What Happens to Real Estate During Probate in the US?

Probate is one of those topics most people know a little bit about, but feel lost once real property is involved. If someone you know passes away and leaves a house behind, you might think the kids just take over. In reality, during this time, the court watches over the property, an appointed executor manages it, and the home is either transferred to heirs or sold to pay debts. 

In this post, we’ll break down exactly what happens when real estate enters probate in the US. At the end, you will learn: 

• How the probate process works step by step

• What happens to real estate during probate

• How long probate takes for property

• How executors handle selling a house in probate

• Ways to avoid probate for real estate

• What happens if there’s no will

• Tax implications and practical tips for heirs and business owners

Let’s break it down in plain language that’s easy to follow.

What is Probate and How Does It Work?

Probate is the legal process where the court checks a will (if there is one), appoints someone to manage the estate, pays debts and taxes, then passes the remaining property to the right people.

Probate starts after someone dies. The court makes sure that:

1. The will is valid

2. A responsible person (called an executor or personal representative) is in charge

3. All debts, taxes, and expenses get paid

4. Property, including real estate, goes to heirs

How Real Estate is Handled During Probate

While the estate is in probate, the deceased person’s real estate does not automatically belong to heirs. Instead, the executor manages it under the court’s supervision until it is either sold or legally transferred to heirs.

Here’s how that plays out:

1. Legal Control Shifts

The property becomes part of the estate. The executor is responsible, even if the heirs want to live in the house.

• Heirs don’t own the property yet

• The estate technically owns it

2. Appraisal and Listing

Before anything happens, the property is appraised to find its fair market value. This helps the court and heirs understand what it’s worth.

• A licensed appraiser usually does this

• The value is used for tax purposes and potential sale pricing

3. Court‑Approved Sale

If the estate needs to sell the property, the executor often has to get court permission first. Many states require that offers be presented at a hearing so others can make higher bids.

Example of sale steps:

• Executor gets an offer

• Court hears the offer

• Anyone can bid higher in some states

• Highest approved bid wins

4. Debt Settlement

If the deceased had a mortgage or other debts tied to the property, the sale proceeds (or other estate funds) may be used to pay them.

• Mortgage must be addressed

• Other liens or taxes also must be paid

5. Transfer to Beneficiaries

Once debts and expenses are paid, the remaining property or sale proceeds go to the heirs.

• Title is transferred with a deed

• This usually requires a court order

6. Occupancy Limits

An heir might live in the house during probate, but legally the estate owns it until the court finalizes transfer.

For business owners, probate can affect properties owned personally or through a business. Understanding this process helps you plan better and avoid surprises.

Selling Property During Probate

A property in probate can be sold, but the executor must usually get court approval. The sale proceeds pay debts first, and only then do beneficiaries receive what’s left.

Here’s how a sale typically works:

Executor Responsibilities

• Get the home appraised

• Work with a real estate agent, often one familiar with probate sales

• Present offers to the court if required

• Attend confirmation hearings

Example Timeline for Sale

1. Appraisal done

2. House listed on the market

3. Offers received

4. Court confirmation hearing

5. Sale approved and closed

Costs and Fees

Probate sales include additional costs:

These costs can reduce what heirs ultimately receive.

How Long Probate Takes for Property

Probate for real estate usually takes 6 to 24 months, depending on complexity, whether there are disputes, and how many assets need to be managed.

General Timeline

What Slows It Down

• Disagreements among heirs

• Multiple properties in different states

• Complex debts or liens

• Court backlog

For business owners with real estate tied to a business, longer timelines can mean lost rental income or missed opportunities. Planning helps keep things faster and smoother.

Exceptions: When Real Estate Bypasses Probate

There are ways to transfer real estate without probate if the property was set up that way before death.

Common Probate Avoidance Tools

1. Revocable Living Trust

   • Property titled to the trust passes outside probate

   • Owner keeps control during life

   • Beneficiaries get it immediately after death

2. Joint Tenancy with Right of Survivorship

   • Co‑owners automatically inherit

   • No probate required

3. Transfer‑on‑Death (TOD) Deeds

   • Available in many states

   • Owner names beneficiary who gets property when owner dies

   • No court involvement

These tools can save time and cost. For business owners, using a trust or TOD deed may prevent interruptions in business operations tied to real estate.

