How to Avoid These Home Inheritance Mistakes

Tom Turnbull
Oct 5
3 min read

Your Home and Your Legacy: How to Pass Along Your Most Valuable Asset

At a presentation this weekend to a group of 25 local homeowners (Thanks Breylan Deal and Team!), I was struck by something simple but powerful: for most families, the home is the single most valuable asset they own. Many (or even most) of the questions from the group were focused on their homes.

For many families, estate planning is about planning for what happens to your home — who gets it, how they get it, and under what conditions.

Below are several ways to pass along your home, with some of the pros and cons of each approach. My apologies, this newsletter is a little more technical (dry?) but it’s important to law out the main options.

If You Do Nothing

If no planning is done, your home will pass according to state law through probate.

Pros: The state provides a default plan — someone will inherit your home eventually.
Cons: Probate can take months, even a year or more, and comes with court costs, delays, and public filings. Heirs may not agree on whether to sell or keep the home, leading to conflict.

If You Have a Will

A will allows you to specify who should receive the home.

Pros: You get to decide who inherits; simple and inexpensive to prepare.
Cons: Still goes through probate. The transfer isn’t automatic, and title won’t change hands until the court process is complete.

If You Have a Living Trust

A revocable living trust allows you to hold title to the home during life and transfer it to your heirs without probate.

Pros: Avoids probate, provides privacy, and allows for smooth management if you become incapacitated. You can set conditions — for example, that the home be sold and the proceeds divided, or that one child has the first right to purchase it.
Cons: Slightly more setup work and cost than a will, but it pays off in efficiency later.

Transfer on Death (TOD) Deed

Oregon and Washington allow you to record a Transfer on Death Deed (sometimes called a “beneficiary deed”).

Pros: Simple, inexpensive, and avoids probate. You stay in full control during life.
Cons: No flexibility after death — the home goes directly to the named beneficiary. If that person dies first or is unable to take title, complications can arise.

How Title Is Held: Tenancy Types

How you hold title matters just as much:

Tenants in Common: Each owner’s share passes according to their will or trust. No automatic right of survivorship.
Joint Tenants with Right of Survivorship (JTWROS): When one owner dies, the survivor automatically owns 100%. Avoids probate for the first death, but not the second.
Tenants by the Entirety (Married Couples Only): Similar to JTWROS but with extra protection from creditors.
Community Property (Washington): Each spouse owns half. A special deed (“community property with right of survivorship”) allows the survivor to receive the full home with a full step-up in tax basis, which can be a major tax advantage. By contrast, with a Tenancy by the Entirety, only 50% of the property receives a basis step-up when the first spouse dies.

What About the Mortgage?

A home with a mortgage can still pass to heirs — the loan doesn’t disappear, but heirs may continue making payments or refinance.

Should you pay it off before death? Not necessarily. It depends on your goals, interest rate, and liquidity.
Can heirs keep your low-rate mortgage?Sometimes, yes. Under federal law, lenders generally can’t call the loan due when the property transfers to a relative or heir after death (thanks to the “Garn-St. Germain Act”). That means your heirs can usually keep paying the same loan — a huge benefit if you locked in a low rate.

Final Thoughts

Whether your home passes through probate, a trust, a TOD deed, or through survivorship, the key is to make a clear, intentional plan. Your home is more than a financial asset. Planning ensures it stays a source of comfort, not conflict.

If you’d like to review how your home fits into your estate plan — or whether it’s time to put one in place — I’d be happy to help.