Inheriting a home should feel like a gift. For a lot of people, it ends up feeling like a stack of paperwork written in a language no one warned them about. Terms like "letters testamentary," "step-up in basis," and "affidavit of heirship" come from three different worlds — estate law, tax code, and real estate — that collide the moment your name appears in a will. This glossary translates all of it into plain English. No legal background required.
This glossary is for general informational purposes only and isn't legal or tax advice. Every estate is different. For guidance specific to your situation, consult a licensed estate attorney or tax professional.
Why Inherited Home Terminology Can Feel Overwhelming
When someone passes and leaves behind real estate, the property doesn't simply transfer overnight. It moves through a legal and financial process that involves courts, titles, tax authorities, and eventually — if you choose to sell — buyers and escrow. Each stage introduces new vocabulary, and most of it was written by lawyers for lawyers.
The good news: you don't need to master all of it. You just need enough to ask the right questions and recognize when something doesn't sound right. If you're wondering what selling actually looks like step by step, how it works is a good place to start.
Probate and Legal Terms You'll Encounter
Probate
The court-supervised process of validating a deceased person's will, settling their debts, and distributing their assets — including real estate — to the rightful heirs. Not all inherited property goes through probate, but most does when a will is involved. Probate timelines vary widely by state, ranging from a few months to more than a year. The CFPB offers a plain-language overview of probate if you want to go deeper. For a related issue many heirs don't anticipate, see our guide to vacant house insurance for inherited properties.
Testate vs. Intestate
If the person who passed left a valid will, they died testate. If there was no will, they died intestate, and state law determines who inherits. Intestate succession can complicate an inherited property sale, especially when multiple heirs are involved.
Executor (also: Personal Representative)
The person named in the will to carry out its instructions. The executor settles debts, files estate tax returns, and has legal authority to manage or sell real estate on the estate's behalf. If there's no will, the court appoints an administrator to fill this role.
Letters Testamentary
A court-issued document that gives the executor legal authority to act on behalf of the estate — including signing contracts and selling property. Without this document, a title company won't close. It's often one of the first things you'll need to request from the probate court.
Affidavit of Heirship
In some states, if the estate is straightforward and the heirs are clearly established, a sworn affidavit can transfer property ownership without full probate. This is more common in Texas and other states with simplified succession procedures. It's faster, but it does carry some legal risk — consult an estate attorney before relying on it.
Administrator
When someone dies without a will, the court appoints an administrator to manage and distribute the estate. The role is functionally similar to an executor, but the administrator follows state intestacy law rather than the wishes of the deceased.
Living Trust
A legal arrangement in which a person transfers ownership of their assets — including real estate — into a trust during their lifetime. When they pass, those assets transfer directly to the named beneficiaries without going through probate. If the home you inherited was held in a living trust, the process is typically faster and simpler than a standard probate sale.
Tax Terms Every Inherited Property Seller Should Know
Step-Up in Basis
This is one of the most valuable tax concepts for inherited property sellers, and most people have never heard of it. When you inherit a home, your cost basis for capital gains purposes is "stepped up" to the fair market value of the property on the date of the original owner's death — not what they originally paid for it decades ago. This means if you sell shortly after inheriting, you may owe little or no capital gains tax on the sale. See IRS guidance on inherited property and basis for the official rules.
Capital Gains Tax on Inherited Property
When you sell an inherited home for more than its stepped-up basis, the profit is subject to capital gains tax. Because of the step-up rule, this mainly affects people who hold the property for a period of time after inheriting it and then sell for a higher price. Long-term capital gains rates apply to inherited property, regardless of how long you personally held it. IRS Topic 409 covers the rate structure.
Estate Tax
A federal tax on the total value of a deceased person's estate before it's distributed to heirs. The federal estate tax threshold is high enough that most inherited homes don't trigger it — though this threshold is subject to change, so consult a tax advisor for current figures. Some states have their own estate or inheritance taxes at lower thresholds.
Inheritance Tax
Different from estate tax. Inheritance tax is levied on the recipient of inherited assets, not the estate itself. Only a handful of states impose it (as of 2025), and most exempt direct heirs. Check your specific state's rules.
