Probate guide update for 2019
Sep 26, 19

Complete Guide: What Happens During Probate Process (2019)

Introduction

Probate is the legal term to describe the process when somebody dies. It ensures that property, assets and possessions are distributed to the rightful heirs, and that any associated taxes or outstanding debts are paid in full. In the event that there is a written will, the court will validate it and then ensure that its provisions are fully respected and implemented.

Here are the main steps involved during the Probate Process.

Appointment of an Overseer

Before proceedings can get started, the court must appoint somebody to oversee the entire process. This person will be responsible for taking possession of the property of the estate, and then distributing it accordingly.

If there is a will, then there may well already be a personal representative (or executor) already designated in it. If not, then the court will appoint somebody to fulfil that function. It is essential that the overseer is impartial, and does not favour one, or more, potential beneficiaries over the others.

Filing a Petition

Once an overseer has been appointed, the first step is to file a petition with the relevant court – in the case of California, for example, the California Superior Court – in the county where the deceased lived at the time of their death. The petition acts as a trigger for a hearing to be scheduled, which will normally be held within a month or so of the filing.

Posting of Notices

Once the petition has been filed, notices must be posted to all interested parties about the forthcoming hearing. These parties will include everybody named in the will – if there is one – as well as all outstanding creditors, and anybody else who might have an interest in the estate. Notice of hearing should be published in the local newspaper, and direct beneficiaries should also be mailed.

Proving the Will

If there is a will, then there is a requirement to “prove it” – in other words to authenticate and validate that it is genuine, and represents the last wishes of the deceased person. This may be especially the case if the will is quite old, or in a poor condition, or has been found in the back of a drawer somewhere. 

In some cases, the will may qualify as “self-proving” with appropriate language, or supported by an affidavit from everyone who has signed it, which means that this step can be dispensed with altogether.

Collection and Inventory of the Assets

One of the most important tasks for the personal representative is to take possession of all of the deceased’s assets that are needed to go through the probate process.

Some of the assets which fall outside the remit of probate include:

– Retirement accounts – IRAs, of 401(KS), for example. If a beneficiary has been named;

– Life insurance proceeds;

– Pension plan distributions;

– Wages, salaries, bonuses due and commissions; and

– Household goods.

However, if the title of an asset needs to be transferred into the name of another person, then it is the responsibility of the personal representative to see to it.  Such assets include:

 – Bank Accounts;

– Stocks and Bonds;

– Mutual Funds; and

– Physical assets (real estate, motor vehicles, boats etc.).

The court will normally require the personal representative to draw up an inventory of probate assets, and may also demand an independent appraisal of the value of specified assets as well.

Paying Off Creditors

Once potential creditors of an estate have received notice of death, then they must submit a formal claim for repayment, together with supporting documentation. In the event that those claims are determined to be valid, then they must be paid from the proceeds of the estate.

It is important to realise that no distribution from the estate can be made until such bills have been paid, including any funeral expenses.  Whilst it varies from state to state, California, for example, requires creditors to submit all claims within four months of the personal representative having been appointed.

Payment of Estate Taxest Here

The personal representative also has the responsibility for ensuring that all taxes to which the estate is liable have been paid – these include all federal and any local state taxes. The personal representative is not personally liable for such taxes normally, but there is one important proviso.

 In the event that they decide to make a partial or full distribution of the estate before all taxes have been paid, and there is not enough assets left in the estate to pay those taxes, then, under certain circumstances, they may be made personally liable.

Concluding the Estate

Once all the above steps have been completed, the final stage in the process is to conclude the estate. This involves the personal representative providing a report detailing all the actions they have taken with regard to the estate, and consists of a petition which is filed with the court.  This petition will also include any fees which are due to them for the services which they have rendered.

Provided there are no objections, the court will approve the petition, and enter an order, concluding the estate.

The final act then is for the personal representative to distribute all remaining assets to the beneficiaries, and pay any fees which may still be outstanding.

What to do when real estate clears probate

If an estate contains real estate, the inheritor of it has several choices as to what to do next with it once it clears probate.

The first thing they can do is to keep it and live in the property. This can be tempting for some, especially if the home has happy memories associated with their youth, or when they were growing up. It may also appeal when they are living in rented property or where their current house is encumbered with a mortgage. However, the house in question that they have inherited may be far from where they currently live, work, or send their children to school, and may need money spent on renovations before they can even move into it  

The second option is to use the property as a source of income by becoming a landlord. However, whilst this may seem attractive at the outset, it comes with several hidden drawbacks. Firstly, there may be the need to spend money on repairs and upgrades to the house before it is suitable for tenants to inhabit. And, secondly, becoming a landlord means assuming a number of tax, legal, and insurance obligations that can be quite onerous.

Often, then, the preferred choice of many who inherit property is to sell it. Again though, they have several choices. The usual path that many people follow is to decide to sell, have a realtor advice that it needs extensive renovations to find a buyer, and then spend a lot of money, before having to wait months for a purchaser to come along. Meanwhile, their capital is being diminished, and there is no income coming in to offset this. This may particularly be the case if the house is located in a less desirable part of town.

There is an alternative solution, however, and that is to sell the house to an investment company like SoCal Homes Solutions.

Choosing this route has much to offer those who want to sell their house quickly and realise a profit. There are no real estate broker or agency fees – there is no middleman involved because you are the seller, and the investor is the buyer.

They will usually offer a quick close, which means there is no need for a long wait whilst a buyer is being lined-up.  And, as another major advantage, when you sell your house to an investment company, they will normally take it, whatever condition it may be in at the time, which means there is no need to spend money on costly repairs, or clearing unwanted junk from the property.

The downside of this approach is that the investment company may offer you less money than you could get by selling the property on the open market, but, after all the associated costs and worry are taken into account, the price differentials can be surprisingly small, and the peace of mind considerably greater.

Conclusion

Probate is the term to describe the legal process for the administration and distribution of assets, including real estate, when somebody dies.  The steps are laid down by law and, although the required actions may vary from state to state, the underlying principles remain the same in the majority of cases.

For those who receive real estate as part of the probate process, they have several choices then what to do with it – keep it, use it as an asset, and become a landlord, or sell it. Many will prefer the latter option, but might be deterred by the expensive cost of renovations, or the long wait for a buyer to come.

A viable alternative for those look for a quick sale and profit is to sell it to an investment company, many of whom will buy real estate properties “as is” without the need for costly repairs, and who will also take responsibility for clearing out any old household junk.

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