What to expect when you inherit California real estate. Probate timelines, the stepped-up basis, Prop 19 reassessment, and how to navigate it when siblings don't agree.
Probate is the court-supervised process for transferring assets after someone dies. In California, it has a specific scope: it handles assets that the decedent owned in their own name without a beneficiary designation, joint tenant, or living trust. Anything in a trust, anything held in joint tenancy with right of survivorship, anything with a payable-on-death designation, and anything in a community property with right of survivorship deed bypasses probate entirely.
The most common reason a California family ends up in probate is real estate held in the decedent's name alone, with no trust, no surviving joint tenant, and no Transfer on Death deed. Even small estates can trigger formal probate if the real estate is worth more than $184,500 (the 2024 California small estate threshold; check current limits before relying on this number).
Probate timelines in California typically run 9 to 18 months. The court appoints a personal representative (typically the executor named in a will, or an administrator if there's no will), inventories assets, notifies creditors, resolves debts, and finally distributes what's left. During that time, real property in the estate can usually still be sold, but with court oversight and a different process than a normal listing.
There are two paths in California: full probate sale (court-confirmed) and sale under the Independent Administration of Estates Act (IAEA). Most modern probates use IAEA authority, which lets the personal representative sell without court confirmation as long as no heir or interested party objects.
Under IAEA full authority: the personal representative can list, accept an offer, and close more or less like a normal sale, with a Notice of Proposed Action sent to heirs at least 15 days before closing. If no one objects, the sale proceeds.
Under court-confirmed sale: the property is listed, an initial offer is accepted, and then the sale is published and brought to court for confirmation. At the confirmation hearing, the property is auctioned in open court with a minimum overbid (typically 10 percent of the first $10,000 plus 5 percent of the balance). The original buyer can be outbid by anyone showing up with a cashier's check. This adds 30 to 60 days to the timeline and creates uncertainty that drags on price.
Either way, probate sales generally close at slight discounts to fair market value because the buyer pool is smaller and the timeline is longer. Not all buyers and not all lenders are comfortable with probate properties.
When you inherit real estate, your tax basis is generally the fair market value at the date of death (or six months after, if the alternate valuation date is elected). This is the stepped-up basis, and it's one of the largest tax benefits in the U.S. tax code for real estate.
Practical effect: if your parents bought a Simi Valley home for $90,000 in 1985 and it's worth $850,000 when they pass, your basis is $850,000, not $90,000. If you sell within a few months at $850,000, you owe roughly nothing in capital gains. If you hold for ten years, sell at $1.4M, your taxable gain is $550,000, not $1.31M. The savings are not theoretical.
Get a formal appraisal as of the date of death. Without that documentation, the IRS can challenge your basis and you may end up paying tax on phantom gain. The cost of an appraisal ($500 to $1,000) is small insurance against potentially six-figure tax exposure.
California's Proposition 19, passed in 2020 and effective February 2021, dramatically changed how property tax basis transfers between parents and children. Under the old rules (Prop 58), children could inherit a parent's property tax basis on the primary home plus up to $1 million of assessed value on other properties. Under Prop 19, the parent-to-child exclusion now applies only to the primary residence, only if the child uses it as their primary residence, and only on the first $1 million of assessed value above the parent's prior basis.
Practical effect: an inherited Simi Valley rental that was on the property tax rolls at $200,000 in the parent's name will likely reassess to current market value (perhaps $850,000) the moment ownership transfers. Annual property tax can jump from $2,200 to $9,500 overnight. For long-held investment properties, this is the single biggest financial change in California real estate inheritance in decades.
There are planning strategies (lifetime gifts before death, holding property in LLCs structured to limit reassessment, and primary-residence transitions) but most require advance planning. After death, the options narrow sharply.
A frequent scenario: three adult children inherit a Simi Valley home. Two want to sell. One wants to keep it as a rental, or wants to move in, or thinks the appraisal is too low. Without alignment, the property sits.
The legal fallback in California is a partition action. Any co-owner can file in superior court to force a sale. The court will order an appraisal, list the property, and divide proceeds after costs. Partition is slow (often 6 to 12 months on top of probate timelines), expensive (legal fees can run $20,000 to $60,000), and stressful in ways that destroy family relationships.
A better path, when possible: facilitated mediation before anyone files. If one heir wants the property, a buyout at appraised value (with financing structured through a regular cash-out refinance) often works. If all heirs want to sell but disagree on price, getting two independent appraisals and averaging is a common compromise.
Typically 9 to 18 months from the petition for probate to final distribution. Simple estates with cooperative heirs and clean asset titles can finish closer to 9 months. Estates with disputes, challenging assets, or unfiled tax returns can stretch past 24 months. The court calendar in your county is also a factor.
Yes, in most cases. If the personal representative has full Independent Administration of Estates Act (IAEA) authority, the home can be sold like a normal listing with a 15-day Notice of Proposed Action to heirs. If the executor only has limited authority, or if any heir objects, the sale must be confirmed by the court at a hearing where overbidding is allowed.
Possibly, but only on appreciation between the date of death and the date you sell. Your basis is the fair market value at the date of death (the stepped-up basis), not what your parents paid. If the home doesn't appreciate much between inheritance and sale, the tax bill can be very small. Get a date-of-death appraisal so you have documentation.
If the home was your parent's primary residence, and you make it your primary residence within one year of inheritance, Prop 19 lets you keep the parent's property tax basis on the first $1 million of assessed value above the prior basis. If the home was a rental property, or if you don't move in, the property fully reassesses to current market value, which can dramatically increase property taxes.
First option is mediation, often facilitated by a real estate attorney or a probate-experienced realtor. If alignment is impossible, any co-owner can file a partition action in California superior court to force a sale. Partition is the legal fallback but it's slow, expensive, and damaging to family relationships. Almost every partition action ends in a sale anyway, so finding a way to settle voluntarily is usually better.
Yes, this is the most common and effective way to avoid probate in California. A revocable living trust holds title to the property; on death, the successor trustee distributes assets without court involvement. Setting up a trust during life costs a few thousand dollars; probate after death typically costs 4 percent of the gross estate value or more. Worth doing before, not after, even for relatively small estates with real estate.