When a loved one passes away, their property or estate must be distributed among their heirs and beneficiaries (or handled in some other way). The person responsible for overseeing this process is typically named in a will as the executor or personal representative. Dealing with probate can be overwhelming. You’re grieving the loss of a loved one while, at the same time, having to make legal and financial decisions. It can be difficult to know where to begin or how to manage all of these responsibilities. This guide will walk you through the essential steps of navigating probate and selling an inherited house.
- What Is Probate?
- Ownership of Real Estate Through a Will
- Inheritance Without a Will
- Probate or Affidavit of Heirship for Inherited Real Estate
- Additional Considerations When Selling a House in Probate
- How to Sell a House in Probate
- Streamlining the Probate Process with a Cash Buyer
What Is Probate?
Probate is the court-supervised process for transferring a deceased person’s assets to their heirs. If there’s a will, the executor named within it is responsible for handling probate. If there’s no will, the court appoints a personal representative. Probate ensures that the deceased’s property is distributed as intended and that any debts or taxes are settled.
There are two main scenarios regarding property inheritance:
If there is a will: First, someone can leave property to another person by setting up a Last Will and Testament. If someone leaves you real estate in their Will, then when that person dies, you inherit that real estate and become the new owner.
If there is no will: Second, if someone dies without a Last Will and Testament, then most states have laws that direct who gets the deceased person’s property, since they did not have a Will. In most cases, when this happens, the property is left to surviving spouses and/or children.
Ownership of Real Estate Through a Will
If someone leaves you real estate in their Will, then you become the owner of that real estate when the person dies. However, before you can sell the property, you have to probate. This is typically done in one of two ways:
1. Full Probate for Estate Division
One way is to do a full probate of the deceased person’s estate and let the court approve the division of that person’s property through the appointment of an executor or personal representative.
2. Shortened Probate for Property Transfer
The other, and easier, way is to do a shortened version of the probate where the Will is recorded in the Court Clerk’s Office solely for the purpose of transferring the real estate. In this case, an executor is not appointed, and the court does not oversee the transfer of the property. Because the court does not formally involve itself in this process, it is usually less expensive and a little bit faster. This is typically the preferred method when the house is the only piece of property that the deceased person owned, since things like clothes and furniture do not always have to be formally probated.
Inheritance Without a Will
If someone dies without a Will, and you were that person’s spouse, child, grandchild, etc., then you may be one of that person’s heirs. A person can have multiple heirs. For example, in Tennessee, if a person dies and at the time of the death is married with two children, then that person would leave behind three heirs: their spouse and their two children. In that scenario, each heir would receive one-third of the deceased person’s estate, including any real estate property.
Probate or Affidavit of Heirship for Inherited Real Estate
If you inherit property because you were someone’s heir, then you can also choose to probate the estate and have the court oversee the distribution of the deceased person’s property. And again, this might be necessary if the deceased person owned property other than real estate—for example, bank accounts, stocks, investment accounts, etc. If not, and if the real estate is the only asset that you’ve inherited, then instead of probating, you can simply prepare and record a document called a List of Heirs or Affidavit of Heirship. This states that a person has died, and you were one of that person’s heirs. The List of Heirs or Affidavit of Heirship is recorded with the county land records and provides the information necessary for you to sell the house in probate.
Additional Considerations When Selling a House in Probate
Regardless of whether the deceased person left property to you in a Will or simply left you as one of their heirs, there are a couple of other things to consider as part of the process of selling a house you inherited:
1. Creditor Claims
First, most states allow creditors of the deceased person a specific period of time to file claims against the deceased person’s estate/property. This prevents a creditor from not getting paid simply because that person has died. If you sell a house that you inherited, you have to comply with these creditor’s claims laws. That may require you to wait until the creditor’s claim period has expired before closing on the sale of the house, or, alternatively, it may require that your money from the sale of the house be held in the closing attorney’s escrow account until the creditor’s claims period is over.
2. Inheritance Tax Compliance
Second, some states have inheritance taxes that are owed when a person dies. As part of the process, you need to ensure that the person who left you the real estate did not owe these inheritance taxes. This usually just requires the filing of a document with the state to confirm that no inheritance taxes are owed.
