Do All Heirs Have To Agree To Sell A Property In Washington

Do All Heirs Have To Agree To Sell Property In Washington

Selling a house is already a complicated process with plenty of moving parts. However, managing the sale with multiple heirs instantly adds another layer of complexity in the process. If you’ve recently inherited property with your siblings or other family members and are wondering whether everyone needs to agree before selling it…

Well, let’s just say the answer will depend on many things like: the type of estate planning, the existence of a will, your relationship to the decedent, the state do you live in, and so on.

It’s a pretty lengthy list, but don’t be overwhelmed! We’re here to demystify the process to help you sell your inherited property, as smoothly and as painlessly as possible.

Heir vs. Beneficiary

First things first, we have to know the difference between an heir and a beneficiary. Both these words have been tossed around and used interchangeably but, in the eyes of the law, they differ from one another.

An heir is someone who, through familial ties, is recognized by law as the next in line or next of kin to receive a person’s estate should they pass. You may be more familiar with the term “heir” as it is common in mainstream media and is used in lieu of the term “beneficiary”. 

On the other hand, a beneficiary is someone who is chosen by the decedent to inherit their estate. The law will recognize you as a beneficiary if you’re named as such in a valid will. A beneficiary can be a family member or someone despite having no blood ties, is close to the deceased, such as a dear friend.

Both heir and beneficiary stand to gain from a decedent’s estate but differ in how they gain the assets. One can be both a beneficiary and an heir; for example, your parents name you the beneficiary to their estate in the will, and legally, you are their rightful heir.

It’s possible to have multiple heirs and beneficiaries for a single asset or property, and regardless whether you are an heir or a beneficiary, the process of selling a house in Washington is the same.

Who is an Heir?

Now you may be wondering what your rights are should a family member pass. This boils down to one question: did the decedent die testate (with a will) or intestate (without a will)? 

There’s a will… 

If a person dies testate, then everything becomes straightforward. The court will follow the instructions written in the will left by the decedent. 

If proper estate planning was done, then the will should specify how they would like their estate to be handled, such as to whom each asset should be transferred to. 

On the other hand, if the will is vague, there could be complications. This can happen if the beneficiary named is not the next of kin; an heir may contest the will. Therefore, it’s good to remember that when planning your estate, make sure to take everyone into account. 

There’s no will…

So, is there still a way forward?

If there is no will then intestate succession law follows. The government takes into account the family line of the decedent and hands it down to the closest family member, which is typically the children, or the parents, if the decedent died single and childless. 

There are cases where multiple people will stand to inherit the estate and those circumstances would be: 

• If both parents pass then the children will inherit everything.
• If there is no spouse and no children, then the parents will inherit everything.
• If there is no living spouse, children, or parents, then the siblings will inherit the estate.

Intestate succession laws may not be suitable for many, since it only accounts for individuals with blood ties to the one who passed. Close friends and caretakers will not be taken into account, hence, it’s important to prepare a will to avoid leaving someone out.

Other Ways To Inherit Property 

In Washington, wills and intestate succession laws aren’t the only vehicles used to inherit property. 

Living Trust 

A living trust holds the property in trust, allowing its transfer while the trustor is still alive. This way, when the trustor passes, the chosen beneficiary will receive the property. A living trust can be expensive, sometimes costing up to $5,000, making it unappealing to most; although that amount is a drop in the bucket for an estate worth millions.

Transfer on Death Deed (TODD)

The TODD is a legal document which is acquired in order to smoothly transfer the title of an individual’s property to their chosen beneficiary in the event of their death. This is appealing to property owners because not only do their beneficiaries avoid probate, TODDs only cost a couple of hundred dollars, so it is also a more cost-efficient option compared to a living trust. 

A living trust or transfer on death deed are attractive alternatives to a will as they both avoid the tedious and time consuming probate process.

The Share of Spouses in Washington 

When we think of an heir, we usually picture someone’s children. 

But what happens if there is a surviving spouse? 

Spouses are not legally taken to be heirs as they inherit property through the marriage as delineated by community property laws. Thus, what a surviving spouse receives depends on what is defined as community property and separate property. 

What is Community Property?

Community property is property that a couple acquired during the marriage. Washington is one of only 9 states with a community property law.

For example, the wife buys a car while married to her husband but doesn’t put his name on the title. Nevertheless, the car will be considered community property since it was obtained during the marriage, and in the event of the wife’s death or the couple’s divorce, the husband will be entitled to his share. 

What Is Separate Property? 

In contrast, separate property is property that the married couple acquired prior to the marriage.

However, even in community property states such as Washington, it is still possible to acquire separate property if one spouse inherits or is gifted one. In case of an inheritance, care must be taken so funds aren’t commingled, which can make the determination of separation impossible. 

How are Community and Separate Property Divided? 

Unless stated by a will, community and separate property will be allocated in accordance to the intestate succession laws. Washington also recognizes registered domestic partners and are treated as spouses by the law. 

