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If you’ve been tasked with the complex process of selling a home in probate, it’s natural to feel overwhelmed. Yesterday you were just a daughter, son, sister, brother, or friend. Now you’re an executor of an estate and dealing with things like petitions and going to court. That’s a lot to take on.
And although upward of 5 million homes are sold every year, only a fraction of those go through probate, a specific process with its own rules that most people have never had to navigate before. In this case, a simple Google search might only lead to more questions.
So we turned to the experts who’ve actually dealt with probate paperwork and estate property administration to find out: how do probate sales work? They helped us identify the biggest misconceptions around probate real estate and clear them up for you, the person with a day job and family to raise while juggling this challenging (yet critically important) responsibility on the side.
Myth 1: So long as an estate has a will, the property won’t have to go through probate.
Even with a will in hand, you’ll likely still need to go through the probate process if only to have the legal document validated in court so that the estate assets can be legally distributed.
“There is no requirement that a will or property go through probate, but if the decedent owned property that is not arranged specifically to avoid probate … there is no way for the beneficiaries to obtain legal ownership without it,” writes Brette Sember, a probate attorney based in New York, for LegalZoom.
In most cases, probate can only be avoided with regard to property when:
- A living trust is in place.
With a living trust, the assets of an estate are put into a separate legal entity before a person dies. Those assets, which can include property, automatically transfer to established beneficiaries without the need for court involvement.
- The house is passed on to a surviving spouse.
Through joint tenancy, if one owner of a house dies, their surviving spouse assumes their share of the property without the need for probate.
- The decedent recorded a beneficiary deed (aka “transfer on death” deed).
This special type of property deed automatically conveys property interest to the designated grantee when the current owner dies therefore bypassing probate.
While the above instances often mean probate can be sidestepped, depending on where you live and the intricacies of your case, you still might be required to go through the probate process.
Work with a probate attorney early on to get a better idea of the process for your case specifically. Even if the estate has a will, you should consult with an expert on probate law to determine next steps.
Myth 2: All probate sales are the same.
There are different levels of probate that will come into effect depending on state law as well as the size and complexity of your estate.
In some instances, after you validate the will, you can bypass the probate from there. There’s also the question of dependent vs. independent administration in the probate process.
Independent administration generally means less court oversight, while dependent administration requires that most of an executors’ decisions be approved by the court.
“I would advise my client to petition for ‘independent administration’ based on the high likelihood of success on the merits when the estate is small and not complex,” explains attorney & CEO of LegalAdvice.com, David Reischer.
Factors like there being no will or the executor operating from out of state will make it more likely that you have to go through dependent administration.
Myth 3: If you’re selling the house in probate, you can skip the appraisal.
“The first thing to do [in the probate process] is to get the property appraised by a certified appraiser approved by the probate court,” advises Reischer. And this is true whether you’re selling the house or keeping it among beneficiaries.
The immediate appraisal has less to do with your intent to sell the property, and more to do with the date of death valuation, which records the market value of each estate asset at the time that the decedent died.
“The attorneys usually need, right off the bat, the date of death valuation,” explains Laurie Davies, a top-selling real estate agent in Boca Raton, Florida, with extensive experience in selling probate properties. “They need to know, based on days after the person died, what their house or condo was worth.”
The valuation is required more for tax purposes than real estate, but it’s necessary nonetheless. Trying to bypass the initial appraisal will only stall the probate process.
In some states, the home can’t be sold for less than the death valuation. However, that doesn’t mean you can’t price the home based on comparative market analysis (CMA) and the knowledge of your agent down the line.
Myth 4: Probate sales aren’t marketed like other homes.
Marketing a probate home is similar to any regular listing, except there are some caveats, says Davies. The executor of the property can list the home traditionally, but they’ll need to include a disclaimer that the deal is contingent on the seller getting probate court approval.
As the executor of the property, you will be responsible for paying monthly fees like the mortgage, taxes, maintenance and HOA fees on the property, Davies notes. “In my experience, executors have chosen to get the property on the market so that they know that it’s at least sold. And we’re just waiting for the go-ahead from the probate attorney.”
Myth 5: Anyone can sell probate property.
In addition to hiring a good probate lawyer, you’ll want to work with a real estate agent well-versed in the sale of probate properties who knows how to work with the other professionals representing you.
