If you have recently lost a loved one, you may have to deal with the probate process.
Probate is a legal process of determining whether or not a will made by a deceased person is valid. If the deceased person has made a will, the court will appoint an executor. And the approval by the court will provide legal rights to the executor to act on behalf of the deceased person.
Else, the court will appoint an administrator to look after the process of probate. The administrator will try to locate the legal heirs of the deceased person. And the probate court will finalize the assets to be distributed among the legal heirs and how to transfer them.
Well, it might seem quite easy for you. But trust me, the actual process of probating is not that easy and takes time too. In most cases, it takes more than a year to complete the entire probate process.
Besides, different states have different probate laws. And every state specifies whether or not probate is necessary after the death of a testator (the person who has made a will). For example, the probate law in California states that if the total assets at the time of death doesn’t exceed $100,000, probate is not necessary.
If probate is required, the executor has to initiate the process as he/she is responsible for locating and supervising the assets of the deceased person.
By the way, are you the executor in your loved one’s will?
You might be bereaved due to the loss of a closed one. And at this moment, handling all these responsibilities being an executor might be a cumbersome task.
You can handle the situation in a better way if you can work with a person who has hands-on experience with probate laws. And there lies the importance of a probate attorney!
A probate attorney is a state-licensed legal representative who gives legal advice regarding the estate administration. They can help you with:
Family disputes may occur among the heirs of the deceased person. And being an executor, it’s your responsibility to answer their questions.
It might happen that the spouse or a close family member of the deceased person is claiming properties or assets. They might want to be a part of the probate process. As you are the executor of the will, people may accuse you of mishandling the estate.
All these things together will lead to severe conflict and confusion among the family members when they are already in utter grief.
But hiring a probate attorney can help you to get rid of family conflicts as he/she can clear any confusion among the family members. And thereby, the probate process can become smoother.
If family members don’t agree with the probate process, they can file a lawsuit. And eventually, it can delay the probate process that can hurt both financially and emotionally.
However, a probate attorney can make all the family members understand the will of the deceased person and how the probate works. So, there are very low chances of any family member disagreeing with the probate process and filing a lawsuit.
As an executor, you may have to do a lot of court filings which is an integral part of the probate process. If you commit any mistakes in court filings, it can lead to rejection of the same.
A probate attorney can help you to file the documents correctly so that there is no unnecessary delay in the probate process. And you can seek information on some of the finer technical details of the probate process too.
The deceased person might have left some debts to pay off. Being the executor, you will have to take care of these financial responsibilities. And you will have to deal with the creditors too for paying off the debts. A probate attorney can help you to deal with the debts properly so that you don’t end up overpaying the creditors.
In a will, a person designates an executor who will take care of the assets and do the necessary distributions upon his/her demise.
If a probate is required, you will have to file a petition to be appointed as an executor. For that, you will have to submit the deceased person’s last will and a testament to the probate court for approval. Usually, the court approves the executor mentioned in the will unless the beneficiaries object.
The court will let you know through a hearing that whether or not the will is valid and can be subjected to probate. If it’s valid, the judge will issue a “letters testamentary” or “letters of administration” to act on behalf of the estate.
You will have to notify the Social Security Administration, credit card companies, banks about the death of the concerned person.
You can furnish “letters of testamentary” or “letters of administration” to the insurance companies or any other financial institutions to prove that you have the legal authority to act on behalf of the estate.
You will have to find out the value of the asset by considering the date of the death or the alternate valuation date, as specified by the Internal Revenue Code.
Being an executor, you will have to pay taxes and debts owed by the deceased person. Usually, creditors have almost a year from the date of the demise of the borrower to claim for the money owed to them.
In 2020, estates with a value of more than about $11.58 million are subject to an estate tax. You may have to prepare and file estate income tax returns if any of the assets earn income during the probate process.
After all these things are done, you will have to submit an accounting to the court citing the transactions that have been done on behalf of the estate. If the accounting is approved, the judge will grant you the authority to distribute the remaining assets among the beneficiaries according to the will of the deceased person.
Well, the sale of the home needs to be done before the probate is closed. You will have to contact the homeowner’s insurance company to inform them that the home is no longer owner-occupied.
