What is probate? What Is the Purpose of Probate? How does it pertain to real estate? What if there is no will in place? How long will this have to be scrutinized and processed? There is an abundance of questions that circle this small word.
Probate is the judicial process by which a decedent’s estate is valued, beneficiaries are determined, an executor in charge of estate distribution is declared, and the estate is legally transferred to the determined beneficiaries. An estate can be brought to the Probate Court in 4 ways.
- The decedent has a will distributing property to beneficiaries without the use of a valid and properly funded trust.
- The decedent passed intestate (without a will).
- A Trust is being challenged as to validity, capacity, fraud, or undue influence.
- A Trust is unfunded, and property remains outside of the Trust’s intended protection from the probate process.
The Probate Process can be long and arduous, typically taking anywhere from 10 months to 18 months for an uncontested Probate Proceeding.
The Probate Court certifies the executor designated in the decedent’s estate plan or appoints another third-party administrator under certain circumstances. A valuation is conducted of the decedent’s entire estate. The beneficiaries are both determined and contacted. Creditors are notified of their last opportunity to seek unpaid bills. The property is distributed to the beneficiaries. Lastly, the Executor is discharged from his/her duties. There is a case to be made to facilitate probate by oneself, if you’re an executor you can apply for probate yourself or use a solicitor or another person licensed to provide probate services. If there’s no will you can apply for letters of administration.
To avoid probate, homeowners can put all their assets into a revocable living trust. This is a written document (signed and notarized) that determines who will receive the property when a homeowner dies. In order to do this, a homeowner must create a trust document and then transfer any assets into said trust. It is not required to make a trust if you own property or other valuable assets, though it can be helpful down the road. While it may seem melancholy, it is not uncommon for individuals to create a living trust (or will) to prepare for the future. You do not need a lawyer to create a trust, though legal help can be invaluable as you navigate the process. When done correctly, a revocable living trust can help homeowners (or more specifically their trustees) avoid probate court after death.
What Happens After an Estate Has Been Probated? … During the probate process, real property owned by the deceased is retitled to his beneficiaries or heirs. To open probate and begin the process, an interested party, typically a beneficiary or heir, must file a petition with the state court that handles probate.
Now let’s look at how it pertains to real estate…
Real estate probate is the legal process following a homeowner’s death, where the property either transfers ownership to someone or is sold. It is another way of describing the proceedings by which a decedent’s will is processed in court — a special court, nonetheless. In the case of real estate, it refers to the previous owner’s respective home.
According to BB&T, “An executor of the estate is named to handle the decedent’s affairs and administer the estate throughout the probate process. Assets that are distributed under a will (or all assets in the absence of a will or other ownership forms) go through this process and are subject to probate.” In other words, probate often refers to the administering of a deceased person’s will. Often, said administering will include a home.
But why would investors be interested in probate properties, especially when they aren’t even on the will of the deceased? You see, not everyone wants to inherit a property from a deceased relative. The recipient may not be able to afford the costs that coincide with the property, and are, therefore, more likely willing to part ways sooner rather than later; that’s where investors come in. Investors can help purchase the property quickly to minimize the costs involved in holding the property: taxes, insurance, utility costs, etc. They help resolve the overwhelming task of cleaning out and getting a home ready for sale by purchasing it quickly, as-is.