“As the agent, it’s really important to have a good partnership and a good relationship with the probate attorney that’s handling it. They understand from the get-go what the steps are and the timeframes and what they can expect moving forward,” Davies says.
An experienced agent will work with you and the attorney to make sure the process goes smoothly. They’ll also be an asset during the sales process, often working to educate the buyer’s agent about the differences between probate and traditional sales.
Without an experienced team on your side, you could end up missing deadlines, filing court procedures improperly, or miseducating buyers about the sale of your property.
Myth 6: Probate properties are always discount properties.
You may have heard that probate is the place to get a great deal on real estate. But that’s not necessarily the case. In California, for example, probate law requires that a house in probate be sold for no less than 90% of its appraised value.
Moreover, “a house in probate is still going to sell at market price unless, just like any other deal, the property’s in bad condition or it was left with deferred maintenance,” says Davies.
“Of course, there are some owners that are going to need the property to move quickly. So in those cases, maybe a buyer could get a better price.”
Myth 7: The first offer on a probate sale wins.
In most states, the offer on a probate sale is subject to court confirmation, which requires a formal overbidding process.
“Most jurisdictions require that the sale be advertised with the offered price from the buyer in a local newspaper,” says Reischer. “The advertisement informs the public of the sale in order to allow for open bidding at the court hearing among other interested parties. The seller will attend the court hearing and wait for the bidding process to proceed.”
In California, for example, each subsequent bid could be 5% more than the last, plus an additional $500. Like an auction, this process can continue until the highest bidder wins. The original buyer is allowed to bid as well.
Myth 8: Probate sales and estate sales are the same thing.
Davies says one of the biggest misconceptions she sees is that people confuse probate sales with estate sales.
However, while probate sales involve the court-supervised procedures of marketing a house and formal bidding to find a buyer, an estate sale is a means toward liquidating all the belongings of an estate—like a garage sale on steroids with lots of family heirlooms, antiques, and furnishings.
Myth 9: Court oversight is somewhat of a formality.
Court-confirmed probate sales are rule-driven and any missteps can cause delays.
Los Angeles-based real estate agent and probate specialist Nancy Sanborn describes the process of selling probate real estate as follows on her website: “Deadlines are unforgiving, documentation is specialized, and the court’s oversight must be honored throughout the marketing, offers, negotiations and sale of the property.”
For this reason, even if you’re lightning fast when it comes to getting the house sale ready, and offers come pouring in quickly, a probate sale will typically take longer than a traditional sale. According to the American Bar Association, the average probate process as a whole takes between six to nine months.
The longer process is due mostly in part to the court oversight, Davies reasons. “I would say that it’s really the approvals of the court, the notifications of the court, and making sure there are no debtors [that extends the timeline].”
Depending on the caseload of the court in the property’s area, the sale could take even longer. That’s why hiring an experienced probate lawyer who knows the ins and outs of filing can make all the difference.
How probate sales work—the truth is, it’s complicated!
The myths surrounding probate may be the stuff of real estate legend, but armed with the right information and the right team (like a top agent in the area with probate experience), you can navigate each step, deadline, signature on the way to closing without any trouble.
Header Image Source: (Denis Kuvaev/ Shutterstock)
FAQs
Which of the following is a disadvantage of the probate process? ›
A big disadvantage of probate and arguably the one that affects all parties the most is the cost of it. Expenses may vary by state but you expect to have various expenses such as court and filing fees, accounting service fees and estate expenses which may also affect what is left for beneficiaries.
What is the probate process the legal process that performs the function? ›Probate is the formal legal process that gives recognition to a will and appoints the executor or personal representative who will administer the estate and distribute assets to the intended beneficiaries.
Can you sell a house while in probate in Florida? ›You might think that when a loved one passes away, you have to wait until the probate process is complete to sell their home, but you actually don't. Florida law generally allows heirs to sell a home before the rest of the probate is finished.
What are the rules for probate in NY? ›In New York state, a will only has to be submitted to probate if the decedent's remaining assets are worth $30,000 or more. Such assets do not include any property or funds that transferred via pay on death accounts, in trust for (ITF) accounts, or joint ownership, as these automatically bypass the probate process.
