Inherited Property in Alabama: What to Do After a Loved One Dies

Inheriting property in Alabama is one of those situations where grief and legal complexity arrive at the same time. Whether it is a family home, a piece of land, or a rental property, what you do next — and how quickly you do it — has real legal and financial consequences. This guide walks you through the key steps, your options, and the tax considerations you need to understand.

At Colvin & Sawyer Law Offices, we help families across Birmingham, Mountain Brook, Hoover, Vestavia Hills, and throughout Alabama navigate inherited property from the first question to the final transfer.

Step 1: Determine How the Property Was Owned

The first thing to determine is how the deceased held title to the property. This controls everything that happens next:

• Solely in their name — the property must generally go through Alabama probate before title can transfer to heirs
• Joint tenancy with right of survivorship — the surviving joint owner inherits automatically; no probate required. File an affidavit of survivorship with the county probate court to clear the title.
• In a revocable living trust — the successor trustee transfers the property per the trust terms; no probate required
• Transfer-on-death deed — Alabama recognizes these in limited circumstances; confirm with the county records

If you are not sure how the property was titled, a copy of the deed from the county probate court records will tell you.

Step 2: Open the Estate if Probate Is Required

If the property was owned solely in the deceased's name, you will need to open an estate in Alabama probate court before the title can be transferred. The personal representative — named in the will or appointed by the court — handles this process. See: Alabama Probate Process Explained and How to Become Executor of an Estate in Alabama.

Once the estate is fully administered, the personal representative can deed the property to the heirs through a personal representative's deed recorded in the county where the property is located.

Step 3: Understand the Tax Implications

This is where most families are pleasantly surprised:

• No Alabama inheritance tax — Alabama has no state inheritance tax or estate tax
• Stepped-up cost basis — for federal tax purposes, inherited property receives a stepped-up cost basis to its fair market value at the date of death. If you sell the property shortly after inheriting it for close to that value, you may owe little or no capital gains tax.
• Property tax — the property continues to be assessed for annual Alabama property taxes regardless of who owns it. Make sure taxes are current.

See: Does Alabama Have an Estate Tax or Inheritance Tax?

Your Options: Keep, Sell, or Rent

Keep the Property

If you want to keep the property, make sure the title is properly transferred into your name through the probate process. Update homeowner's insurance and confirm property taxes are current. If you move in as a primary residence, you may qualify for Alabama's homestead exemption.

Sell the Property

You cannot sell inherited property until title has been properly transferred through probate (or via the trust or survivorship deed if applicable). Once title is clear, you can list and sell. Thanks to the stepped-up basis, your capital gains exposure is limited to appreciation after the date of death.

What If Multiple Siblings Inherit Together?

When multiple heirs inherit a property together, they hold it as tenants in common. Each owner has the right to use the property, but also the right to petition the Alabama court for a partition — which can force a sale or physical division of the property if co-owners cannot agree. This situation calls for a family conversation and often a legal agreement before disagreements escalate to court. See: My Parent Died Without a Will in Alabama.