The vocabulary of inherited property — in plain English.
Twenty terms heirs encounter most often. Each linked to deeper guides where the term applies.
Step-Up in Basis
A federal tax rule (IRC §1014) that resets an inherited asset's cost basis to its fair market value on the date of the original owner's death.
Probate
The court-supervised process of validating a will, paying the deceased's debts, and transferring remaining assets to heirs.
Inheritance Tax
A state-level tax paid by the heir on the value of property received from a deceased person.
Estate Tax
A tax on the gross estate of a deceased person, paid by the estate before assets are distributed to heirs.
Capital Gains Tax
A federal tax on the profit from the sale of a capital asset, including real estate.
Executor
The person named in a will to administer the deceased's estate through probate.
Intestate
Dying without a valid will. Assets pass according to the state's intestate succession laws.
Quitclaim Deed
A deed that transfers whatever interest the grantor has in a property, with no warranties of title.
Transfer-on-Death Deed
A deed that automatically transfers real property to a named beneficiary on the owner's death, bypassing probate.
Date-of-Death Valuation
The fair market value of a decedent's property on the day they died, used to establish the heir's stepped-up basis.
Fair Market Value
The price a property would change hands for between a willing buyer and willing seller, neither under compulsion.
Cost Basis
The amount used to calculate gain or loss when a property is sold. For inherited property, basis equals fair market value at the date of death.
Holding Period
The length of time a taxpayer owns a capital asset, determining whether gain is short-term or long-term.
Forced Heirship
A legal regime requiring a portion of the estate to pass to certain heirs (typically children), regardless of the will.
Personal Representative
The neutral legal term for an executor (named by will) or administrator (appointed by court) of an estate.
Letters Testamentary
The court-issued document that gives an executor legal authority to act on behalf of an estate.
Small Estate Affidavit
A simplified probate alternative available in most states for estates below a statutory dollar threshold.
Community Property
A marital property regime treating most assets acquired during marriage as jointly owned by both spouses.
Homestead Exemption
A state law protection that reduces the taxable value of a primary residence and may shield it from certain creditors.
1031 Exchange
A federal tax provision (IRC §1031) allowing deferral of capital gains tax when investment real estate is exchanged for like-kind investment property.
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