When a homeowner dies, the house typically passes to a surviving joint owner, a designated beneficiary via a will or trust, or heirs-at-law through state intestacy laws if no estate plan exists. Jointly owned property (with right of survivorship) transfers immediately to the co-owner, bypassing probate.
If the homeowner dies, ownership will pass to someone else based on either his Will or the state/country's laws where he lived OR where the property is located.
If the deceased held property in their sole name, and they left a valid will dealing with the property, then the property will usually pass in line with the will. If the deceased left no valid will, or a will that did not deal with the property, it is dealt with under the law of intestacy.
If the deceased did not leave a will, property will be transferred through intestate succession laws. The legal heirs will need to approach the court to claim the property. This process can be lengthy and sometimes contentious, as all claimants will need to prove their right to inherit.
As we mentioned, if you have jointly owned assets when one joint owner dies, the property is yours.
An heir who takes ownership of the family home must decide whether to continue making payments on the loan or use other assets to pay the mortgage off. Even if the home is put up for sale, mortgage payments must be made until money from the sale is available to pay off the mortgage.
Tax-free lump sum payments (where the individual dies under 75) must be made within two years of the scheme administrator being notified of the death of the individual. Any lump sum payments made after the two-year period will be taxed at the recipient's marginal rate of income tax.
The "40-day rule after death" refers to traditions in many cultures and religions (especially Eastern Orthodox Christianity) where a mourning period of 40 days signifies the soul's journey, transformation, or waiting period before final judgment, often marked by prayers, special services, and specific mourning attire like black clothing, while other faiths, like Islam, view such commemorations as cultural innovations rather than religious requirements. These practices offer comfort, a structured way to grieve, and a sense of spiritual support for the deceased's soul.
However, if there's no mortgage, Daniel says, "If there is not a mortgage on the property, then as long as the property taxes are paid, the property could remain in the deceased's name for decades or until a family member or heir tries to sell it.
Gift of an Existing Life Insurance Policy.
If an individual gifts a policy he or she owns on his or her life and continues to pay premiums and dies within three years of the transfer, the full death proceeds will be included in the insured's gross estate.
Transferring a property deed costs vary but generally include attorney/preparation fees ($150-$300+), county recording fees ($10-$100+), and potential state/local transfer taxes (ranging from small percentages to significant amounts) based on property value, with costs influenced by location and property complexity, so checking with your county recorder and an attorney is crucial for an accurate estimate.
6 options for passing down your home
If the partners were beneficial joint tenants at the time of the death, when the first partner dies, the surviving partner will automatically inherit the other partner's share of the property. However, if the partners are tenants in common, the surviving partner does not automatically inherit the other person's share.
Assets exempt from probate typically include those with named beneficiaries (life insurance, retirement accounts), jointly owned property with rights of survivorship, assets held in a living trust, and sometimes specific items like homestead property or a certain value of vehicles/household goods, depending on state law, allowing direct transfer to heirs without court involvement.
In general, any inheritance you receive does not need to be reported to the IRS. You typically don't need to report inheritance money to the IRS because inheritances aren't considered taxable income by the federal government.
You can typically inherit a very large amount from your parents without paying federal tax, as the federal estate tax exemption is around $15 million per person for 2026, meaning only estates larger than that pay tax, not you directly. While you generally don't pay income tax on inheritances (except for pre-tax retirement funds like IRAs/401(k)s, which are taxed as income when withdrawn), some states have their own estate or inheritance taxes with much lower thresholds, affecting a smaller portion of wealth.