Home » Blog » Step by Step Guide for If You Inherit a House
Step by Step Guide for If You Inherit a House - Werner Law Firm

Step by Step Guide for If You Inherit a House

Troy Werner and his family

Written by Troy Werner

Troy Werner has been an indispensable asset to The Werner Law Firm since joining in 2009, providing exceptional legal service to its clients.

Get To Know Troy!
POSTED ON: January 30, 2023

Homeownership is often part and parcel of the American dream, and for countless families, the house is the primary asset in the eventual inheritance. But what do you do when you inherit a house? Do you need to amend a deed? Sign or fill out a change of ownership form? Pay more taxes? Settle a […]

Homeownership is often part and parcel of the American dream, and for countless families, the house is the primary asset in the eventual inheritance. But what do you do when you inherit a house?

Do you need to amend a deed? Sign or fill out a change of ownership form? Pay more taxes? Settle a debt? Take out a mortgage? Or start looking for buyers?

Let's take a deep breath and take this one step at a time.

Are You Going to Inherit a House?

Let's say you stand to inherit a house. 'Maybe you are an only child, and it's a matter-of-fact that the house you grew up in will pass on through your parents to you. Maybe your grandfather has revealed that he’s planning to give you his summer vacation home.

If the house's current owners are alive and well, then it might be worth discussing the best way to transfer property with them.

Will or Trust?

There are different ways to bequeath real estate, depending on the property's circumstances (is it an investment? A rental property? A primary residence?) and the state you live in. Most of the time, people will opt for the most straightforward choice – a will. Anything in a will must pass through probate, a mandatory process through which the will is legitimized and the transfer of assets is overseen. A last will and testament is a set of legal instructions in probate court by an appointed executor named by the court (and optionally specified by the will).

If a person dies without a will, their estate (belongings) may be distributed per local intestate laws. Most of the time, this means the estate is split between the next of kin – usually half-and-half between a spouse and child, a 1:2 ratio between a spouse and multiple children, or other constellations depending on the family situation and local laws.

What's the Difference?

A will gives greater control than no will because the decedent could specify who gets what. But a trust goes a step further.

A trust is an agreement between a grantor, a managing trustee, and the recipient beneficiary. Trusts are legal entities in their own right and become the owner of whatever is funded into them. The trustee is an impartial financial manager who acts in the best interests of the beneficiary (and the original wishes of the grantor). Whereas a will is a set of instructions, a trust is more complicated – it requires active management by a human being or an organization. It goes into effect the moment it is created rather than upon death.

Then there's the option of circumventing both trusts and wills and the probate process. In some states, houses can be transferred to designated beneficiaries at the time of death via a transfer-on-death clause, also known as a Totten trust. However, this is more like a deed that affects the owner's death than a trust.

Will You Share the Inheritance? Under what arrangement will you own the property?

Are you going to become the sole owner of the house? Or will you share its equity with co-owners?

Real estate is typically co-owned through joint tenancy (everyone gets an equal share) or tenancy in common. When a parent bequeaths a house to multiple children, it will usually be a joint tenancy. Of course, it often isn't that simple. Multiple adult children may not want to share the same residence, especially if it is a one-family home. Similarly, giving the home to only one child might trigger a sibling rivalry.

Take the time to figure out with your parents or other relatives how your family should divide interest in the home or manage the property moving forward, especially if you have not inherited it yet.

Will It Become a Primary Residence or a Cash Windfall?

Whether or not you intend to keep the house, you will likely need to set up a change of ownership. This is usually done through a form that details who owned the house before you and includes your details.

Property taxes are paid based on property value – usually, when a property changes hands, it must be reassessed and updated. This often leads to an increase in property taxes for the next owner. If the house was a primary residence endowed by a parent or grandparent, it might not require an assessment for property tax purposes. But if you inherit a house within the family, chances are that you will be exempt from reassessment.

Nevertheless, once your ownership is established, you can continue to manage the property as an investment, as your own home, or get ready to sell it.

Is It a Liability?

While home ownership is over 60 percent in the US, only 34 percent of American homeowners possess 100 percent property equity. The other 66 percent are still paying off a mortgage.

"Owning" a home and being a complete real estate owner are two separate things. Depending on the circumstances, your inheritance may become a financial burden you might not be able to afford.

Furthermore, you may look at additional HOA fees and property taxes that might be too much for your current income or situation, even on their original basis. Under these circumstances, your best bet might be to cut your losses and determine whether you want to sell.

Any Other Questions?

Property law, tax law, and family law are complex fields, and depending on where you live, when you stand to inherit. Individual factors which are impossible to name, your best options and priorities may shift and change. Whether you're about to inherit a house, likely to inherit a house, or have already inherited the property and are unsure of your next steps, it's important to clarify every question you might have with an on-hand professional who can specifically cater to your needs and requirements.

Contact an estate planning professional to learn more about what you should do now that you have/will inherit a property.

Step by Step Guide for If You Inherit a House - Werner Law Firm

Share This Post

Why Our Living Trust Law Firm & Probate Attorneys?

Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.

Whether you need help creating a living trust or navigating probate, our living trust law firm's compassionate team of estate planning lawyers and probate lawyers are here to help you and ready to answer your questions.

Our goal is to make your case as easy as possible for you. Hiring a lawyer can be a daunting task, but it doesn’t have to be. From the moment you contact our firm, through the final resolution of your case, our goal is to make the process easy and understandable. We cannot change the fact that probate is a long and complicated process, but through our Werner Law Firm Difference, we strive to go out of our way to keep you informed of your case through every step of the way. We are constantly refining our processes and procedures for a more streamlined and calm client experience. Our goal is to have you feel like a burden was lifted from your shoulders, and that we made the whole process an easy one

If you're dealing with a legal matter, we urge you to schedule a free initial appointment today and join the many satisfied clients who have contacted Werner Law Firm.

Book an Initial Call Now

Join Our eNewsletter and our California Estate Planning and Probate Blog Digest

Werner Law Firm logo
The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. See full disclaimer here.
Santa Clarita, CA Office

27433 Tourney Rd, Suite 200
Santa Clarita, California 91355

DIRECTIONS
Los Angeles, CA Office

445 S. Figueroa St., Suite 3100
Los Angeles, California 90071

DIRECTIONS
Bakersfield, CA Office

4900 California Ave, Tower B-210
Bakersfield, California 93309

DIRECTIONS
Newport Beach, CA Office

23 Corporate Plaza Dr., Suite 150
Newport Beach, California 92660

DIRECTIONS
Lancaster, CA Office

626 W Lancaster Blvd.,
Lancaster, California 93534

DIRECTIONS
Pasadena, CA Office

35 North Lake Avenue, Suite 710
Pasadena, California 91101

DIRECTIONS
Simi Valley, CA Office

2655 First St, Suite 250
Simi Valley, CA Office, California 93065

DIRECTIONS
Encino, CA Office

15760 Ventura Blvd, Suite 700
Encino, California 91436

DIRECTIONS
Oxnard, CA Office

300 E Esplanade Dr., 9th Floor
Oxnard, California 93036

DIRECTIONS
Santa Barbara, CA Office

7 W. Figueroa St., Suite 200
Santa Barbara, California 93101

DIRECTIONS
IMS - Estate Planning and Elder Law Practice Growth Advisors
Powered by