From Probate to Partnership: How Children Can Legally Operate Rental Properties After a Parent’s Death

When a parent who owns rental properties passes away, their children often find themselves facing two difficult realities: grieving the loss of a loved one while also managing valuable income-generating real estate. If there is no clear estate plan, the process can feel overwhelming. However, once the estate has been settled through probate, children who inherit rental properties have several options for jointly managing those assets. In Florida, forming a legal entity like a Limited Liability Company (LLC) or creating a trust can help streamline operations, reduce conflict, and protect the property for the long term. Our Tampa Estate Planning Attorneys at Bleakley Bavol Denman & Grace are here for you.

Step One: The Probate Process

Before any inherited property can be sold, rented, or legally transferred, it must typically pass through probate—the court-supervised process of validating the will (if there is one) and distributing assets. In Florida, if your parent died without a will (intestate), state law dictates how assets are divided among surviving heirs.

During probate, a personal representative (executor) will be appointed, debts and taxes will be settled, and once the court approves, ownership of the rental properties can be legally transferred to the children.

Step Two: Transferring Title to the Heirs

After probate, the next critical step is transferring title of the rental properties into the names of the rightful heirs. This may result in several siblings owning the properties as tenants in common, each with an undivided interest. While this ownership structure is legally valid, it can create challenges when it comes to decision-making, collecting rent, paying expenses, or selling the property.

Step Three: Forming an LLC for Efficient Management

To avoid future disputes and simplify operations, many families choose to form a Limited Liability Company (LLC)after probate. Here’s why this strategy works well for inherited rental properties:

• Streamlined decision-making: Instead of each sibling having to agree on every decision, an LLC can operate under an operating agreement that outlines voting rights, responsibilities, and procedures.
• Limited liability protection: An LLC can shield the heirs from personal liability for accidents or lawsuits related to the rental property.
• Clear financial management: Rental income, expenses, and profits are handled through the LLC’s bank account, making it easier to track distributions and file taxes.
• Flexible ownership: If a sibling wants to exit the partnership, the LLC can structure a buyout or sale without requiring all co-owners to sell their interest.

Step Four: Using a Trust for Long-Term Planning

In some cases, a trust may be more appropriate—especially if there are minor children, special needs beneficiaries, or a desire to keep the property in the family for generations. A trust can hold title to the property, manage income, and distribute proceeds according to your parent’s or family’s wishes, without going through probate again in the future.

Seek Legal Advice Today

While inheriting rental property can be a blessing, managing it jointly can be complex without the right legal structure. After probate, forming an LLC or establishing a trust can help Florida families operate and preserve inherited properties more efficiently and harmoniously.

At Bleakley Bavol Denman & Grace, we help families in Tampa and throughout Florida navigate the probate process and plan for smart asset management. Contact us today to explore the best path forward for your inherited real estate.

Source:

floridabar.org/public/consumer/pamphlet026/