And make sure to inform that all the beneficiaries mentioned in the will are informed about the sale of the home.
Usually, probate properties are sold when there is a dearth of cash to pay off debts of the deceased person. After paying off debts, the remaining sale proceeds will be distributed among the heirs.
To sell the home, make sure that all the beneficiaries are informed and they all agree with it. So, when you receive the letter of testamentary, you can seek permission from the court to sell the home while it’s in probate.
You should know that probate sales usually receive a fewer number of offers than regular sales. The reason being the considerable amount taken by the probate process. Besides, you need to know the probate laws of your state. So, things could be easier if you can hire a probate lawyer to seek legal advice about selling the probate property.
The main steps involved while selling a home as the executor are:
You can hire a real estate agent to assess the property and suggest modifications that will help to increase the value of the home. Besides, an agent can help you to deal with the tenants staying in that home with a lease agreement.
Since the probate and regular sale is different, make sure that the agent has experience in probate assets.
Once you place the property up for sale, you will receive offers from buyers. Buying a home in probate can be a lucrative option for buyers as these properties are usually sold at a lower price.
But remember, you should inform the interested buyers that the acceptance of the offer is contingent upon the court.
Once the contract is signed, you will have to furnish the details of the buyer’s offer to the court for approval to close on the sale. Once the court approves the sale, you will have to sign the executor’s deed and close on the sale.
The proceeds from the sale of the home will go towards paying off the debts of the decedent. The remaining proceeds will be deposited into the estate’s bank account. After that, it will be distributed among the beneficiaries.
Being an executor, if you sell the home of the deceased person within 1 year of his/her demise, the proceeds will be held by the underwriter. However, you can use the proceeds to cover any personal expenses of the deceased.
If you want the proceeds before the span of 1 year, you will have to pay a fee of 2% of the sale proceeds.
Of course, it’s legal for the executor to sell the property to themselves. However, you should buy the property at the fair market value and all other beneficiaries should agree with it.
Being the executor, you have to list the property for sale in the fair market value. Because selling the property at a value below the fair market value can lead to the removal of the executor. And it can temporarily stall the real estate transaction as well. So, you can take the help of a real estate appraiser to find out the value of the home.
After that, you have to submit a written offer to the court and inform them that all the beneficiaries agree with the sale. Then you can sign the purchase contract and make the necessary payments to complete the transaction. Eventually, the home will be transferred to your name.
If you are the sole beneficiary, you may have to go through the probate process to change the ownership. However, if the decedent has set up a transfer-on-death (TOD) deed, then probate is not required. You just need to submit a copy of the death certificate to the court for an easy transfer of the home in your name.
So, if you are planning to sell the property to yourself, I would suggest you consult with a real estate agent who has experience in probate and a probate attorney who can guide you through the process by complying with the laws in your state.
As the executor, you are a fiduciary. You must maintain the trust of the beneficiaries and look after the probate process so that the distribution of assets is done smoothly.
If you feel that a beneficiary is halting the deal without any proper reasons, you can file a petition in the court.
In this situation, a good probate attorney plays an important role. He/she can make unreasonable beneficiaries to understand the working process.
In real estate deals, an arm's length transaction is required to ensure that the deal is at the fair market value. It is a transaction that takes place between 2 completely unrelated parties.
If the two strangers are involved in the transaction of a property, it is likely to be sold at fair market value. Because both the buyer and seller will try to bargain and come down with a negotiated amount. It prevents the family members and business partners from making any special deals or invoking any special terms and conditions.
Without an arm’s length transaction, you may have to pay extra taxes as the watchdog IRS (Internal Revenue Services) keeps a tab on whether or not homes are sold at fair market values.
As you can see, being the executor of someone's will is an honor. But at the same time, you might feel exhausted in managing the estate of the deceased person. You will have to take care of the distribution of the assets to the beneficiaries and paying off debts and taxes. The executor has to decide whether the estate will go through a probate or streamlined probate process for small estates.
During this time, a helping hand who is experienced with probate processes and state laws is necessary. And that’s a probate attorney. He/she can guide you through the entire process of probate so that you can do your fiduciary duty with honesty, impartiality, and diligence.
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