When a family member dies, there's certainly a lot to sort out. If the estate you’re dealing with contains real estate, such as a house, it’s probably the most valuable single asset in the estate—and surviving family members are going to be extremely interested in what happens to it. (If more than one person inherits it, there are many opportunities for conflict.) Let’s look at the process for transferring the property to its new owners.
Before you transfer real estate, you need to take care of it. This includes paying the mortgage and taxes and keeping the place maintained until it can be formally transferred to its new owner or owners.
You may also need to get the property appraised, which means getting a professional valuation of what the property is worth. This might be required if the estate goes through probate, or to determine whether the estate qualifies for simplified probate procedures. Beneficiaries might also want to know what the real estate is worth, or may need the value for tax purposes.
Probate will be necessary to transfer the real estate to the new owner or owners unless:
To find out if the deceased person co-owned the real estate, first find the deed that transferred the property to the deceased owner. The deed, which may be titled a quitclaim, grant, joint tenancy, or warranty deed, should state how the deceased person, and any co-owners, held title to the property. That will determine how the property can be transferred.
Below are a few possibilities for how the deceased might have owned the property.
If the property was owned in the deceased person’s name alone (and there is no living trust or transfer-on-death deed), the property will probably have to go through the probate process to be transferred to whomever inherits it. Who inherits the property is determined by the person’s will, if there is no will, by state law.
If the deed says title was held in joint tenancy or joint tenancy “with right of survivorship,” and the co-owner is still alive, then the surviving co-owner is now automatically the sole owner of the property. No probate will be necessary to transfer ownership, though the co-owner will need to complete some paperwork to make it clear that the property is now solely owned.
If the deceased person owned the property with his or her spouse, then in certain states it could have been held in tenancy by the entirety (also called "tenancy by the entireties"). The surviving spouse is now the sole owner. No probate proceeding is necessary for the survivor to take ownership.
In community property states, spouses (and registered domestic partners, in some states) can hold property in community property, meaning that it’s owned by the couple together. The deed may also say that they owned the real estate “as husband and wife”; that also shows an intent to hold the real estate as community property.
Community property states include Arizona, California, Idaho, Louisiana, New Mexico, Nevada, Texas, Washington, and Wisconsin. Alaska also allows spouses to designate real estate as community property, and Kentucky, South Dakota, and Tennessee allow spouses to create special community property trusts. Spouses are free to leave their half-interest in community property to whomever they choose; generally, if they don’t name a different beneficiary, it passes to the surviving spouse. (As always, inheritance law in Louisiana differs from all other states; if you’re dealing with a Louisiana estate, you’ll probably want to consult a local expert.)
Some community property states (Arizona, California, Nevada, and Wisconsin) offer the option of holding property "with right of survivorship." When the first spouse dies, it gives the survivor automatic ownership of the property. No probate is necessary.
Co-owners seldom own real estate as tenants in common, but you might come across this form of ownership if the co-owners inherited the real estate—for example, they were siblings who inherited a house from their parents—or were in business together. Each co-owner can name a beneficiary in his or her will; if there’s no will, the deceased co-owner’s interest in the property passes under state law to the closest relatives. Probate will be necessary to transfer the interest in the property.
If the real estate is held in a trust: If the deceased person held the property in a trust, the most recent deed should show that the property was transferred to the trustee of the trust. For example, it might say "To Tomas Penko and Marla Penko, trustees of the Penko Family Trust dated March 3, 2015." See Transferring Real Estate Held in a Trust for more on transferring the property from the trustee to the new owner.
If the real estate is the subject of a transfer-on-death deed: If the deceased person filed a transfer-on-death deed, that deed will specify the new owner of the property. The new owner will usually have to complete a little paperwork by filing an affidavit (a simple statement) and a copy of the death certificate with the county's land records office.
If there's a surviving co-owner who inherits: Although the rules will vary for each state or even county, generally, the surviving co-owner will need to file a statement that explains the surviving co-owner is now the sole owner, as well as a death certificate, in the county's land records office.