Community and separate property is distributed by law in the following manner:

If you have a surviving spouse and children, your spouse inherits the entire community property, while the separate property is divided between your spouse and children;

• If you have a surviving spouse and no children, your spouse inherits the entire community property, and 75% of your separate property with the 25% of your separate property going to your parents;
  
• If you have a surviving spouse, no children and no parents, your spouse inherits the entire community property, and 75% of your separate property with the 25% of your separate property going to your siblings; but,
  
• If you have a surviving spouse, no children, no parents and no living siblings, your spouse inherits the entire community and separate property.
  

When Do All Heirs Need To Agree To Sell Real Estate In Washington?

Now that we understand how property is inherited and how to determine one’s share, let’s revisit the question: do all heirs need to agree to sell property in Washington?

In most situations, the answer is “yes,” especially if the property is co-owned.  If the property is co-owned, that means each one of the heirs has a say on how the property should be handled. In this scenario, all heirs must agree in order before the property can be sold.

Issues That Can Arise With Multiple Heirs

The situation can be more complex if the property is not equally divided among the heirs, where one holds a majority share of the property as stated in the will or through intestate laws.

Profit sharing

Discussions and conflict can arise when deciding how the profit would be split among everyone. For example, a sibling who has been the parent’s primary caretaker before they passed might feel entitled to a larger share. Or, if an heir paid a portion of the mortgage or shelled out money for repairs, they could also demand to be compensated for it.

Differences in opinion

Heirs can differ on what to do with the property. Should they keep it? Rent it out? Sell?

Some heirs might refuse to sell for sentimental reasons. This can occur when siblings inherit the family home, with one of them having a strong emotional attachment to the property. On the contrary, the rest of the siblings may want to sell as quick as possible because holding on to the property serves as a painful reminder of the family member who recently passed.

Living out of state 

Another complication can arise if not all heirs live in the same state. Communication can be difficult and property laws may vary depending on where the heir lives, so even if the property in question is in Washington, they would need to be represented legally to ensure everything goes smoothly.

A sibling living in the inherited house 

If one heir currently lives in the inherited property, and they refuse to vacate the home, it becomes a roadblock to the sale of the house. The heirs can then be embroiled in a lengthy and emotionally draining legal battle.

What If A Heir Is A Minor?

If any of your co-heirs are minors, they would need legal representation or a guardian following Washington state laws. The reason for this requirement is because legally, minors cannot directly inherit property. In fact, the court may intervene and order court supervision over the minor’s inheritance until they are 18 years old. The court would also appoint a guardian to care for the property on behalf of the minor.

This means that the sale of the house can be delayed until such time that the property is handed back to the minor when they reach the age of majority. 

What Happens When Not All Heirs Agree To Sell Property? 

This is the (sometimes) literal million dollar question. If, after all the discussions and meetings, you still don’t come to an agreement to sell the property, there are two options available to you:

Option 1: Hire a Mediator 

If each discussion tends to devolve into shouting where no one is heard, it might be time to hire a mediator. At the end of the day, family members may not always see eye to eye, but everyone could benefit from the viewpoint of a neutral third party. With a mediator, the issues can be resolved while preserving the heirs’ relationship with each other.

Option 2: Buy out the other owners

Money talks, and if you want your voice to be heard above the din, then buying out all the other heirs is the way to go. Doing so would enable you to gain full control and rights over the property, allowing you to do with it whatever you wish.

The Estate Buyout Process

Hire an appraiser to evaluate the house and know its current market value. From their assessment, a deal can be struck among you to buy out your co-owners. Once a price has been set and everyone is satisfied with the plan, then it’s time to secure financing. Buying out your co-heirs is pricey so if you don’t have the liquidity, you can get a loan. Finally, after settling the payment, each heir needs to sign over their share of the deed to you.

Of course, for this option the other heirs would need to be willing to sell their shares to you, which may be a difficult feat if they didn’t originally want to sell the property. However, if you have good negotiation skills and know the heirs personally, you can present an offer they’d be hard-pressed to refuse.

Cases Where Not All Heirs Have To Agree For The House To Be Sold 

Although Washington state generally requires that all parties must agree to sell the property, there are always exceptions to this rule, such as when:

You file a partition action

Filing for a partition action should really be your last resort when it comes to selling an inherited home. A partition action is a lawsuit that will force the sale of the home–throwing all discussion out the door.

When you file a partition action, your disagreement is brought before the courts, leaving them to decide how to move forward and distribute the property. Only one heir needs to file for a partition action for it to take into effect. Upon filing this suit, you must be prepared for either of the two outcomes: a partition by kind or by sale.

If the inherited estate is large enough, the court may rule in favor of a partition by kind where the properties are divided among the heirs.

In contrast, estates that are too small to divide leads to a partition by sale where the estate is liquidated and the cash is distributed among the heirs.

