What is Probate?
Probate is the legal process where beneficiaries legally obtain property promised to them in a will and pay off debts of the estate. If no will is present, then the probate process assigns legal ownership to a close relative of the deceased through a law called the “state intestacy law.”
In many states, going through the process to probate a will is the only option to legally become the owner of a home. Keep in mind that every state has a different probate law, even though many have adopted the “Uniform Probate Code.” You can find your state’s probate policies by looking at this list of the probate laws in every state.
If you need to sell a house that’s in probate and it’s not required to be sold within probate court, you’ll need to first finish the entire probate process before listing or selling the home. You can, however, speak with a real estate agent to get an accurate idea of the home’s worth. The agent will also be able to go over any changes or upgrades you’ll need to make to the property so that you can get a head start before it’s time to put the home on the market.
If the home does not have to be sold in probate court, you need to wait to list until you have power of attorney, which the court will give you. We’ll go into detail about whether or not the house needs to be sold in probate court or not below.
What is Involved in the Probate Process?
Before the property gets legally transferred to you, you’ll need to go through the entire probate process. The will of the deceased will list an executor; this is the person in charge of putting the estate through probate. If the deceased left a will, that is called “testate.”
If there was no will, then a judge will pick an immediate family member to be the executor of the estate. This is called “intestate.” Usually intestate properties are the homes that have to be sold in probate court.
Generally, probate will go something like this:
1. Find and Begin Working With a Probate Attorney
Contact a probate lawyer who will help you and represent you as the will goes through probate. Your probate attorney is your best ally because he will become an integral part of the probate process.
Your attorney will do things such as: file documents with the court, help collect any money obtained from life insurance, problem solve on income tax issues, and more. He will also be your general advisor throughout the entire probate process.
2. File a Petition to Start the Probate Process
You’ll then file a petition with the local court office to get the ball rolling. The court office must be local to where the deceased lived. Keep this in mind if you’re out of the state or you live in a different city; you’ll need to look into state laws to confirm that you can lead the process.
You’ll also need to let all heirs and beneficiaries listed in the will know that you’re petitioning to begin probate. You’ll provide them the court date of your probate hearing so that they can present objections, if any.
FYI: Probate hearings are public record, and your hearing date will most likely be listed in the local newspaper. This is to provide notice to anyone who the deceased owes money to you are unaware of, and it allows them to step forward.
3. Take Inventory of the Estate
You will have to go through the estate and take inventory of the estate. This means gathering all important documents. That may include:
- Estate planning documents (Will, burial and funeral arrangements, living will, power of attorney, advance medical directive)
- Assets (Stocks, bonds, other properties, cars, deeds, life insurance, bank statements, etc.)
The inventory and documents required to collect inventory will vary from state to state. Check your state laws and check in with your probate attorney to make sure you collect all proper documentation and that you report it correctly.
4. Notify Known Creditors & Pay Legitimate Claims
Then, once you’ve taken inventory of the estate, you’ll need to notify those who the deceased owes money to. This is known as “notifying known creditors.”
Once you have identified legitimate creditors (such as credit card companies), you will pay out their claims with money from the estate.
You’ll also use the estate to pay other debts such as personal loans.
5. Manage Income Tax Returns
You’ll also need to file income tax returns for the deceased. This includes paying any inheritance taxes due.
6. Assets Are Legally Transferred to Beneficiaries
After all bills and creditors are paid, you’ll petition the court to legally transfer all assets to beneficiaries of the estate.
How Long Does Probate Take?
The length of probate depends on the estate and the will you have to prove. The presence of a will can make probate a shorter and easier process because everything has already been planned and assets have been assigned to beneficiaries.
How long probate takes also depends on state laws. In some states, if you’re dealing with a small estate the probate process can take as little as 6 months. In other states, probate is a lengthy process that can take up to two years.
Check your state laws to make sure you file for probate in time. In some locations, like Texas, you must file within 4 years of the date of passing.
Can You Avoid the Probate Process?
In some states, it’s possible to avoid probate if the deceased has put all assets into a revocable living trust. This trust must be established while the person is alive, and the estate will not have to go through probate after death.
The other positive associated with a revocable living trust is that you won’t have to worry about selling the house through probate court. This means that you’ll be able to avoid the legal fees that come with selling in probate court. You’ll also have a much more flexible timeline.
Intestate Probate Real Estate Sales
What is an intestate probate sale?
If the estate is intestate or does not have a will, usually that estate will have to go through the formal probate process. This means that the court controls the entire sale and bidding process for the home.
What happens in an intestate probate home sale?
Every state has different rules, regulations, and practices for intestate probate sales, but generally they follow the same steps. Basically, the executor gets a house inspection done and then will need to find a top real estate agent to work with. The attorney may make suggestions of agents to work with, but it’s up to the executor to pick a skilled agent who will list, market, show, and ultimately sell the home.
Sometimes real estate agents will have Certified Probate Real Estate Specialist (CPRES) certification, which is helpful because they’ll be much more knowledgeable about court regulated probate home sales. Look for this certification on an agent’s profile or ask your probate attorney to hire a real estate agent with this certification for a more experienced probate agent.
After the real estate agent lists the home, he’ll market the home. Some states require that the home is listed in the newspaper; check in with your realtor and probate attorney for a full list of the required places the home must be listed as for sale.
Timelines for the sale process vary by state as well. Some areas, like California, mandate the home be sold within a certain number of days. Once you get and accept an offer on the home, there will be a waiting period of about one month to a month and a half. This waiting period is the time it takes for your attorney to secure a court date to finalize the sale. Check your local state laws to confirm a more exact timeline for intestate probate sales.
Some states have a complex bidding process for probate homes. Once you accept an offer, other buyers can step forward and outbid the current buyer. It depends on the state, but some “overbidding” laws are very specific. The most commonly known overbidding law is in California: buyers must offer an additional $1,000 plus 5% of the proposed sale price, minus $10,000. Other states have simpler rules, and demand these bidders raise their offer by $5,000. Keep in mind that some states also advertise the primary offer as higher than it actually is, as to drum up a higher sale price for the home.
Waiting periods and finalization procedures vary by state, but know that even after an offer is finalized and accepted by the court, it may be at least a month before the home is legally sold.
This process can be confusing and complicated, which is why it is so important to work with a real estate agent with probate experience. A CPRES agent will know exactly how the process works in your state and will guide you through until the home sells.
Testate Probate Real Estate Sales
In some states, if a will is present, then you can petition the court to sell the home yourself, outside of probate court. In California, this is called an “informal” probate process because it isn’t highly court regulated like an intestate sale is.
In fact, selling a probate property without court involvement is often easier and less expensive because you won’t have to pay court fees, you can go through a traditional home sale process, and you’ll have much more control over everything.
The ability to close the probate process and sell the home without court intervention depends on your state laws, so you’ll need to check in with your probate attorney.
When In Doubt, Ask the Experts for Help
Probate can be a long and draining process, even if you’re not selling the property. It’s confusing and laws are very particular, and they vary from state to state. The best help you can give yourself is to research and find top professionals to guide you through the entire process.
That means researching statistics and finding a top local probate attorney and top local real estate agent with probate experience to help you.
This article is not a source of legal advice. Please consult a legal professional for legal assistance.