What are the pros and cons of probate? ›pro: The probate process provides plenty of time for heirs to adjust to the idea of their inheritance. It also provides plenty of time for challenges to be brought. Con: Your beneficiaries must wait to receive their inheritance. Your Executor must work on your estate throughout the process, completing form upon form.
Which of the following is a commonly used way to avoid probate? ›In many cases, the best way to avoid probate is to establish a transfer-on-death, or TOD, on those bank accounts, brokerage accounts or real estate. That way, assets transfer to the person listed as the TOD beneficiary.
Which is the correct order of payment from an estate? ›Typically, fees — such as fiduciary, attorney, executor, and estate taxes — are paid first, followed by burial and funeral costs. If the deceased member's family was dependent on him or her for living expenses, they will receive a “family allowance” to cover expenses. The next priority is federal taxes.
What can be done before probate is granted? ›Before being granted probate, you'll need to sign a declaration of truth - the probate registry will tell you how they want you to do this. You won't need to go anywhere to sign in person. You'll need to send some documents with the forms, including: the original will (if there is one) and three copies.
Which situation requires the use of probate law? ›If a person dies and leaves a will, then probate is required to implement the provisions of that will. However, a probate process also can happen if a person dies without a will and has property that needs to be distributed under the state intestacy law (the law of inheritance).
How long does it take to sell a house in probate in Florida? ›The formal probate administration usually takes 6-9 months under most circumstances - start to finish. This process includes appointing a personal representative (i.e., the "executor"), a 90 days creditor's period that must run, payment of creditor's claims and more.
What is the 10 day rule for probate in Florida? ›
Filing for probate – 10-day deadline
This specifies that the individual in possession of the deceased's last will and testament must file for probate within 10 days from the date of death of the deceased in the same county where the deceased died. The size of the estate to be probated does not affect these ten days.
Florida does not have an inheritance tax or estate tax, so Florida's inheritance tax rate is zero. A beneficiary of a deceased person in Florida does not owe any state taxes on inherited property.
What assets are exempt from probate in New York State? ›These "non-probate assets" include life insurance policies, IRAs, U.S. savings bonds, and jointly held bank accounts. Discounting exempted items, if the total value of your loved one's personal property is below $50,000, the good news is you can likely bypass full probate in New York.
What is the cost of probate in New York State? ›Assuming that no one is contesting the will or challenging the appointment of the executor, and assuming all of the decedent's next of kin (called distributees) can be found and will sign a waiver of process and consent to probate, you can expect to pay $3,000 - $3,500 in legal fees to have the will admitted to probate ...
Can you get around probate? ›You Can Avoid Probate If You Have A Funded Revocable Living Trust. There are two general steps to using a Revocable Living Trust as the foundational document for your estate plan: (1) Establishing the Trust; and (2) Funding the Trust.
What are the benefits of avoiding probate? ›Avoiding probate can allow you to keep the contents of your estate within the family and away from prying eyes. Since probate can be a long, stressful process, it can leave room for family disagreements and disputes.
Why do some dislike the probate process? ›Why do some dislike the probate process? Because probate is public and difficult to maintain privacy for the deceased person and his or her heirs. The court caps the amount a personal representative can earn to $25 per day. The probate process makes it difficult to execute a will efficiently.
Which of the following is not a disadvantage of probate? ›The fact that probate provides clear title to heirs and legatees is an advantage, not a disadvantage, of the process.
Which type of ownership would best avoid probate? ›Take Advantage of Joint Ownership
In addition, you can also avoid probate on property that involves joint tenancy with rights of survivorship (JWTROS). In effect, if one of the two current owners passes away, upon their death, title to the property automatically passes onto the surviving owner.
Assets that generally do not go through probate are (1) jointly owned assets that transfer to the surviving owner, (2) assets that have a valid beneficiary designation, and (3) assets that are in a trust.
What is a beneficiary on a checking account? ›
But what about checking accounts? The beneficiary for an account, of course, is the person you want to benefit from the account after you die. Beneficiaries can be named for individual retirement accounts (IRAs), mutual funds, annuities, and life insurance policies.
What debts are not forgiven at death? ›Bottom line. Federal student loans are the only debt that truly vanishes when you pass away. All other debt may be required to be repaid by a co-owner, cosigner, spouse, or your estate.
