If you need to sell a house in probate this article is for you. Selling a house in probate can seem daunting. Besides the emotional burden attached to the passing of a loved one, inheriting an estate from them comes with several challenges that you are called to deal with, including matters associated with real estate. And, the need for probate (so you can sell the deceased person’s house) makes the entire process even more complicated.
Unfortunately, unlike what many people think, having a will does not mean that you have the right to sell the asset without probate. It is paramount to know how to remain within legal bounds so you avoid the risk of stepping into grey areas that could put you in trouble. You see, there are serious legal consequences tied to selling a propertyx| without probate when you are not authorized to do so. For instance, other beneficiaries may file a lawsuit against you. You may even face criminal charges.
To help you, we have created this guide to ensure you are properly informed in regard to selling a house in probate.
What Is Probate?
A probate is a legal process you need to go through if you wish to legally obtain property that has been promised to you in a will. In this case, expect to be responsible for repaying any debts that are tied to the estate. If there is no will at hand, the state intestacy law dictates that the probate procedure involves assigning legal ownership to the person that is a close relative of the deceased.
Bear in mind that, in many states, there is no other way to become the legal owner of an asset than going through the process of probate. However, although most states seem to have adopted the Uniform Probate Code, each state has its own probate law, so it is best to check the existing policies in your state (here is a list of the probate laws per state for your reference).
What Is Involved in the Probate Process?
Going through the entire probate process is a necessity, so the property can be legally transferred to you. The executor of the deceased will (aka testate) is in charge of putting the property via probate. In the case of no will, a judge is responsible for assigning a close relative (usually an immediate family member) as estate executor (aka intestate property).
In general, a probate procedure goes like this:
- You start working with a probate attorney – They will represent you and help you out with the paperwork (and not only) involved as the will goes through probate. Besides filing documents for the court, the selected probate attorney will also perform several other tasks, including solving problems related to tax issues, collecting any life insurance money, and more.
- File a petition – This initiates the actual probate process. When you file a petition with the local court office (local to where the deceased lived, not your location), you will also need to notify any beneficiaries and heirs listed in the will that you intend to start probate. It is their legal right to present objections (if any) so do provide them with the court date of your hearing. For your information, though, when you file a petition, the probate hearing date is probably listed in the local newspaper (probate hearings are public records). This gives the individuals that the deceased owes money to (and you have no idea as to who they are) to step forward and claim their money. If you live in a different state or city than the deceased, make sure you check out the state laws. On some rare occasions, you might not be able to lead the probate process.
- Take inventory of the property – This involves collecting all needed documents, such as assets (i.e., bank statements, life insurance, deeds, cars, bonds, stocks, other properties, etc.), estate planning documents (i.e., advance medical directive, power of attorney, living will, funeral and burial arrangements, and will), and any debt. Again, the requirements related to the necessary documents and the inventory you must gather vary per state.
- Pay legitimate claims – This involves a process called notifying known creditors, which means that you identify legitimate creditors (i.e., credit card companies), meaning those who the deceased owes money to, and pay out their claims. This is usually done by using cash/funds from the property. The same applies to when repaying personal loans and other debts.
- Manage income tax returns – This step calls you to pay inheritance taxes due (if any) and also file income tax returns for the deceased.
- Transfer assets to estate beneficiaries – You petition the court to transfer all assets to the estate beneficiaries. This, of course, can take place after you pay all creditors and bills.
How Long Does Probate Take?
There is no definite and straightforward answer to this because it all depends on how much time you will need to prove the will, any estate particularities, and, of course, the state laws. Usually, if there is a will, the entire process is easier and faster as the assets have already been assigned to beneficiaries, and everything has been planned down to the last detail. Note that some state laws make it quite challenging for you to get it over with fast, and you may be caught in bureaucracy for up to 48 months. In Texas, for example, you need to file for probate within four years of the passing date. Nevertheless, in most states, the process takes as little as 6 months, especially for small estates.
Below is a probate process timeline chart with the stages of the probate process for your convenience (taken from Inheritance Funding).
Avoiding the Probate Procedure
If the deceased has passed all assets into a revocable living trust (provided the trust has been established while the individual is alive), then chances are you can avoid probate in some states. In this circumstance, you gain another benefit as you save yourself the headache of selling the property via probate court (so, no worries about paying the legal fees relates to selling in probate court). Plus, your probate process timeline is far more flexible than in any other case.
You can also legally sell the estate out of probate if:
- The property has been passed into your care through a transfer-on-death deed.
- The asset has been passed into your care via joint tenancy with a survivorship right.
- You are a surviving spouse living in New Mexico, Nevada, Louisiana, Idaho, California, Arizona, Wisconsin, or Washington.
Note: For other relatives of the decedent (i.e., a child) in a community property state, the court will probably sort out the will. If you find yourself in this situation, it is recommended to speak to a real estate expert with probate experience for guidance.
Selling a House During Probation
Selling a house during probate is, in many cases, an obligation of executors. Such is particularly common when the liabilities cannot be covered via the available assets. The process involved calls for the executor(s) to track down creditors and start negotiating a way to pay them off. As soon as the debts are repaid, the beneficiaries can receive the rest of the money. This procedure is called an abatement. Now, if abatement is not required, you can still sell an estate before the completion of the probate, as long as the interested parties of the property do not contest. The probate, in this case, occurs informally and enables the executor to manage the required tasks and responsibilities (including selling the property) without court supervision being a must.
Selling a House That Does Not Have to Be Sold In Probate Court
If you want to sell a house that is in probate and you are not obliged by law to sell it within probate court, it is advised to speak with a real estate expert so you can get a precise idea of the property’s worth. This is because you will have to finish the probate process first before you can sell or list the home. The real estate expert will give you a head start before putting the property on the market by going over any required upgrades or changes that need to be made to the asset. Remember that you will also be called to have power of attorney before you can list the home (the court gives this one). All in all, although you can sell a property without probate, there are many parameters involved that need to be taken into account. In general, you can sell an estate without probate if probate is not required AT ALL.
Consult the Experts
When in doubt, it’s best to speak to an expert for help and assistance. Probate can, indeed, be a tedious and draining process, irrespective of whether you are selling the property or not. Considering the laws that are not only confusing but also vary per state, it is critical to find top professionals to receive proper guidance and walk you through the entire process. Just ensure the respected local real estate expert you contact has probate experience, so you get the best and most efficient help when selling a house in probate.