42% of Young Americans Set To Inherit Property Admit Soaring Cost of Insurance and Taxes Could Make It Impossible To Keep the Homes

Trillions of dollars in assets are expected to change hands during the so-called Great Wealth Transfer over the next 20 years, with millions of homes set to be passed down to younger generations.

However, the next generation of homeowners appears to be looking a gift horse in the mouth, as according to LegalZoom’s new survey, 42% of younger Americans say they feel financially unprepared to maintain an inherited home. 

But the reality is, if you're lucky enough to inherit a property, and fear you won't be able to afford the taxes and other expenses that come with homeownership, you actually have options. 

By educating yourself on what they are, you’ll be more likely not only to be able to afford a home, but hang on to it for the next generation as well.

What younger Americans fear about inheriting a home

As of last year, only 3% of homebuyers were Gen Z, while millennials made up only 29%, according to the National Association of Realtors®. With such a wide margin of young people still renting, it’s easy to understand why there would be hesitation. 

“Roughly two-thirds of adults under 35 rent instead of own, which means they’ve never written a property tax check, called a plumber for a water heater replacement, or shopped for homeowners insurance,” says Mike Steward, vice president of real estate sales at Real Property Management, a Neighborly company in Gulf Shores, AL.

Still, nearly half (47%) expect to inherit property, whether a family home or an investment, according to LegalZoom’s survey. And while 60% say the prospect of an inheritance makes them feel more secure, 42% don’t feel financially ready to maintain a home.

Their top worries include property taxes (20%), maintenance costs (20%), existing debt (12%), and legal issues (11%), according to the survey—and in all fairness, the concerns are warranted. 

And yet, at the same time, the survey found that two-thirds of older Americans are at least somewhat confident their heirs could manage a home if inherited, which perhaps speaks to their longtime wisdom as homeowners.

Knowledge gaps in inheritance taxes

There's no denying that taxes can get complicated very quickly. Unsurprisingly, LegalZoom found that over half of Americans surveyed lack confidence in their understanding of how inheritance taxes could affect what they receive. 

The good news is, depending on where you live and the size of the home you're inheriting, the initial tax burden may be nonexistent.

“In 2025, federal tax law changed and now provides an estate tax exemption of $15 million per person or $30 million for a married couple,” says Asher Rubenstein, partner at Gallet Dreyer & Berkey in New York City.

Therefore, estates with a value of less than $15 million are not subject to federal estate tax; those that are greater than $15 million are taxed at the 40% rate. Simple enough.

Now, on the state level, the exemption can be much lower, but still should be within reason for most inheritors.

“For example, in New York, if the property is valued less than $7.16 million, there is no estate tax. And, if the value of the estate is between $7.16 and $7.518 million, the estate must pay taxes on anything that exceeds the $7.16 million exemption,” explains Rubenstein. 

If the value of the estate is greater than $7.518 million, it “falls off the cliff,” and is therefore subject to New York estate tax of up to 16%—with absolutely no exemptions.

Why experts agree young Americans don't need to be this worried

At the end of the day, there are many positive aspects to inheriting a home, even if you have to deal with the burdens and obligations of real estate taxes, insurance, upkeep, and in some cases, mortgage payments. 

“My advice is not to let the fear overshadow the legacy of what’s been entrusted to you. Yes, you should be alert because you don’t know what you don’t know. However, all you have to do is educate yourself and start asking questions,” says Steward. 

Furthermore, there are plenty of options for new homeowners to decrease costs. For starters, if you’re shocked by the property tax bill when it comes in, you have the right to protest your property valuation and be reassessed. Similarly, as the new owner, you can shop around for new home insurance that is at your price point—or forgo it entirely, which while unadvised is a path many homeowners are taking right now. 

Once you learn you’ve inherited a home, your first step is to decide if you have any interest in living in it. It’s perfectly fine if the answer is no. You can still preserve its financial value and the legacy of your loved one without making it your own.

“Second, meet with a local property manager. They can help you turn the home into a hands-off investment, which can buy you time, generate income, and keep the property well cared for while you decide on the long-term plan,” adds Steward.

And third, sit down with a tax professional or estate advisor early. A little planning goes a long way in avoiding surprises and making the most of what you’ve been given.

For heirs, Rubenstein recommends equalizing the inheritance.

“For instance, the home can be left to the sibling who is more well off and able to handle the real estate costs, and a commensurate amount in cash or other assets can be left to the other sibling,” explains Rubenstein.

Another option is to place the home in a trust, along with cash or other assets that would be used toward the expenses of the home. This can help ameliorate some of the financial obligations that come from inheriting a property. 

With a bit of creativity and planning, an inheritance can turn into a valuable asset, rather than a costly burden.