Are you aware of who will be inheriting your parents’ home one day? Is it you? Is it someone else? Now is the time to find out!
Often times no one knows what their parent’s wishes are, but even those that are aware aren’t exactly sure how the house will pass into their hands. For the sake of this information, let’s assume that the home is coming to you.
You’ll need to know the steps your parents took to give you ownership of the inherited property before you can even think about selling the house.
You’ll need to make sure that you have the legal right to sell the home before you ever contact a realtor.
There are three ways to inherit a house from your parents: through the probate process, by a transfer on death deed, or via a living trust.
Probate
Many families mistakenly believe inheriting property is as simple as listening to an official reading of their parents’ will. We see this in movies all of the time, but in reality, real estate inherited via a will is usually subject to the long, complex probate process.
And if your parents didn’t leave a will, then probate is pretty much a given.
Probate is a court-supervised process that oversees the dispensation of your parents’ entire estate, which includes the sale of the house. This is done so the proper people are granted the right to and responsibility for the estate, and so that your parents’ debts get paid as part of the process.
While probate laws vary from state to state, expect this process to take from several months up to a year or two.
Depending on the laws in the state where the home is located, the courts may play a role in when and how the home is sold during probate. So be sure to do your probate research and enlist the help of a probate attorney.
Transfer on death deed
There is one way for your deceased parents’ home to transfer to you as easily as it does in the movies: the transfer on death deed.
Also known as a beneficiary deed, this type of deed allows you inherit the property directly and immediately. You get to skip probate! With this type of deed in place, you can proceed with the sale of your parents’ home as soon as you’re ready.
However, this deed type is only valid in certain states. It is available in Indiana, but not Kentucky or Florida.
The requirements vary from state to state. For example, in some states, you only need a completed transfer on death deed to avoid probate. In other states, your parents must also bequeath the property to you in their will, or the transfer on death deed is rendered meaningless.
Finally, while you can avoid probate with a transfer on death deed, you will still need to pay taxes on the house when you inherit it this way (more on this later).
Living trust
It’s much simpler to sell your parents’ house if it has been inherited via a living trust.
A living trust is designed to streamline the management and inheritance of all of your parents’ assets — including the house. The document names your parents as the trustees (allowing them to manage assets while they are still living), and you as the beneficiary.
If you inherit property where there’s a living trust in place, you can bypass probate, avoid some estate taxes, and it sets you up to sell the home immediately.
A trust is usually the best scenario when there are multiple heirs.
Step 2 of the process is to identify the estate executor and notify all interested parties.
