Inheriting a House in Illinois: Probate, Taxes, and Selling

You inherited a house in Illinois - here’s what actually happens

First things first: nothing has to be decided this week. The house stays where it is, the mortgage cannot be called due just because the owner died, and the process ahead is well-mapped even if it feels opaque right now.

In Illinois, estates run through the circuit court of the county where the person lived (in Cook County, the Probate Division). Whether the house itself goes through court depends on the paperwork the owner left behind: Illinois has a purpose-built probate-avoidance tool for real estate - the transfer on death instrument, or TODI - alongside trusts and joint ownership. A house solely in the deceased owner’s name with none of those generally means probate.

If you live out of state, which is very common with inherited Illinois property, everything in this guide can be handled remotely with an Illinois attorney and a good local agent.

Does it go through probate?

Run through the exceptions first:

• Transfer on death instrument (TODI). Illinois has allowed TODIs since 2012 (and since 2022 they can cover any Illinois real estate, not just residential). If one was recorded, the named beneficiary takes the house outside probate; recording a notice of death affidavit and acceptance puts the transfer on the public record. Check the county recorder’s records early.
• Living trust. A house titled to a revocable living trust passes outside probate; the successor trustee manages or sells it.
• Joint tenancy or tenancy by the entirety. Survivorship ownership passes the house automatically to the surviving co-owner.
• Small estate affidavit. Illinois raised the limit to $150,000 (for deaths on or after August 15, 2025; it was $100,000 before). But note: the affidavit covers personal property - bank accounts, vehicles, stocks - not real estate. It will not transfer a house, though it often mops up everything around the house so that only the real estate needs court attention.

A solely owned house with no TODI or trust means probate. Illinois requires formal probate when an estate includes real estate, and the estate is opened in the county circuit court. The saving grace: Illinois routinely grants independent administration, which lets the executor or administrator act without court approval for most steps - including, usually, selling the house.

The Illinois probate timeline

Plan on roughly a year for a normal estate; faster is possible, slower is common:

1. Opening (month 1-2). The will is filed (Illinois law requires filing a will with the clerk within 30 days of learning of the death), the petition is heard, and the representative receives letters of office.
2. Notice and the six-month claims period. Publication starts a six-month window for creditor claims - the main reason Illinois estates rarely close in under seven or eight months.
3. Inventory and administration (months 2-9). Assets are gathered and valued, debts and taxes handled, the house maintained or sold.
4. Closing (months 9-14). In independent administration, the estate can often close with a final report rather than a formal court accounting.

Cook County’s volume can add calendar time at each step. Contested wills, missing heirs, or estate tax filings push things past a year.

Taxes when you inherit

Illinois splits the difference between the no-tax states and the heavy-tax states, and it is worth understanding which side of the line the estate falls on.

No inheritance tax. Illinois does not tax you, the heir, for receiving property.

But Illinois has an estate tax. Estates above $4 million face Illinois estate tax, with graduated rates topping out at 16%. Two catches make it bite harder than it sounds: the $4 million exemption is not indexed for inflation and not portable between spouses, and the calculation works on the whole estate once over the line - a house in a good Chicago suburb plus retirement accounts and life insurance can reach $4 million faster than people expect. Estates below $4 million owe nothing and generally do not even file. Federal estate tax starts far higher, at $15 million per person (2026).

The stepped-up basis is the fact that matters for nearly everyone. When you inherit, the house’s cost basis for capital gains purposes resets to fair market value at the date of death. A bungalow bought for $45,000 in 1980 and worth $350,000 today gives you a $350,000 basis - sell near that soon after, and there is little or no capital gains tax. Decades of appreciation are never income-taxed. This is federal law and applies in every state. If you keep the house, only growth after the date of death is taxed when you eventually sell.

Property taxes - already famously high in Illinois - continue as normal. Any senior freeze or homestead exemptions the owner had will drop off, so budget for the unreduced bill if you keep the property.

Can you sell during probate in Illinois?

Usually yes:

• Independent administration (the common case). The representative can list and sell estate real estate without a court order, much like a normal sale - the deed is signed in their capacity as executor or administrator. Title companies will want the letters of office and, where relevant, an Illinois estate tax clearance on larger estates.
• Supervised administration. If the court is supervising (because of disputes or by request), sales of real estate need court approval - a petition and order, adding weeks.
• TODI or trust property. No probate constraints; the beneficiary or trustee sells as a regular owner once the transfer paperwork is recorded.
• Heirs after distribution. If the house is distributed to heirs first, they sell as ordinary co-owners - all signatures needed.

Sale proceeds during administration belong to the estate and are distributed after the claims period and expenses.

If you live out of state

Out-of-state heirs settle Illinois estates every day:

• A non-resident can serve as executor under a will. (For intestate estates, Illinois requires the administrator to be an Illinois resident - out-of-state heirs commonly designate a resident co-administrator or work through counsel.) Some judges require a surety bond for non-resident fiduciaries unless the will waives it.
• Once appointed, the legal side runs through your Illinois attorney - filings are electronic, and remote appearances are common.
• The physical side needs local hands: winterizing a vacant house before a Chicago January, insurance for an unoccupied property, snow and lawn compliance, and clearing out a lifetime of belongings.
• A local agent experienced with estate sales is your presence on the ground - regular property checks, cleanout crews, contractor bids, an honest read on selling as-is versus updating, and running the sale while you stay home.

What’s the house worth?

Everything keys off this number: the estate’s inventory, whether the estate clears the $4 million Illinois estate tax line, your stepped-up basis, and the keep-or-sell decision. Automated estimates are least accurate on exactly the houses people inherit - original-condition homes in blocks where renovated comps distort the algorithm, or two-flats and three-flats where condition and tenancy change everything.

Get a documented date-of-death value plus current as-is and fixed-up numbers. A local agent can pull all three for free, and they feed directly into what the attorney and accountant need.

Frequently asked questions

How long does probate take in Illinois? Commonly around 9 to 14 months, with the six-month creditor claims period setting a practical floor. TODI and trust property transfers outside probate in weeks.

Does Illinois have an inheritance or estate tax? No inheritance tax on heirs. Illinois does levy an estate tax on estates over $4 million (not indexed, not portable), with rates up to 16%. Most estates fall below the line and owe nothing.

Can we use the small estate affidavit for the house? No - the $150,000 small estate affidavit covers personal property only. A TODI, trust, or probate moves the real estate.

Can the executor sell the house before probate ends? Yes, in most cases - under independent administration the representative can sell without a court order. Supervised estates need court approval for the sale.

Do I pay capital gains tax when I sell the inherited house? Generally only on appreciation after the date of death, thanks to the federal stepped-up basis. Selling soon after inheriting at roughly date-of-death value usually means little or no capital gains tax.