Intestate Succession and Special Cases

If someone dies without a valid will, the state’s intestate succession laws decide who gets the real estate.

How Intestate Succession Works

If there’s no will:

• A court appoints a personal representative

• The probate court follows state law to distribute assets

• Usually spouse and children are first in line

Special Situations

• Blended families: Stepchildren may not inherit unless named in a will

• Co‑owned property: Ownership type determines outcome

• Business real estate: May follow business succession rules as well as probate

This is why having a valid will or trust matters, especially for families with multiple heirs or business partners.

If someone dies without a valid will, state intestate succession laws decide who inherits real estate. For a more detailed explanation of how property is distributed, what heirs can expect, and planning options to avoid probate complications, see our comprehensive guide: [What Happens to Your Real Estate If You Die Without a Will in the US?].

Tax Implications for Inherited Real Estate

When heirs inherit real estate, they often get a step‑up in tax basis, which can reduce capital gains taxes if they sell the property later.

What a Step‑Up in Basis Means

• The property’s tax basis resets to fair market value at the date of death

• If heir sells the property soon after inheritance, capital gains tax may be minimal

Other Tax Notes

• In some states, property tax reassessment after inheritance can increase ongoing taxes

• Estate taxes may apply for very large estates

• Consult a tax professional for business‑linked properties to avoid surprises

For business owners, tax planning is especially important when real estate is part of the estate.

Practical Tips for Executors and Heirs

Executors and heirs should follow clear steps to manage probate property responsibly and avoid unnecessary delays or costs.

Executor Checklist

• Inventory real estate and get appraisals

• Continue insurance, taxes, and utilities

• Consider hiring a probate‑experienced agent

• Notify creditors promptly

• Keep detailed records for court

Heir Tips

• Understand your rights but let the executor follow the court process

• Stay in communication about maintenance and plans for the property

• Get professional advice on taxes and legal steps

Clear communication and organization make probate easier for everyone involved.

Variations by State: Key Differences to Know

Probate rules vary a lot by state, affecting timelines, fees, simplified processes, and forms of probate avoidance.

Examples of Differences

• Some states have small estate procedures for low‑value estates

• States like California may require overbidding at sale hearings

• Transfer‑on‑Death deed availability differs by jurisdiction

• Community property states (e.g., CA, TX) treat ownership and taxes differently

Because of these variations, it’s a good idea to consult state‑specific resources or an attorney familiar with your state’s probate laws.

Conclusion

During probate, real estate doesn’t automatically pass to heirs. The court oversees the process, the executor manages the property, and any debts or taxes must be paid before heirs receive their share. Understanding how probate works can help you plan ahead, avoid costly delays, and protect your family’s or business’s real estate assets.

If you own property, run a business, or want to make sure your heirs are taken care of, start planning today. Talk to an estate attorney or tax professional to explore trusts, transfer-on-death deeds, and other strategies that can simplify real estate transfers and keep your assets protected. Take control of your estate planning now so your property passes exactly as you intend.

For a full guide to planning your estate and leaving real estate to your heirs, check out our main comprehensive guide discussing about "What Every Parent in the US Should Know Before Leaving Real Estate in a Will".

Frequently Asked Questions 

Does every house go through probate?

Not always. If the house is in a living trust, held with survivorship rights, or has a transfer‑on‑death deed, it may bypass probate.

How long does probate take for a house?

Typically 6–24 months, but it depends on complexity and whether the property must be sold.

Can real estate be sold during probate?

Yes, but most states require court approval and a confirmation hearing before the sale is final.

What are probate fees for property?

Fees can include executor fees, attorney fees, court costs, appraisal costs, and real estate commissions.

Will heirs pay taxes when they inherit property?

Heirs may benefit from a step‑up in basis, reducing capital gains tax. State property taxes and estate tax rules vary.