What to Do After Inheriting Land in Tennessee

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What to Do After Inheriting Land in Tennessee
By

Bart Waldon

Receiving that fateful phone call or letter informing you that you've inherited property in Tennessee can be met with simultaneous excitement and dread. While vacant land represents an asset with myriad potential uses, it also comes with costs and responsibilities that must be addressed. If you've recently found yourself inheriting undeveloped land in the Volunteer State, this comprehensive guide will provide the knowledge needed to evaluate your options and determine the best next steps.

Verify the Will and Get Organized

The first order of business when inheriting real estate is to obtain documentation and get your ducks in a row. Locate the last will and testament or trust that specifies the bequeathed property. Study the documents closely, making note of critical details like:

  • Exact location of the land, including county, acreage, parcel number, and physical address
  • Mineral rights, water rights, easements, or right-of-ways associated with the property
  • Survey maps and plot plans showing boundary lines and key features
  • Any liens against the property that will need to be settled
  • Instructions left by the previous owner regarding their wishes for the land
  • Other named beneficiaries who may have partial interest in the land

Getting organized from the start, cataloging all the specifications and parameters on the inherited land, will streamline the process later when decisions need to be made.

Make a Trip to View the Property

Seeing is believing, so plan a trip to view the inherited land yourself, even if located hours away. There's no substitute for walking the actual property lines and assessing the lay of the land. This will give you a feel for the overall terrain, condition, and accessibility of the site.

Look for any existing structures or improvements in need of maintenance. See if there are viable uses like farming, logging, recreation, or development based on the physical landscape. Check for issues like illegal dumping, squatter dwellings, or trespassers. If wooded, inspect the timber for health and value. Document anything that needs addressing with photos.

Settle Any Liens or Mortgages

One of the first priorities with inherited property will likely involve settling any existing liens against the land. This includes mortgages, home equity loans, mechanics liens, tax liens, or judgments. Any debts owed by the deceased must be addressed before you can officially take ownership.

Contact all lien holders to request payoff amounts. You will need to provide a copy of the death certificate. Make arrangements to satisfy these obligations so the liens can be released, such as coordinating with the estate administrator or paying amounts due. Get written confirmation when debts are paid in full.

Probate the Will with County Court

To legally transfer ownership of inherited property in Tennessee, you must probate the will through a county probate court. The court will review the will, confirm validity, notify beneficiaries, and appoint an estate executor if needed. The executor carries out the will's instructions under court supervision.

Work with an experienced Tennessee probate attorney to file the proper petitions and paperwork with the court and navigate the required steps. The court will appraise assets, require publication of notices in newspapers, and settle any contests by heirs. Expect probate to take at least 6-12 months to complete after the will is submitted, at which point you can officially claim the inherited property.

Weigh Keeping vs. Selling the Land

Once probate concludes and liens have been removed, it's time to determine what to do with the inherited Tennessee land. Do you want to keep or sell? Assessing your options will require looking at factors like:

  • Location - Is it conveniently located near amenities and infrastructure? Difficult-to-access rural land can be harder to use, lease or sell.
  • Size - Large tracts of 100+ acres offer more potential usages but are harder to maintain.
  • Terrain - Flat, usable land is ideal. Steep, heavily wooded, or marshy land limits possibilities.
  • Zoning - Does current zoning support your intended use or easily allow rezoning?
  • Market value - Research sales of comparable local properties to estimate worth.
  • Costs - Property taxes, maintenance, management all add up. Can you shoulder the load over time?
  • Personal value - Do you have sentimental connection to the land?

If keeping the land, have a clear vision for how to use it profitably. If selling, be realistic about the time, effort and price it can command. Inherited rural land can take 1-2 years to sell in Tennessee's sparse market. Maximize value by subdividing larger tracts.

Pay Required State Inheritance Taxes

In Tennessee, inherited property may be subject to state inheritance taxes, depending on the previous owner's net estate value and your relationship to them. As of 2023, inheritance tax only applies to estates worth over $3 million or if inheriting from a non-relative.

Consult a Tennessee inheritance tax attorney to determine if any tax is due, complete required filings, and arrange payment to avoid penalties or disputes. The Tennessee Department of Revenue manages inheritance tax filings and collections. You may also need to address federal estate taxes if the estate exceeds federal exemption amounts ($12 million in 2023).

Maintain and Monitor the Property

If you opt to retain the inherited Tennessee land for now, ongoing maintenance and monitoring will be required to protect your asset. Tackle any deferred maintenance like fences, access roads, debris cleanup or building repairs. Remove or secure any abandoned personal property left on site.

Post signage stating "Private Property" and "No Trespassing" with your contact information. Block unofficial access points. Conduct regular inspections to check for dumping, timber theft, unauthorized activity or adverse possession attempts. Consider carrying liability insurance in case of injuries. Neglecting vacant land simply invites trouble.

Explore Options for Generating Income

Inherited land can become a valuable income-producing asset with the right approach. Possible options to explore include:

  • Farm leasing - Lease acreage to local farmers for hay, soybeans, timber, etc.
  • Mineral leases - Allow oil/gas or mining companies to extract resources for royalties.
  • Hunting leases - Lease to hunting clubs or host guided hunts.
  • Alternative energy - Lease land for solar/wind energy or cell towers.
  • RV/boat storage - Rent space for RV or boat storage and maintenance.
  • Recreation - Allow private camping, hiking, ATV riding for fees.
  • Agricultural tourism - Launch a vineyard, corn maze, pumpkin patch, or you-pick operation.
  • Development - Invest in residential, commercial, or industrial projects based on local demand and zoning.

