When the owner of a living trust dies, the successor trustee can sell the house without going to court. In California the trustee usually records proof of the death, notifies the beneficiaries, gets a date of death appraisal, and then lists and sells the house under the trust's terms. The appraisal matters most for taxes: the heirs' basis steps up to the value on the date of death, which often wipes out most of the capital gain.

Steps to sell a house in a trust after a death

Get certified copies of the death certificate.
Record an affidavit of death of trustee with the county recorder, so title shows the successor trustee is in charge.
Within 150 days, file the change in ownership statement for the death (form BOE-502-D) with the county assessor.
Send the notice to beneficiaries and heirs that California requires within 60 days after a trust becomes irrevocable. That notice starts a 120-day window to contest the trust, and many trustees wait it out before selling.
Order a date of death appraisal while the house is still in its inherited condition.
List the house. The trustee signs as trustee, and the title company will usually ask for a certification of trust.

An estate attorney can confirm what the trust document requires. Some trusts give the trustee broad power to sell, and others require beneficiary consent.

Capital gains and the stepped-up basis

For inherited property, the tax basis becomes the fair market value on the date of death, not what the parents paid. If a house bought in 1985 was worth $1.8 million on the date of death and sells for $1.85 million, the taxable gain is figured on the $50,000 difference, less selling costs.

For a married couple's community property in California, both halves usually step up when the first spouse dies, not just the half that belonged to the spouse who died. Ask your CPA how that applies to your trust.

That is why the date of death value should be documented with a written appraisal, not a listing price or an online estimate. More on why inherited property needs an appraisal.

Selling with siblings

When several children inherit through the trust, the trustee has to treat them all fairly. Common situations:

Everyone agrees to sell, and the proceeds are split after costs.
One sibling wants to keep the house and buys out the others. A current appraisal gives everyone an independent, documented price to work from.
One sibling wants to move in. Under Proposition 19 that can keep part of the parents' lower property tax base, but only if the house was their primary residence and the child files on time. See inheriting a house in Marin County for the rules.

A written appraisal also protects the trustee if a beneficiary later questions the sale price.

Selling an inherited house in Marin or San Francisco

Many inherited Marin and San Francisco homes were bought decades ago, so the gap between the purchase price and today's value is large. That makes the step-up worth more here than in most of the country, and it makes a supportable date of death value more important.

Older homes often have deferred maintenance. The date of death value reflects the condition on that day, so photos and an inspection before the cleanout or any repairs make the report stronger. In San Francisco, tenants in a 2 to 4 unit building also affect what a buyer will pay, and the appraisal accounts for the leases in place.

Getting the date of death appraisal

Austin Fernald, a California Certified Residential Appraiser based in San Rafael, appraises inherited homes for successor trustees throughout Marin County and San Francisco. Fees start at $500 for a single-family house or condo and $700 for a 2 to 4 unit building, with a free quote within one business day.

If the house is not in a trust, see probate in Marin County and what a probate referee does.