The loss of a spouse, or parent, is always painful even if we know the time is coming. There’s a lot of confusion around what happens to property when a homeowner passes away. Was there a will? Is there a surviving spouse? and most importantly, how was Title vested by the homeowners. That is the biggest piece to the puzzle when a homeowner passes away.
The other day I received a text from my friend Matt. His father passed away over the holidays, which in itself can be difficult to handle. “Hey, quick question, with my mom’s hose being in both their names. What happens to the house? Does she need to report to anyone? How does that process work?”. These are reasonable questions to be asking once a spouse or parent has passed and there is property to be handled.
In the case of Matt’s mom, it is pretty straight-forward in the state of Utah. Both of his parents had the Title of their property vested as Joint Tenants. This means that when a spouse passes away that the sole interest of the property goes to the surviving spouse. His mom doesn’t need to do anything and the house remains in her name. Yet, it’s not always that simple.
Having Title for your property vested as Joint Tenants is the most common way for married couples to hold property along the Wasatch Front. There are other ways to hold Title, including as Tenants In Common, where each owner has a percentage of the property. In the case of a homeowner who held property as Tenants In Common, and passes away, then that percent of ownership passes to the deceased homeowner’s heirs.
Of course, that ends up being just one piece of the bigger puzzle. There’s also a tax equation that goes along with your property when a spouse passes. You should always consult with a CPA, tax consultant, or your financial advisor on anything regarding your finances or taxes. For many people they do not want to continue to live in the home they shared with their spouse. Sometimes there is trauma when a loved one has an illness and is at home in hospice care. Other times the event is fast and still as traumatic for the surviving family members. So what does all of this have to do with taxes? The U.S. government views a surviving spouse as still “married” up to 2 years from the date of death of the deceased spouse. That allows the surviving spouse to receive up to a $500,000 tax exemption on the equity in their home. However, once those 2 years have passed then the surviving spouse is viewed as “single” and the tax exemption for the home equity drops to $250,000.
It doesn’t always make sense to sell your house after the death of your spouse or family member. Sometimes the trauma and memories are too much for surviving family members to handle. It could also be a good time to explore adult communities or assisted living depending on the age of the surviving spouse. The good news is that no decision needs to be made hastily or immediately. The law allows time for survivors to determine their options.
Do you have a question about what to do with property when a homeowner passes away? What if there is no will? What if the property is held in a Trust? The house is now in probate, what do I do? Reach out and I’m happy to provide you with answers at no cost to you. Call me at 801-231-4794
