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Property Issues

What happens when the person who dies owned land in multiple states?

In most cases, the laws of the decedent’s state of permanent residence will be used to solve probate issues, including issues involving the decedent’s property, no matter where it was located.

 

However, in the case of out-of-state real estate, the laws of the other state may be used to determine who inherits the real estate if there was 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 as well. 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 which can complicate matters.

 

When there is no will, probate is typically necessary in every state in which real property is located along with the decedent’s state of primary residence.

Is it necessary for all of the decedent’s property to go through probate?

No, but there must be a legal method used to transfer ownership and title of property to heirs and beneficiaries. In most states, some types of property can pass to certain beneficiaries outside of probate or with a simplified probate procedure.

For example, real estate can pass to a surviving co-owner, usually a spouse, with joint tenancy with right of survivorship.

Life insurance policies with a named beneficiary pass outside of probate. 401(k)s, IRAs, and other retirement accounts can be transferred to a named beneficiary or heir outside of probate automatically.

Bank accounts may be set up with a payable on death designation to pass directly to named beneficiaries.

Another option to bypass probate is a living trust which is a separate legal entity that holds title to property. Assets held by a living trust automatically pass to heirs or beneficiaries without going through probate.

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 is 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 be done with oversight and approval of the probate court. In other states, the home can be sold 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 likely was not living in the home. There may also be additional clauses involved in a probate sale such as a requirement that the buyer wait for probate court confirmation. if there is no will or it is contested.

When can probate real estate be sold?

Real estate can only be sold 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 was a will, the executor has more limited power to sell real estate. In most states, it depends on whether the will left the property to a beneficiary. If the will left the 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 consent of the beneficiaries if the will does not disallow the sale or specify who should receive the home.

Note: before real estate can be sold or even listed, the executor must be officially appointed by the probate court.

How does real estate ownership affect probate?

There are many ways to hold title to real estate, depending on the state. Real estate can avoid probate completely 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 right of survivorship.

There are several things that can happen to a home if it needs to go through probate:

  • The real estate can be transferred 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 right type of ownership, the home can bypass probate completely and go directly to beneficiaries.

What is the process for an executor to sell 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 be helpful in navigating 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, the home must be sold within a certain number of days.

When there is no will or it’s 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 who is experienced with probate sales.

 

Probate

Contested Wills


Definition and Duties of the Personal Representative/

Executor


General Probate Questions


Payments and Taxes


Probate Cash Advance


Probate Terminology


Property Issues


Provisions For Children & Survivors


Questions About Wills


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