How is money distributed from an estate? ›Only certain assets are distributed according to your will: individually owned assets, your share of assets held as tenants in common, and assets for which your estate is the beneficiary. Other methods of distributing assets include other joint property ownership types and beneficiary designations.
How do beneficiaries receive their money? ›Individuals can receive inheritance money in different ways including through a trust and from a will, which can come with restrictions, or as a beneficiary on a bank or retirement account.
How do you clear a house after a death? ›- Secure the house. ...
- Find and keep important documents. ...
- Check if probate is necessary. ...
- Read and follow their Will. ...
- Stop any ongoing services. ...
- Sort out your loved one's personal belongings. ...
- Contact the rest of the family. ...
- Get a property appraisal.
(a) Upon the death of an accountholder, the FDIC will insure the deceased owner's accounts as if he or she were still alive for six months after his or her death.
Which of the following is an example of non probate property? ›In California, any form of property that is not individually owned by the deceased is considered a non-probate property by operation of California probate law. These assets are common. They can be anything from cars, belongings, life insurance policies, real property, and transfers on death accounts.
What is the average cost of probate in Florida? ›According to the Florida probate code, reasonable fees are as follows: $1,500 for an estate valued at $40,000.00 or less. $2,250 for an estate valued at $40,000.01 to $70,000.00. $3,000 for an estate valued at $70,000.01 to $100,000.00.
What happens to a house in probate in Florida? ›Under Florida probate law, the instant that someone dies all of their solely owned property is transferred to their legal “estate,” a recognized legal entity that holds title until the estate can be properly administered.
How much does an estate have to be worth to go to probate Florida? ›Formal administration is required for any estate with non-exempt assets valued at over $75,000 when a decedent died less than two years ago. Formal administration is also required any time that a personal representative is needed to settle the affairs of the decedent.
Can you empty house before probate in Florida? ›
Probate would need to be completed before you could remove the items. If you're the personal representative or executor of the estate, you would need to take inventory of the contents of the house as part of recording the estate's assets. The executor may need to sell off the house to pay any outstanding debts.
Do you need a lawyer for probate in Florida? ›ALTHOUGH YOU ARE NOT REQUIRED TO HAVE AN ATTORNEY FOR CERTAIN PROBATE PROCEEDINGS, ONLY AN ATTORNEY CAN GIVE LEGAL ADVICE. IF YOU CHOOSE TO PROCEED WITHOUT AN ATTORNEY, AT ANY TIME IN YOUR CASE YOU MAY OPT TO HIRE ONE.
How does a probate sale work in Florida? ›A buyer must make an offer accompanied with a 10% deposit, which the seller can accept or reject. The estate representative, through their Florida probate attorney, will then submit to the court to validate the sale. Then a future date is set for the sale to be finalized in court, if all parties agree.
How much can you inherit from your parents without paying taxes? ›In California, there is no state-level estate or inheritance tax. If you are a California resident, you do not need to worry about paying an inheritance tax on the money you inherit from a deceased individual. As of 2023, only six states require an inheritance tax on people who inherit money.
How to avoid paying capital gains tax on inherited property? ›- Sell the inherited property quickly. ...
- Make the inherited property your primary residence. ...
- Rent the inherited property. ...
- Disclaim the inherited property. ...
- Deduct selling expenses from capital gains.
Generally, beneficiaries do not pay income tax on money or property that they inherit, but there are exceptions for retirement accounts, life insurance proceeds, and savings bond interest. Money inherited from a 401(k), 403(b), or IRA is taxable if that money was tax deductible when it was contributed.
What assets do not form part of the estate? ›- Life insurance or 401(k) accounts where a beneficiary was named.
- Assets under a Living Trust.
- Funds, securities, or US savings bonds that are registered on transfer on death (TOD) or payable on death (POD) forms.
- Funds held in a pension plan.
Non-probate assets are assets owned jointly with others or have some type of post-death designation in place. Examples of non-probate assets are: jointly-owned property (car, home, bank accounts, etc.), 401(k)s, life insurance, Transfer on Death accounts, and life estate properties.