Fair Market Value (FMV)
The price a willing buyer would pay a willing seller in an open market, with neither under pressure to complete the transaction. FMV at the date of death determines the step-up in basis and is typically established through a formal appraisal.
Title and Ownership Terms
Clear Title
A title with no disputes, liens, or legal encumbrances that would prevent or complicate a sale. Clearing title is often one of the more time-consuming parts of selling an inherited home, especially when the estate has outstanding debts or multiple heirs.
Quiet Title Action
A court proceeding used to resolve ownership disputes or remove competing claims from a property's title. If there's a question about who legitimately owns an inherited property, a quiet title action settles it legally.
Joint Tenancy with Right of Survivorship
A form of co-ownership where each owner holds an equal share, and when one owner dies, their share passes automatically to the surviving owner(s) — bypassing probate entirely.
Transfer on Death (TOD) Deed
Available in many states, a TOD deed names a beneficiary who automatically receives the property when the owner dies, without going through probate. If the home you inherited transferred via a TOD deed, the process is typically faster and simpler than a standard probate sale.
The Selling Process: Terms That Come Up When You're Ready to Move Forward
As-Is Sale
Selling a property in its current condition, without making repairs or improvements. Many inherited homes sell as-is — particularly when heirs live out of state, the property needs work, or the priority is settling the estate without added expense or delay.
Cash Buyer / Direct Buyer
A buyer who purchases property without a mortgage — using their own funds. Cash buyers can typically close faster than financed buyers and don't require the property to pass a lender appraisal. For inherited homes that need work, a direct cash buyer is often the most practical option.
Closing Costs
Fees and expenses paid at the time of sale, typically including title insurance, escrow fees, transfer taxes, and recording fees. In a traditional sale, sellers often pay 8–10% of the sale price in total costs. With a direct buyer, those costs are typically lower or eliminated. Use our Net Proceeds Calculator to compare both scenarios side by side.
Escrow
A neutral third party — usually a title or escrow company — that holds funds and documents during the transaction and ensures all conditions of the sale are met before money changes hands.
Frequently Asked Questions About Selling an Inherited Home
Do I have to go through probate before I can sell?
In most cases, yes. How long that takes depends on your state and the estate's complexity. Some situations — joint tenancy, TOD deeds, living trusts — bypass probate entirely. Our FAQ page covers common questions sellers in this situation bring to us.
Can I sell an inherited home before probate is complete?
Sometimes. In some states, the executor can list and even contract a sale during probate with the court's approval, then close once letters testamentary are issued. A direct cash buyer experienced with probate sales can often navigate this more smoothly than a traditional buyer who may not want to wait.
What happens if multiple heirs inherit the same property?
All heirs typically need to agree to the sale. If one heir refuses, the others can petition the court for a partition action — a legal proceeding that can force a sale, though it's time-consuming and can strain relationships. The simpler path is usually getting everyone aligned early.
You Don't Have to Figure This Out Alone
Most people who inherit a home aren't in the real estate business. They're dealing with grief, family dynamics, and financial uncertainty — often all at once. Understanding the vocabulary is a start, but what many sellers in this situation find most valuable is working with someone who's been through it hundreds of times.
Wedgewood Homes buys inherited properties directly from sellers across our markets. No repairs required, no commissions, no waiting on a traditional buyer to secure financing. We provide a no-obligation cash offer, and you choose the closing timeline. Use our net proceeds calculator to compare your take-home under different sale scenarios.
Steve inherited his father's 40-year family home in Los Angeles and needed a fast, straightforward path forward. Here's how it went.
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Wedgewood Homes buys inherited properties directly from heirs and estates across our markets — with no repairs required, no agent commissions, and no fees. We serve sellers throughout Southern California, the Inland Empire, Orange County, San Diego, the Bay Area, Sacramento, the Central Coast (Santa Barbara to San Luis Obispo), the Central Valley (Stockton to Bakersfield), Las Vegas, Reno, Dallas, Salt Lake City, Denver, and Colorado Springs. View all Wedgewood Homes locations or browse our homes for sale.