A health check is in order.

The building inspector came and recently shut the building down for health/safety reasons by turning off all the gas to each unit.

If you have a job, but wife doesn't, she can qualify for RE professional and deduct beyond the 25K loses, and might be able to get a salary, establish Solo 401K and health plan, etc.  

They are both in poor health, the wife worse off, and he had thought it would be beneficial to be done with the house now and had discussed the same with her.

Then I either get better than average rents or I'll sell it.First I repair/replace things, if needed, that cause more damage (to property or life) if they fail, roof, water heater, plumbing & electrical... anything health and safety related. 

I am contributing my maximum to 401k with a 6% match and a Health savings account to use for doctors visits.

For property management, which you might want to have if you manage your properties, there are some advantages (health plan, retirement plan) to have it taxed as an S-corp or C-corp, but it will be separate from your assets holding entity, and will not hold any properties or significant assets.Financing makes a difference when holding in personal name vs an entity.

If your tree is in good health, you have no knowledge that it was unhealthy, and it damages an adjacent property; then it is not your issue. 

Contact the owner/borrower and make sure if he/she is still alive, find out what the problem is(health, job loss, moved, etc).

Similar question, how much does health insurance effect ones ability to switch or leave a job?