3. Medicaid Recovery Confirmation
Third, some states require you to confirm that the deceased person did not owe Medicaid any money for things like nursing home care before you can sell property that you’ve inherited. Again, this is usually accomplished by filing a document with the state and awaiting a formal reply.
Once these tasks are completed, you will be able to sell the house that you’ve inherited.
How to Sell a House in Probate
Step 1: File a Petition to Open Probate
Where Do I File a Petition to Begin the Probate Process?
You will file a petition at the probate court in the county where your loved one lived. It asks for you to be officially acknowledged as the legal executor representing the estate. In addition, you will file the original will, if there is one, and the death certificate. The probate court will then schedule a hearing to approve you as the executor or hear objections, if there are any. Once you’re approved and the probate case is open, you can officially act on behalf of the estate.
Step 2: Notify Creditors, Beneficiaries, & Heirs
Who Do I Give Notice to During the Probate Process?
You’ll need to notify any creditors, beneficiaries, and heirs that the estate is now in probate. This may include a published obituary in the local newspaper as well as mailings to interested parties. Check the laws in the state where the probate case was opened to determine how you’re supposed to notify people who have an interest in the estate and the amount of time they have to potentially file a claim against it.
Step 3: Inventory Assets Subject to Probate
What Assets Do I Inventory in the Probate Process?
Examples of assets that are subject to probate include bank accounts, retirement accounts, stock and bonds, real estate, and personal belongings like art collections, jewelry, etc. You’ll have to make a list of everything your loved one owned and file it with the court. If you are able to consolidate the estate funds as much as possible, you will be able to streamline the process of paying bills and bequests by having everything in one, separate checking account. That’s something your attorney can set up or you can do on your own.
Step 4: List & Pay All Bills & Debts
How Do I Handle Bills & Debts in the Probate Process?
If there’s any money owed to the estate (like rent or outstanding paychecks), collect those funds. You should make a list of all your loved one’s liabilities, such as utility bills, mortgage payments, taxes, storage fees, etc. Gathering this information may take some time and require some detective work. Before you start paying any debt, you need to make sure the estate has enough money to cover the expenses, or else the state will have to prioritize which creditors get paid first. If you use any of your own money to pay expenses, keep thorough records because you may be able to use estate assets for reimbursement. You will also need to file a final income tax return (if applicable).
Step 5: Distribute Remaining Assets via Will or Intestate
How Do I Distribute Remaining Assets in the Probate Process?
Once all debts and expenses are paid and claims against the estate are finalized, you can distribute the remaining property as the will directs. However, you may want to keep a reserve for closing costs and unexpected claims. Creditors may be able to make claims against the estate up to a year after your loved one’s date of death. If there is no will, check the state’s intestate succession statute. In general, priority is granted to the surviving spouse, then children, grandchildren, and so on.
Step 6: Close the Estate & Reserve Account
When Can I Close the Estate and End the Probate Process?
To finalize the probate process, you need to file a detailed account with the probate court that includes receipts and records of everything that was filed, paid, and distributed. Next, you ask to close the estate and be released as executor. After the court approves your request, you can disperse any remaining reserve funds. Then, you’re done.
Streamlining the Probate Process with a Cash Buyer
Although there are several steps between inheriting property and selling that property, the process is fairly straightforward, and it can usually be completed in a relatively quick timeframe. If you are thinking of selling the house you’ve inherited, a commercial cash buyer/investor can help with this process, as they can usually help you complete the probate process as part of the closing by integrating the legal process for both the probate and the closing all into one smooth transaction.
Looking to Sell a House in Probate? Contact the Cash Buyers at New Again Houses Today
There is a lot of work involved in the probate process, and you may be looking around for assistance. If you’ve inherited a house you don’t want to keep, New Again Houses® will give you a fair cash offer to take the home off your hands and help with the probate process. You don’t even have to go through the contents if the task is too overwhelming. Reach out today and we’ll see what we can do to help.