A partition action should be a last resort because of the strain it causes in family relations. It can also become expensive, amounting to thousands of dollars, and while winning a partition action can help you recoup some of the expenses, that is not for sure, so be prepared to shoulder the fees when opting for this route.

An Executor needs to settle debt

Another case in which not all heirs need to agree to sell the property is when the estate is in debt. In this situation, heirs and beneficiaries won’t have a say in the matter–they will just be notified about the sale.

If the property enters probate, the executor must first pay off all debts, mortgage loans, liens, and any other obligations tied to the house before transferring the title to the heirs. If the property wasn’t managed properly during the decedent’s lifetime, there may be significant debts owed to creditors, which could lead to the sale of the house to pay off the creditors.

The Probate Process in Washington

If you plan to sell the house you’re poised to inherit, you need to first ensure that the title is in your name.

In order to do this you would need to go through the probate process (unless you got it through a trust or death deed). Probate is the legal process of administering and assessing a decedent’s estate to distribute it among the heirs. The court, through an executor, will gather all the decedent’s assets, evaluate all the liens and claims against it, and pay debts and taxes before ultimately transferring ownership to the heirs.

As luck would have it, Washington state has one of the simplest probate processes. It is also faster in Washington as the court gives full authority to the executor to deal with estate affairs, rarely intervening. At the same time, Washington state has a fixed fee, compared to other states, which base probate prices on a percentage of the estate’s value

The probate process typically unfolds as follows:

An executor, usually a close family member named in the will, must obtain the necessary documents, such as the original will, the death certificate, and the list of family members and beneficiaries, including their addresses. Once on hand, the executor can hire a probate attorney to file a petition and officially start the probate process. The executor will notify heirs, beneficiaries, creditors, and the Department of Social and Health Services regarding their appointment. Afterward, they will collect all the estate assets to prepare it for appraisal. After each asset has been inventoried and appraised, the executor needs to track down all the liens and debts of the decedent and pay them off along with the estate tax. Sometimes the liquid assets won’t be enough to cover the debts so other property will have to be sold. The heirs will then distribute the net proceeds and remaining real property.

All told, the process takes about nine months at best in Washington state. If complications arise, it can drag on for years.

Taxes when selling inherited property in Washington

Familial disputes isn’t the only factor to consider when selling inherited property; you also need to look out for taxes which can take you by surprise.

Fortunately, Washington state does not impose an inheritance tax or capital gains tax on real estate.

However, you may still be liable to pay an inheritance tax and capital gains tax if you reside in any of the states which impose such taxes. Additionally, just because there’s no state capital gains tax doesn’t mean you’re not responsible in paying the 15%-37% federal capital gains tax, so best not forget that. Although, you may be able to get a tax break if the property you inherited didn’t appreciate in value from the time you inherited it to the time you sold it.

In Washington state, the tax you must pay when selling property is known as the real estate excise tax (REET). The percentage of real estate excise tax owed depends on the price your property sold for. You would need to pay around 1.1%- 3% of your property’s sale price. In addition to this, some municipalities within the state also impose a REET, which can range between 0.25% and 0.50%. 

Pros & cons of Selling An Inherited House

Inheriting property can be a blessing for some and liability for others as it comes with big responsibilities they didn’t ask for.

Let’s discuss the positives:

• Selling inherited property can provide a tremendous financial boon that you can use to reach your financial goals or invest in your children’s future.
• Selling the property releases you from paying future property taxes, insurance, maintenance, and other costs that come with owning a home. This is especially beneficial if you live in a different state.
• If multiple heirs co-own the property, selling the house would simplify the distribution process.
• And finally, selling a house could be a form of moving on, freeing people from the emotional burden of keeping the house where a loved one used to live.

Taking a look at the negatives:

• You could be against the sale of the property if you have an emotional attachment to it.
• When selling the house, you need to pay the taxes associated with it such as federal capital gains tax and the REET. This can be especially onerous if you live in a state which imposes both a state capital gains tax and an inheritance tax.

There are valid reasons for choosing whichever option you choose. You just need to consider your current needs and weigh the pros and cons to determine if selling the house is the right decision for you. 

Fastest Way To Sell Inherited Real Estate in Washington State 

After navigating family disputes, entering mediation or being embroiled in a legal battle, and then dealing with a lengthy probate process, the prospect of a looming home sale with all its complications can be unwelcome. Maybe you’re wondering if this can get easier.

Lucky for you, it gets easier from here on out! If selling your house traditionally stresses you out, consider selling to real estate investors. This option eliminates the need for a real estate agent, allowing you to keep more of your profit because you avoid paying that pricey commission.

So, if you’re ready to sell your house, the Kind House Buyers will buy it TODAY! When you sell to us, you don’t even need to stage, clean, or even repair the property –in fact, we would love to buy your house as-is!

Fill in our form below for a quick, no-obligation cash offer delivered to your inbox. As for closing costs, we’ve got you covered!

If you have more questions, feel free to reach out to us at (253) 216-2497 . Ask for Keith or Krixelle—we’d be happy to chat!