How to split up the willed family home
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What often follows when heirs reach an impasse is a partition action, whereby heirs who want to sell the home file suit to force its sale against the wishes of those who want to keep it. Says Neuzil, "That's one of the meanest, most gut-wrenching, tear-shedding actions of all."

Shortcuts, good and bad
Settling an estate when the family homestead is involved can take a minimum of six to nine months even if all parties are in agreement, and longer if they aren't. Neuzil just closed an estate that began more than three years ago.

To streamline inheritance of the family home, several states recently adopted what is called a transfer on death deed that, in essence, enables the homeowner to provide for the transfer of ownership so heirs can avoid the probate process. Better still, it's revocable as long as you live.

In addition, the beneficiary of a transfer on death deed -- also called a beneficiary deed -- receives a step-up in cost basis to the fair market value of the property on the date of death, which is how inherited property normally transfers. For example, let's say that Ed inherits Dad's house. When Ed eventually sells the home, for the purpose of calculating capital gains taxes, his cost would be equivalent to the home's value at the time of his dad's death.

One tempting alternative to the probate battle is having the parent simply deed the parental home to an heir while he or she is still able.

"That's a bad idea," Randolph says. "For one, what if you change your mind? It's been known to happen. Families have falling-outs.

"No. 2, gift taxes. It's certainly going to be more than the $12,000 annual exclusion for the gift tax, which means you'll have to file a gift tax return. And what if the kid you give it to gets divorced or goes bankrupt? The fact is, you could lose the home."

You also have to consider the tax implications. The child to whom the property is gifted before the parent passes away generally doesn't get the advantage of a full step-up in cost basis. That could mean a larger tax bill if the child eventually sells the house.

So what should you and your remaining parent do if you want to keep the home in the family and avoid probate? The prudent course is to use a living trust or a transfer on death deed if it's available in your state.