When you think of real estate, you think of buying a home or residential property. However, one other way of acquiring real estate is through inheritance or probate.
Typically, real estate probate happens where a piece of property is transferred from a decedent’s death to an heir or beneficiary — or even sold. Real estate probate is the proceedings of how a decedent’s will is processed in court.
By law, an executor of the estate handles the decedent’s estate, affairs, and the probate process. All assets named in the will are distributed through probate.
Many times, the will may not specify an heir but instead request the property be sold, and the monetary gain is distributed between the beneficiaries.
While probate may seem long because of the court proceedings and the legal documents, the rules and steps for probate real estate are generally the same.
Steps to secure probate real estate
- Once the court establishes the executor of the estate or administrator, they must determine if the property will be inherited or sold. This is usually determined by what the will specifies. If the will does not specify an heir or inheritance, the property is generally sold.
- Before the sale of the property can take place, the property must be appraised. The executor will determine a listing price based on the value of the property. Typically, a real estate agent will help with this process. However, it is not required.
- Listing the property on the market with either the help of a real estate agent or using signage, websites, or editorial listings.
- Once an offer is put down on the real estate or property, the executor and or real estate agent will negotiate the terms. Typically, all heirs of the estate will be given a written certified mail notice to object to the sale. If no objections, the sale of the property will take place in a courtroom.
How to Avoid Probate
If you are purchasing a piece of property or multiple properties, you can put your assets into a revocable living trust. A revocable living trust is a signed and notarized written document that spells out who will receive the property if and when you pass away. You must create this trust and transfer all assets into the trust. This is not a requirement upfront, but if you are concerned about what will happen to your property when you pass on, specifying your wishes and acting them out will give you the peace of mind. Creating a living trust also helps ensure your trustees will know up front what you wish for your assets and avoid probate.
Add Joint Ownership – adding a joint owner to the deed for real estate helps avoid probate. Joint tenants with rights of survivorship help minimize the need for probate as the property automatically passes to the survivor. There are a few drawbacks to adding joint ownership, so talk to a professional before making this decision.
Beneficiary Designation – Generally, life insurance, 401k, IRA, and annuities automatically avoid probate because there is a beneficiary attached. You can assign beneficiaries to bank accounts and on-retirement investments as a POD or TOD. Through a transfer on death deed, you can designate a beneficiary of your real estate. This helps avoid probate altogether.
Revocable Living Trust– covers three phases; while you are alive and in good mental health, if you become mentally incapacitated, and after you die. You must title and transfer the assets out of your name and in the name of your trust to avoid probate.
Disbursement of Property – if you really want to avoid probate altogether, disburse your property before becoming mentally incapacitated or in the preparedness of passing. However, this is an extreme measure. Everyone needs a means to live, a place to live, and the probability of giving assets away prior to death is minimal. However, there are cases where this worked and made sense for special circumstances and made a no probate asset type case.
While this is not an exhaustive list of ways to avoid real estate probate, the options are limited. You must have due diligence and planning to avoid real estate probate. The bottom line is, what will work for your specific situation, your family and your overall wishes play a big part in the direction to take. Before taking any decision outlined here, talk to a probate attorney the Woodlands to get a better understanding of the law and what can work for you. Create the peace of mind you need to make a decision that impacts your loved ones proactively.