What assets are considered part of an estate? ›An estate asset is property that was owned by the deceased at the time of death. Examples include bank accounts, investments, retirement savings, real estate, artwork, jewellery, a business, a corporation, household furnishings, vehicles, computers, smartphones, and any debts owed to the deceased.
How long does it take for an estate to go through probate in New York? ›Typically New York probate takes 7 to 9 months, but can last a year or more, depending on the complexity of the estate. The most common delays involve contesting the will, disputes between the beneficiaries, and issues with the court calendar.
Do you need a lawyer for probate in NY? ›
A probate attorney is not required under New York law, but legal assistance can save time and effort by ensuring that paperwork is completed properly and everyone with an interest in the estate receives the required notifications.
How much do attorneys charge for probate in NY? ›The legal fee can be a set fee such as 5% of the estate or it can be a percentage based on the amount of assets collected. An example of this would be 5% of the first $100,000 of assets, 4% of the next $200,000 of assets, 3% of the next $700,000 of assets, and 2% of the next $2,000,000 of assets.
What is probate code 5302? ›In California, section 5302(a) of the Probate Code provides that, “(a) Sums remaining on deposit at the death of a party to a joint account belong to the surviving party or parties as against the estate of the decedent unless there is clear and convincing evidence of a different intent.”
What happens when two siblings own a property and one dies? ›Unless the will explicitly states otherwise, inheriting a house with siblings means that ownership of the property is distributed equally. The siblings can negotiate whether the house will be sold and the profits divided, whether one will buy out the others' shares, or whether ownership will continue to be shared.
What assets are not subject to probate in BC? ›Assets that are jointly held—meaning that 100% of that asset goes to the surviving holder once the primary passes away—don't need to go through probate. Neither do assets that are held in a living trust, or insurance policies with named beneficiaries.
Which is an advantage of the probate process? ›It ensures taxes and debts are paid, so there's a finality to the decedent's affairs, rather than an uncertain, lingering feeling for the beneficiaries. If the decedent was in debt, probate gives a brief window for creditors to file a claim, which can result in the forgiveness of some debts.
What is the probate process quizlet? ›The probate process is a legal proceeding that serves to prove the validity of any existing will, supervise the orderly distribution of the decedent's assets to the heirs, and protect creditors by ensuring that valid debts of the estate are paid.
Why do some dislike the probate process quizlet? ›Why do some dislike the probate process? Because probate is public and difficult to maintain privacy for the deceased person and his or her heirs.
Which of the following assets are non-probate assets? ›Non-probate assets are assets owned jointly with others or have some type of post-death designation in place. Examples of non-probate assets are: jointly-owned property (car, home, bank accounts, etc.), 401(k)s, life insurance, Transfer on Death accounts, and life estate properties.
Which of the following assets would pass through probate? ›Probate assets include: Real estate, vehicles, and other titled assets owned solely by the deceased person or as a tenant in common with someone else. Tenants in common don't have survivorship rights. The owners can bequeath their share of the property to someone else.
What is a good way to avoid having property go through probate quizlet? ›
What is a good way to avoid having property go through probate? Use the transfer on death deed that transfers the deed to the beneficiaries while the owner is still alive, then transfers the title upon death.
Is the main purpose of probate is to make sure the beneficiaries are treated equally? ›The main purpose of probate is to make sure the beneficiaries are treated equally. Your estate tax burden can be reduced by giving gifts to your heirs prior to your death. This has the effect of reducing the value of your estate and thus lowering your tax obligation.
What is the first step in probate quizlet? ›The first step in probate is to file with the court the appropriate documents, which generally include the original copy of the will and affidavits by the witnesses that they signed the will after witnessing the signature of the testator.
What is a modification to a will called? ›A codicil is a legal document that acts as a supplement to your last will and testament. In it, you can make changes to your will without having to rewrite your entire original will document.
Which of the following allows people to pass on property after death quizlet? ›The answer is will. A will is made by an owner to convey title to real property after the owner's death.
What is a legal document that dictates your desire to distribute your property after death? ›A Will, also known as a Last Will and Testament, is a legally prepared and bound document that states your intentions for the distribution of your assets and wealth after your death. In the event you have children, a valid Will also allows you to designate who will care for them.
What type of account funds do not have to go through probate quizlet? ›A mutual fund investment can be inherited by a designated beneficiary without the need to go through probate.