Over the years I have read so many articles regarding Probate and most of them are just fluff, glossing over what you really need to do if you inherit a house in Stockton or Sacramento that needs to go through the Probate process .
Probate is a legal process and it has nothing to do with weather a will was prepared prior to the death of the decedent. The existence of the will can merely speed up the process and help guide the court to determine at least two things; 1) the identity of the executor and 2) the wishes of the decedent.
It’s a myth that an estate that has a will does not need to go through probate process. The fact of the matter is that if you inherit a house and there is just a will it needs to go through the probate.
You also need to know that Probate is an expensive process and that in California, it is one of the only legal actions that the Attorney’s fees are spelled out by legislation? If the estate has no money the fees will come out after the sale of the estate.
Some estates are easy, there is a will, the estate has sufficient assets to pay its bills and there there are just one or two heirs that are in agreement regarding the distribution of assets and the bills that need to be paid. Very cut and dry and very simple. But, if you add a couple of variables to that equation, the simplicity of the case becomes a bit more complicated at best.
My name is Peter Westbrook and I am a local real estate investor with years of experience managing and guiding both probate attorneys and executors through an often confusing, emotional and uncomfortable process. Death and inheritance dont always bring out the best in people and just because an executor was named by a decedent doesn’t mean that the choice was the best for managing the swift and fair settlement of the estate.
I have worked with many family’s and executors helping them navigate the probate process and in many cases finding, hiring and paying for the probate so that the house could be sold. My role as a Sacramento homebuyer, is to provide a level of management to the process that support the heirs and the attorney. I am the eyes the ears and the muscles that performs most of the heavy lifting that ensures there are no delays. My clients and title companies have fondly called me the enforcer.
it is necessary because most attorneys that are hired directly by the estates have only handled 3 probates in 30 years and that is a recipe for delays, more delays and even more delays.
So how are important are the people that consist of your team if you want to deal with a Probate is the fastest way possible?
Unrealistic Expectations on Executors
Most executors were selected because they were perceived to be the most fair by the decedent. Some because there was an obligation by the decedent. What I have seen is that most good executors dont really want the responsibility and are lost is a process that they dont understand. They are often frustrated because the process is complicated, fraught with delays (that are mostly mistakes by others , including attorneys, referee’s or judges, dropping the ball) and they are not sure what they can do to positively guide the attorney through a process they have never been through before. Most ask what am I supposed to do. What can I do and often sit waiting for the next court date.
Finally, most executors dont like answering the daily questions from everyone else, even though they are the one that is responsible for managing and decoding the explanation of the lawyers, referees and judges involved in the case.
Complicated Cases, Missing Heirs
The other common occurrence is that the sale of a house just gets stuck in the probate courts. Unfortunately this happens more often than not because houses and estates are not properly managed by either the attorney, the executor or both.
Many delays are caused by missing heirs, deceased heirs and people that have just lost touch with one another. Probate cannot move forward unless the heirs can be located and notices can be properly sent.
The number one reason for elongated time frames and delays during the probate process is locating all of the heirs that may have an interest in an estate. The Court is not going to allow one brother to systematically remove two brothers and a sisters from a process that causes them to loose out on a fair share of their parents estate. The same goes for nieces and nephews.
If you own a property, that has a potential to get stuck in the courts, then this article is for you because hiring the right people to help you through the process is more important than some of the technical details that will cause delays.
Probate in general can get complicated and it is important that that each step of the probate process is managed by someone that will not leave any stone un-turned. All too often estates hire just any attorney without an understanding of the journey that lies ahead. Probate is a specialized process and each county has its own probate court with individuals. While one could argue that the process is the same, each court has judges and referees that do things subjectively differently and most attorneys are not familiar enough with that process because they do not deal with probate every day.
Remember, hiring an attorney that specializes in probate is extremely important because they understand the process and the players. A good probate attorney will see pitfalls in advance and be able to avert delays because they are prepared. The same thing can be said for a cash home buying company. Westbrook REI specializes in probate and we have probate attorneys that know the court and know the process each bit of evidentiary evidence and we are prepared to do the things that attorneys are not prepared to do without additional and sometimes costly and time delaying procedures.
Most people believe that the attorneys will do all of the work. The problem with that mentality is that not all attorneys are motivated to get the work done. You are just another case and the process is already got built-in delays with built-in cost. So it is important that the team that supports the executor is experienced, so follow some very simple rules of engagement.
- Determine whether or not there is a will and if an executor has been designated.
- Determine whether or not there is a Living Trust that has been certified by the County Recorder. If it is, the next step is to determine who is the Trustee. But estates with a Recorded and Certified Trust do NOT need to be Probated.
- Determine the size of the estate. The real question is… Is the entire estate worth more that $150,000.00? If it isn’t, you’re in luck because the estate can go through a shortened probate process that will take less time and cost less money. If the entire estate is worth more than $150,000.00 the estate needs to be probated fully in court and it will take more time and cost more money.
Remember, the probate process and purpose is determining the rightful and lawful order of succession of real property based on the wishes of the deceased. Prepare yourself, not all concerned parties with an interest in the estate will always agree on an outcome and that is why the estate needs to go through probate unless there is some other mechanism that establishes that right of succession for the heirs, such as a living trust.
So when you hear about an estate having to sell a house along with everything else, its because the role of the probate court is to make sure that there is a mechanism for the estates bills to be paid and and assets to be distributed and that there is a person (executor or trustee) that can and will carry it out. When an estate has several heirs, it can only add to the frustration.
