Selling a House in a Trust or Estate

What’s inside the guide

• How to tell whether the house passes through a funded trust or through probate, since that fact decides who has the authority to sign
• What escrow and the title company need to see before they will open a file and set a closing date
• How the tax basis reset at death changes what you actually owe when the house sells
• The sale steps laid out side by side for a trust sale and a probate sale, so you can see where the two paths diverge
• The signing-authority mistakes that most often stall escrow at the last minute

Who has the legal authority to sign when a house sells out of a trust or an estate?

It depends on whether the house was already retitled into a funded revocable living trust before death. If it was, the acting successor trustee signs the listing agreement and the closing documents directly, with no probate court involved, because a trustee’s job is to administer the trust according to its terms. If the house is still titled in the deceased owner’s name alone, the person the probate court appoints as personal representative signs instead, and how much the court is involved in approving that particular sale depends on the scope of authority the court granted that representative.

Does selling an inherited house trigger a big capital gains tax bill?

Often less than people expect. Inherited property generally gets its tax basis reset to fair market value as of the date of death, so a sale soon after death, at close to that value, frequently produces little or no taxable gain. The rules differ by how the property was held before death: for community property, both halves of the house get that basis reset, while property held in joint tenancy only gets the reset applied to the half that belonged to the person who died.

How long does probate take before a house can actually close escrow?

Most California probate cases run about twelve to eighteen months from filing to final distribution, and that timeline runs on its own schedule regardless of when a buyer is ready to close. A trust sale generally moves faster, since there is no court calendar to work around, though an uncontested trust administration still typically takes something in the range of 6 to 18 months to fully wind up.

For the broader picture of what a trust does and does not avoid, see our trust administration page.