Do your homework to understand which options offer the steadiest income, weigh costs, get fair market rates, and consult attorneys to draft iron-clad lease agreements for any tenant usage.

Seek Financing If Needed

Depending on your financial situation, you may need to finance maintenance costs, taxes, or development of the inherited property. There are financing options to explore, though inherited vacant land can be riskier collateral for lenders. Look into a personal loan, home equity loan, land loan, USDA program, or commercial loan. Compare rates and terms wisely to avoid defaults. A line of credit can provide flexible access to funds as needed.

Consider Conservation of Undeveloped Land

Those looking to conserve natural or historical land may want to consider donating or selling the inherited property to a non-profit or government agency. Many options exist in Tennessee to protect unique undeveloped land for public use, wildlife preservation, recreation access, or environmental protection.

Work with one of Tennessee's many land trusts to have the land appraised, evaluated for eligibility, and identify any potential tax benefits from donation. The Land Trust for Tennessee has conserved over 120,000 acres to date. Government agencies like Tennessee Wildlife Resources Agency also acquire and manage conserved public lands across the state.

Choose the Right Business Structure

If pursuing any kind of income-generating activity on inherited Tennessee land, be sure to establish the proper business structure. Consult with business attorneys and accountants to decide between options like sole proprietorship, partnership, corporation, limited liability company, etc. Choose the structure that limits personal liability and provides the best tax treatment for your situation. You may need to formally register your business with the Tennessee Secretary of State.

Develop a Plan for Dividing or Developing Larger Parcels

For sizable tracts of rural inherited land, you may want to consider dividing and developing the acreage. Assess factors like location, access, demand, zoning and topography to determine development potential. Whether building a master-planned housing community, commercial center, manufacturing facility or something else, a well-thought-out plan is crucial.

Consult with land developers, planners, engineers, investors and county officials on feasibility, costs and regulatory requirements before committing. Not properly zoning and planning for infrastructure like roads and utilities can tank large development deals and leave you with an expensive mess. Do your due diligence.

Seek Guidance from Professionals

At every turn when inheriting property in Tennessee, don't hesitate to seek out trusted professionals for guidance on legal, financial and real estate matters. Attorneys, accountants, appraisers, title companies and brokers can provide insights and services that save you time, money and headaches in the long run. Having an experienced local team in your corner makes a big difference when navigating all that comes with land inheritance.

While inheriting real estate in Tennessee can seem like a complex labyrinth of taxes, titles and choices, taking the right steps at the right time will lead to the best outcome for your situation. With proper planning, research and help from professionals, that unexpected land can ultimately prove a valuable prize. Whether you keep, sell, develop or donate the property, the keys are getting organized, asking questions, and making informed decisions each step of the process. Conquering the land inheritance labyrinth just takes diligence, perseverance and a spirit of adventure. The rewards of newfound land stewardship lay on the other side.

Final Thoughts

Inheriting vacant land in Tennessee can certainly feel overwhelming as both an exciting opportunity and serious responsibility. While the list of considerations may seem endless, know that you don't have to figure it all out at once. Take it step-by-step, tackling one task then moving to the next in organized fashion. Lean on professionals like attorneys and accounts when needed for guidance. Don't rush into decisions before understanding all your options and their implications. With careful planning, research and preparation, your inherited Tennessee land can become a cherished asset that remains in your family for generations, whether kept for personal enjoyment or sold for profit. The fruits of the land stewardship labors lay ahead!

Frequently Asked Questions (FAQs)

How long does probate typically take in Tennessee for inherited land?

In Tennessee, the probate process usually takes a minimum of 6 months after the will is submitted to the county probate court. However, it can often take 12 months or longer, depending on factors like property appraisals, required notices, and any challenges by potential heirs. A probate attorney can help expedite the process.

What taxes may be owed when inheriting land in Tennessee?

Inherited property in Tennessee may be subject to state inheritance tax if inheriting from a non-relative's large estate. Federal estate taxes may also apply if inheriting from an extremely valuable estate. Property taxes will be owed annually based on the land’s assessed value. Consult tax professionals to minimize taxes owed.

Is it better to subdivide or sell inherited land “as is”?

Large inherited rural land tracts often sell faster and at higher values if subdivided into smaller parcels. This requires surveying, platting, permitting costs, and time, but can maximize profit. For smaller tracts, selling as one piece may be simpler. Talk to local real estate agents for advice.

How can I estimate the value of inherited Tennessee land?

Research the sale prices of comparable vacant land parcels in the same local market to estimate value. Adjust for land size, road access, terrain, timber quality, etc. Hire an appraiser for an expert opinion on current market value based on assessment of the specific property's attributes.

What costs come with owning inherited vacant land in Tennessee?

Ownership costs may include property taxes, liability insurance, maintenance like brush clearing/tree removal, periodic inspections, fencing, road upkeep, signage, pest control, and any financing costs. Budget accordingly if keeping the land.

About The Author

Bart Waldon

Bart, co-founder of Land Boss with wife Dallas Waldon, boasts over half a decade in real estate. With 100+ successful land transactions nationwide, his expertise and hands-on approach solidify Land Boss as a leading player in land investment.

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