At Westbrook REI and We Buy Houses Sacramento we can help you navigate a fair and fast sale of your probate house in Sacramento. In many cases we will even pay for the cost of the probate upfront, including mortgage payments, etc.
Read Related Article on Probate
So now we know that Probate is a legal process that is generally required for an estate of a decedent to determine the rightful succession of real property, (for the the heirs), appoints the responsible person (executor) and finally determines how the assets will be distributed and how debts of the estate will be paid off.
You will need to take an inventory of the estate’s assets and locate all estate planning documents. You will have to notify all heirs and creditors and create a plan to pay off any outstanding debts with money from the estate. There will also be a need to file income taxes for the heirs, which includes a possible inheritance tax. The time frame to complete the probate process is dependent on each estates specific situation and weather or not a will present. In any case the process can take 6 months to over two years.
If you’ve inherited a house—or think you may in the future—here are five other things you should do before making any decisions.
Investigate the mortgage.
There’s a good chance if you’re inheriting a house that the mortgage may be paid for. But, what if it is NOT? What if there is a mortgage or an equity line of credit. And even if the original mortgage was paid off, the decedent may have taken out a reverse mortgage to cover expenses in their final years.
Technically, you can only assume your parents’ mortgage if you’re going to live in the house yourself, If you want to rent out the house, the bank may require you to refinance in your own name. Reverse mortgages can’t be assumed by heirs.
I know it should be obvious, but not all houses in probate get sold. The sale of a house is really determined by the executor and the heirs and in most cases is it is necessitated whether or not the estate has cash to pay its bills. When a person dies and there are outstanding debts owed or ongoing expenses such as a mortgage payments, property taxes, homeowners insurance, etc. the estate may not have enough money to pay these debts. The executor of the estate may be forced to sell the property in order to satisfy those debts and/or avoid foreclosure.
If the house is not required to be sold by the court, you will need to wait until the probate process is completed before actually completing the sale of the house. However, you can plan ahead by speaking to my Company and giving them the property basics. We will be able to provide you with a tentative offer, so you can know what to expect once your house has cleared the probate process.
If the home has a mortgage and you have the cash, do not just rush in and pay it off yourself without an agreement from the court. The e and Executor can make the monthly payments as scheduled unless the bank calls the loan due. If the estate has no money and foreclosure is eminent, negotiate the best sale price with a Cash Home Buying Company like Westbrook REI so that the assets are preserved until the probate is complete. Contact Me directly at (209 481-7780 and i’ll guide you through the process.
What if the Heirs cant agree?
All this assumes you’re the only one inheriting the house, or at least that you’re in agreement with the other heirs. But what if you want to sell it and your brother wants to rent it out, or live in it himself?
In most states, heirs who jointly inherit a home are “tenants in common,” and in such situations, one sibling can force the sale of a property. But this is an expensive, emotionally damaging process and should be a last resort.
What to do: Get all the options out on the table with family members. There may be a creative solution.
Give the house a physical.
Even before the financials are settled, you may run into problems if you’re inheriting a house that hasn’t been maintained, has suffered deferred maintenance, or has not had any upgrades in a number of years. Certain systems (HVAC, plumbing, electrical, sewer/septic) may be so antiquated that the place is essentially unsaleable, un-rentable, or even unlivable as is. It is important to assess its condition in advance. Its important to discuss this with the other heirs and the experts.
What to do: If you’re inheriting a house that hasn’t been upgraded in decades, has a lot of damage and deferred maintenance get an inspection before making any decisions. The court will order an appraisal by the appointed Probate referee and that will determine its value at the decedents time of death. If you know that the house is in bad shape and have an inspection performed in advance that report can be given to the Court appointed appraiser so that all things are taken into consideration when rendering an opinion or before he/she renders an inflated value on the house. The amount of money you may have to sink into the house just to make it livable and insurable could determine whether you choose to sell it, rent it, or occupy it.
Remember, the tax man will come.
In recent years, the estate tax has had a high exemption: $3.5 million in 2009, for example. Although the estate tax was temporarily suspended in 2017, most experts believe it will come back.
Be mindful of the “step-up” provisions. That means the house you’re inheriting may not get a full step up to its current market value for tax purposes. Say your parents bought the house 40 years ago for $35,000, and today you can sell it for $450,000. With a step up, you’ll only have to pay capital gains tax on the difference between the home’s value at the time you inherited it and the sale price. Without any step up, you’ll pay tax on the full amount of the gain—in this case, $485,000.
Consult a tax professional on the current step-up rules.
So now you know how it works and what to look for
But there is more. Even if the property was not left to an heir, the executor of the estate will be tasked with handling the sale of the home. An interested buyer must provide a deposit along with a written offer. Before the offer is approved by the courts, the court will ask if there is anyone who would like to make a higher offer for the property. Once the court approves the offer, escrow will be able to close within only a couple weeks. The proceeds of the sale are used to pay any outstanding debts, with the remaining balances going to the heirs as outlined in the will.
In Summary, Make Sure Everyone Is Onboard
Remember, even if there are multiple heirs, it is important to make sure everyone is all on the same page. While the executor of the estate has the authority to list and sell the property, it is best to get everyone in agreement ahead of time. You don’t want to have anyone contest the sale or create problems within a family if you can avoid it.