Who Gets the House? Answers to Common Questions About Property After Death

One of the most frequent and emotionally charged questions I receive as an end-of-life consultant is: who gets the house after someone dies? Home is more than just an asset; it is a vessel for memories, a symbol of stability, and often the largest piece of "The Great Wealth Transfer." With approximately $84 trillion expected to pass down to heirs by 2045, understanding the legal and financial nuances of house inheritance is essential for protecting your family’s legacy.

Whether you are planning your own estate or navigating the loss of a loved one, the path the property takes depends on a combination of legal documents, state laws, and financial obligations. This guide breaks down the complexities of property after death, updated with the latest 2025 and 2026 legal reforms.

The Legal Hierarchy of Property Transfer

When determining who receives a home, the law follows a specific "order of operations." It doesn't matter what was promised in a casual conversation; the legal title and recorded documents are what the court recognizes.

1. Joint Tenancy with Right of Survivorship

If the deed includes "Right of Survivorship," the property does not go through probate. It passes automatically to the surviving owner. This is common among married couples.

2. Revocable Living Trusts

A trust is often considered the "gold standard" of estate planning. If a house is held within a trust, the successor trustee follows the instructions in the trust document to transfer the title to the beneficiaries. This happens privately and quickly, bypassing the court system entirely.

3. Transfer on Death (TOD) Deeds

In over 31 states, you can file a Transfer on Death deed. This is essentially a beneficiary designation for your home, similar to a bank account. It stays in your control while you are alive but transfers immediately upon death.

4. The Last Will and Testament

If there is no trust or joint ownership, the Will dictates who gets the house. However, a Will must go through probate—a public court process—to legally transfer the title from the deceased person to the heir.

What Happens if There Is No Will? (Intestacy)

When someone dies without a legal plan, the property enters "intestacy." In these cases, state law decides who gets the house. While every state differs slightly, the general priority list is:

1. Surviving Spouse: Usually receives a significant portion or the entire property.
2. Children: If there is no spouse, the children inherit equal shares.
3. Parents and Siblings: If there are no descendants or spouses, the property moves to the next closest blood relatives.

The Financial Realities: Mortgages and Taxes

Inheriting a home isn't just about receiving an asset; it's also about inheriting the financial responsibilities that come with it.

The Mortgage Stays with the House

A common misconception is that the mortgage disappears upon death. It does not. However, the Garn-St. Germain Act provides a crucial protection: lenders cannot "call the loan" (demand full payment) just because a relative inherited the home. As long as the heir continues making the monthly payments, they can keep the existing mortgage in place.

The "Step-Up in Basis" Tax Advantage

This is perhaps the most important tax rule for heirs. When you inherit a house, the "cost basis" for capital gains taxes is "stepped up" to the fair market value at the date of death.

Example: If your parents bought a house for $50,000 in 1980 and it is worth $500,000 when they pass away in 2025, your new tax basis is $500,000. If you sell it immediately for $500,000, you owe $0 in capital gains tax.

2025–2026 Legal Updates You Need to Know

The landscape of inheritance law is shifting significantly. Two major changes are currently impacting how families plan for the future.

The "One Big Beautiful Bill Act" (United States)

Signed in July 2025, this law provided long-term certainty for estate planning. Previously, the high federal estate tax exemption was set to "sunset" or drop significantly in 2026. This new act permanently set the base exemption at $15 million per person ($30 million for married couples), indexed for inflation. This means the vast majority of Americans will not owe federal estate taxes on inherited property.

UK Inheritance Tax (IHT) Reforms

For those with property in the UK, significant changes are coming in April 2026. This includes a £2.5 million cap on 100% Agricultural and Business Property Relief. Additionally, by April 2027, unused pension funds will be included in the inheritance tax net, making it more important than ever to look at how a home is funded and passed down.

Real-World Examples of Property Inheritance

Example 1: The "Automatic Ownership" Trap

James believed that because his mother’s Will left him the family home, he could list it for sale the week after her funeral. However, because the home was not in a trust, he had to wait for the probate court to appoint him as the executor. The process took nine months, during which James had to pay the property taxes and utilities out of his own pocket before the sale could finally proceed.

Example 2: The Sibling Partition Action

Three siblings inherited a vacation home. Two wanted to sell it to pay off debts, while the youngest wanted to keep it for sentimental reasons. Because they couldn't agree, the two siblings filed a "partition action." The court forced a sale of the property, and the proceeds were split, but a significant portion of the inheritance was lost to legal fees and court costs.

Example 3: Protecting the Mortgage

Maria inherited her grandmother's condo, which still had a $100,000 mortgage. Maria was worried she wouldn't qualify for a new loan. Under the Garn-St. Germain Act, she was able to simply take over the payments without needing to re-qualify, allowing her to keep the home and its 3% interest rate from years prior.

Common Mistakes to Avoid

• Neglecting Holding Costs: Heirs often focus on the value of the house but forget that they must pay for insurance, lawn care, and utilities during the months (or years) it takes to settle the estate.
• Failing to Communicate: Many "partition suits" (legal fights between heirs) can be avoided by having a family meeting while the owner is still alive to discuss whether the heirs actually want the house.
• Misunderstanding Prop 19 (California): In California, heirs must make the inherited home their primary residence within one year to keep the parents' lower property tax basis. Otherwise, the taxes will be reassessed to the current market value, which can be a massive financial shock.
• Forgetting Digital Access: Modern homes often have smart locks, security cameras, and thermostats. If the heirs don't have the digital passwords, they may be locked out of their own inherited property.

Conclusion

Understanding who gets the house after someone dies is a vital part of end-of-life planning and estate management. While the legal process can feel overwhelming, tools like Revocable Living Trusts and Transfer on Death deeds can simplify the transition for those we leave behind.

If you are currently navigating the loss of a loved one, remember that you don't have to do this alone. In addition to legal counsel, you may need to look into other practical steps, such as Accessing Deceased Bank Account (Practical Steps and Documents) or understanding Advance Directive vs Living Will (Differences, Typical Costs, and How to Choose) to ensure all affairs are in order.