If the estate you’re dealing with contains real estate, 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.) But first, let’s look at how the property can be transferred to its new owners.
Taking Care of Real Estate
Before you transfer real estate, you need to take care of it—including paying the mortgage and taxes, and keeping the place maintained. You may also need to get it appraised.
Will Probate Be Necessary?
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.
Sole ownership. If the property was owned in the deceased person’s name alone, it will probably have to go through probate to be transferred to whomever inherits it. (Who inherits it is determined by the person’s will or, if there is no will, by state law.)
If the deceased person wasn’t the only owner, here are possible ways title could have been held:
Joint tenants. If the deed says title was held in joint tenancy or joint tenancy “with right of survivorship,” then the surviving co-owner is now automatically the sole owner of the property. No probate will be necessary to transfer ownership, though the new owner will need to complete some paperwork to make it clear that the property is now solely owned.
Tenants by the entirety. 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.
Community property. 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. 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 handling a Louisiana estate, you’ll probably want to consult a local expert.)
Community property with right of survivorship. Some community property states (Arizona, California, Nevada, and Wisconsin), offer the option of holding property this way. When the first spouse dies, it gives the survivor automatic ownership of the property. No probate is necessary.
Tenancy in common. 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 land—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.
In 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, 2010.”
Learn more about transferring real estate to a trust beneficiary.