an obviously empty house invites problems.
• A local agent who handles inherited sales is your presence on the ground: regular checks, cleanout coordination, honest advice on selling as-is versus updating a dated but solid house, and running the sale while you stay home.

What’s the house worth?

Every path - keep, rent, or sell - starts with a real number. Automated estimates miss most on exactly what people inherit in Michigan: original-condition homes where the same floor plan sells for wildly different prices depending on updates, and where lake proximity or a good school district moves value street by street.

Get the fair market value at the date of death documented (it fixes your stepped-up basis) plus a current as-is number and a fixed-up number. The spread between the last two tells you whether repairs are worth managing from out of state. A local agent can pull all three for free.

Frequently asked questions

How long does probate take in Michigan? A typical unsupervised estate: seven months to a year, with the four-month creditor window and five-month minimum setting the floor. Lady bird deed and trust transfers take weeks, not months.

Does Michigan have an inheritance or estate tax? No - not for any recent death. Federal estate tax applies only above $15 million (2026). Your main tax concepts are the stepped-up basis (good news) and property tax uncapping (watch out if keeping the house).

Will the property taxes go up if I keep the house? Possibly a lot, if the transfer uncaps the taxable value. Transfers to close relatives can be exempt from uncapping if the statutory conditions are met and the Property Transfer Affidavit is filed on time - get advice before retitling.

Can the personal representative sell the house before probate closes? Yes - in unsupervised administration the PR can generally sell without a court order, unless the will says otherwise.

There’s a “lady bird deed” on file. Do we still need probate for the house? No - the house passes to the named beneficiary automatically. Record the death certificate (and file the Property Transfer Affidavit), and the beneficiary can sell as the owner. The rest of the estate may still need its own process.