What to do with your parent's house after they die in California
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A lot of people think they can just move into their parent's house right after the death, or sell it the next week. That is rarely how it works in California. The Executor's Clipboard house is now part of an estate, and the legal process of probate might have to happen first before anyone can do much of anything.
The first thing to do is make sure the house is secure and nobody is living there who should not be. Lock the doors, stop the mail if you can, and keep the utilities running in the name of the estate. You do not want a pipe to burst while you are sorting out the paperwork. If your parent had a reverse mortgage, that mortgage comes due when the last borrower dies. You will have a limited time to either pay it off or sell the house to cover the loan. A HUD-approved housing counselor can explain the reverse mortgage options.
Probate is the court process that transfers ownership of the house from your parent's name to the people who inherit it. If your parent owned the house in a trust, probate is usually not needed. If not, and the house is worth more than a certain amount set by the county, you might need to go through probate. That takes months and costs money. The costs include court filing fees, a probate referee's fee for an appraisal, attorney fees, and executor fees. The total can add up to a few percent of the house's value.
Once you have the legal authority to deal with the property, you have three basic choices. You can keep the house for yourself or for other family members to live in. You can rent it out for income. Or you can sell it. Each one has different tax effects, so talk to a CPA or a tax professional before you make a final decision.
If you keep the house, you will need to pay property taxes, insurance, and maintenance. You might qualify for a property tax reassessment exclusion if you move in. If you rent the house out, you become a landlord with all the responsibilities that come with that. You will need to follow local rental laws in Sacramento County.
If you sell the house, you can do it yourself or hire a real estate agent. The sale price will affect capital gains taxes. You might get a tax break if you or your parent lived in the house for two of the last five years. The timing of the sale matters. You do not have to sell right away, but you also cannot let the house sit empty forever. Insurance for an empty house is different and costs more.
Every situation is different. Some families have clear instructions in a will. Others have nothing in writing. If you are not sure, get a lawyer who does probate work. Spend the money on a consultation. It will save you from bigger problems later.
For more on this, see The Executor's Clipboard.
