How to Sell a House During Real Estate Probate Process Ultimate Guide
How to Sell a House During Real Estate Probate Process Ultimate Guide for inherited home with siblings! We property as-is condition and leave unwanted parent stuff check us out Here. Probate is the term given to the legal process of proving the last will and testament of a deceased. It is the process of verifying the legality of the will, and making sure that the intentions of the deceased are properly carried out.
A probate process also happens even when there is no last will and testament left by the deceased. Instead, a probate court will determine how to divide the assets of the estate to the beneficiaries, as mandated in the “state of intestacy law”.
In most states, the probate process is the only legal option for one to become the owner of a home of the deceased. For every state, there is a different probate law, though more states have been using the “Uniform Probate Code”.
If you intend to sell a house that’s still in probate, and selling doesn’t need to be within the probate court, you will have wait for the whole probate process to be completed first before putting the property on a listing. However, it is not prohibited by law that you consult with a real estate agent to ask for assessment on how much you can sell it for. The agent will also be able to give tips on possible upgrades to make the property more “sellable”.
If the house doesn’t need to be sold within a probate court, you’ll have to get a power of attorney first from the court before you can put it out in the market.
The Probate Process of Selling a House
The process of selling a house through probate will take a series of court-related steps that should be monitored and carefully managed. You’ll need to meet deadlines, documentations, and the court’s oversight should be honored throughout the whole process of marketing, offers, and the sale of the property.
The sale will involve several players, including the personnel of the court, the Executor (Administrator) of the estate, the lawyer representing the estate, the real estate agent representing the estate (seller), buyer(s) who will place their bids via the court, and the buyers’ real estate agents.
Here is the step-by-step process of a typical transaction:
- Start working with a probate lawyer
The probate lawyer will help and represent you throughout the probate process. They will be your best ally. They will be doing much of the work including:
File documents with the court
Collect any money from life insurance
Take care of income tax issues
Act as general advisor throughout the process
- File a petition for the probate process to begin
A petition should first be filed with the local court for the probate process to start. It should be filed within the area where the deceased was a resident of. In case you live in another city or state, check with state laws to verify if you can lead the probate process.
It is also important to inform all the heirs and beneficiaries that you will be filing a petition for the probate process to begin. You should provide them with the schedule of the probate hearing if they need to present any objections to the selling of the property.
Take note that the probate hearings are public record. The date of the hearing will likely be posted in the local newspaper. This will allow the people with whom the deceased had debts that the estate didn’t know about. These people can step forward to join the process.
- Perform an inventory of the estate
You’ll need to go through the process of gathering important documents pertaining to the estate, including:
Estate planning documents – the will and testament, living will, burial and funeral arrangements, power of attorney, advance medical directive
Assets – bonds, stocks, cars, other properties, deeds, bank statements, life insurance, etc.
Debts
Documents may vary from one state to another. You should check with the state laws in your area and work with the probate lawyer to make sure that you acquire all important documentations and report it accordingly.
- Inform identified creditors and pay all legitimate claims (notifying known creditors)
Once you have completed the inventory of the estate, notify the people whom the deceased owes money to.
The moment all legitimate creditors are identified (like credit card companies), you will have to pay out the claims of these companies with the money you can get from the estate.
It is also important to make sure that other debts, like personal loans, are settled.
- Manage the income tax returns of the deceased
You’ll need to file the income tax returns and also pay off any inheritance taxes and estate tax due (if applicable).
- Legally transfer assets to beneficiaries
Once the bills and the creditors have been paid, file a petition with the court for transfer of all the assets to the beneficiaries named by the deceased. The remaining assets after all the creditors, taxes, liabilities, and other expenses have been paid off are referred to as the “residue of the estate”. These should be divided equally.
How long does the probate process take?
The duration of the probate process will depend on the estate and the will. Having a will allows for a shorter and easier process since everything have already been put on paper. The assets should be divided among all the beneficiaries.
The length of the process will also depend on state laws. There are states wherein a small estate may take up to six months to be completed. In other states, the process can be a long process, which can last up to two years.
Make sure you are informed of the state laws, so that you can file your probate petition on time. For instance, in Texas alone, there are places where you must file within four years of the date of death.
Can this long process be avoided?
In some states, there won’t be a need to undertake the process if the deceased placed all their assets to a “revocable living trust”. The trust should be established while they are still alive so their estate doesn’t need to go through the process after death.
With the revocable living trust, you don’t need to go through the probate process when you decide to sell a property. This means you get to avoid the legal fees that come with selling under probate court. This also allows you to have a lot of time to process everything.
The Probate Court
This is the court where you will have to present the last will and testament of the deceased. The judge will assess and verify before making a decision. On the other hand, if no will exists, the judge will consider the deceased intestate. The judge will be the one to choose an administrator who will manage the estate.
If there is someone in the family who would want to contest the probate process, they will have to file a petition with the probate court. All the contentions will have to be adjudicated in the probate court. The probate court is no way near what you see in pop culture.
Many countries have their own court that is dedicated to handle the probate, guardianships, and other matters.
The probate court is also called the superior court, orphan’s court, or the surrogate’s court, depending on the state it is located. The state should maintain a government website for the people to get information on the name of their local probate court and its address.
How much does the process cost?
The cost is between 2 to 7% of the whole estate value (source: LegalMatch). Having a will is important because the estate wouldn’t have to spend much on the costs of the probate process, including filing fees, and attorney’s fees.
If you filed a petition for probate, expect to pay some differential costs and fees.
Attorney fees – there are states that disallow lawyers to collect fees until the probate process is completed. Some states allow lawyers to claim a percentage of the total estate value for their attorney fees. However, there are lawyers who charge by the hour.
Probate bond – also referred to as estate bonds or surety bonds. Probate bonds help protect the estate of the deceased from possible incompetent or malicious actions, like fraud or theft. The administrator will pay a small fee, often the percentage of the total estate value. This is refundable after the probate process is completed.
There are states that require the administrator to post the bond, however, it may be waived when the need arises.
Creditor notice fees – the state could require the executor to post a notice for creditors in the local newspaper to announce the death for the creditors to stake a claim for the money that the deceased owed them. They will have to file for a petition in court.
When in doubt, always ask the experts for professional help. The probate can be a long process, even if you don’t intend to sell the house. Probate laws vary from state to state, hence you’ll need all the help you can get to better understand the process. The best you can do is make your own research and consult with professionals to guide you through.
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