Probate Terminology
1. What happens when the person who dies owns Real Estate or Lands in multiple states and how do you discover them?
In most cases, they will apply the decedent’s state of permanent residence laws to solve probate issues involving the decedent’s property, irrespective of its location.
However, out-of-state real estate may use the other state’s laws to determine who inherits the real estate if there is no will. When a Will exists and is submitted to the decedent’s state of residence, it must usually be submitted to the state and county with jurisdiction over the real estate. This is called ancillary probate, as two probates will occur together in separate states. In some states, a personal representative must be appointed who is a resident of the ancillary state.
Probate is typically necessary for every state where the real property is located and the decedent’s state of a primary residence when there is no will. Some investors invest in multiple states. How do you discover their assets once they are gone? Once I list the property, I help my clients go thru the process to find those out-of-state properties and other financial assets. See more details by requesting a trifold.
2. Is it necessary for all decedents’ property to go through probate?
No, but there must be a legal method to transfer ownership and title of the property to heirs and beneficiaries. Some property types can pass to certain beneficiaries outside of probate or with a simplified probate procedure in most states.
For example, real estate can pass to a surviving co-owner, usually a spouse, with joint tenancy with the right of survivorship.
Life insurance policies with a named beneficiary pass outside of probate. Likewise, 401(k)s, IRAs, and other retirement accounts can automatically be transferred to a designated beneficiary or heir outside of probate.
May set up the bank accounts with a payable on death designation to pass directly to named beneficiaries.
Another option to bypass probate is a living trust, a separate legal entity that holds title to the property. Assets held by a living trust automatically pass to heirs or beneficiaries without probate.
3. Is selling a home in a probate sale different than a traditional real estate transaction?
Yes and no. It depends on the state, whether there are a Will, and provisions in the will. In some states, the home can only be sold by the executor if necessary to pay valid debts of the estate, and it must do it with the oversight and approval of the probate court. In other states, can sell the home as long as the will grants authority to the personal representative or as long as all heirs agree, regardless of the estate’s debts. The process can take longer than a traditional real estate sale, and disclosures are usually very different, as the executor was not living in the home. There may also involve additional clauses in a probate sale, requiring that the buyer waits for probate court confirmation. If there is no will, or it is contested.
4. When can probate real estate be sold?
Can only sell real estate during probate in specific cases. If there is no will, the court-appointed administrator may choose to sell the home and distribute the cash to heirs, especially if there are multiple heirs. There may be compelling reasons to stop this sale by an administrator, such as one sibling buying out the others to keep the home.
If there were a will, the executor would have more limited power to sell real estate. It depends on whether the choice left the property to a beneficiary in most states. If the will is left home to multiple beneficiaries, the executor can sell the home and distribute the proceeds equally among the beneficiaries.
An executor can usually sell the home without the beneficiaries’ consent if the will does not reject the sale or specify who should receive the house.
Note: before the real estate can be sold or even listed, the executor must be officially appointed by the probate court.
5. How does real estate ownership affect probate?
There are many ways to hold title to real estate, depending on the state. For example, real estate can avoid probate entirely if it’s passed to survivors automatically with ownership options like a living trust, community property laws, a transfer-on-death deed, or joint ownership with the right of survivorship.
Several things can happen to a home if it needs to go through probate:
- Can transfer the real estate to beneficiaries named in the will through probate.
- The property can be transferred to heirs through intestate probate without a will.
- The executor can sell the property through probate.
With the correct type of ownership, the home can bypass probate entirely and go directly to beneficiaries.
6. What is the process for an executor to sell a property?
First, an executor must be officially appointed by the probate court. From there, the process is typical of a real estate sale. The executor will usually have a home inspection done and hire a real estate agent. Some agents have a Certified Probate Real Estate Specialist.
Certification, which can help navigate a court-regulated probate sale. In some states, the home must be listed in the newspaper.
Some states also have other specific rules governing probate sales. In California, for example, they must sell the home within a certain number of days.
When there is no will or contested, once an offer is received and accepted, there will be a waiting period to get a court date to finalize the sale. Some states even require complicated bidding on probate homes.
Because selling a home in probate as an executor can be difficult with complex probate laws to follow, it’s usually advisable to work with a Certified Probate Real Estate Specialist experienced with probate sales. I am a trained, certified, and experienced Realtor; contact me and help you solve your challenges.