Is real estate subject to probate?

Real Estate and Probate

Real estate ownership and its disposition upon the owner’s death are determined by the property’s title [1]. If the property is solely owned by the deceased person or jointly owned without any “magic words” on the deed, it is considered probate property [1, 2].

Probate Process for Real Estate

When real estate is subject to probate, the process typically involves the following steps [2]:

Key Facts

  1. Ownership and Probate: Whether real estate goes through probate depends on how the property is titled. If the property is solely owned by the deceased person or owned jointly without any “magic words” on the deed, it is considered probate property.
  2. Probate Process: If real estate is subject to probate, the process typically involves appointing an executor or administrator, taking inventory of the estate, hiring a probate attorney, and potentially selling the property to pay off debts or distribute assets to beneficiaries.
  3. Selling Real Estate in Probate: If the property needs to be sold, a real estate agent experienced in selling probate real estate is often contacted. The property may need to be appraised, listed, and marketed. The highest bidder may need to appear in court to submit their bid, and court permission may be required to finalize the sale[3].
  4. Ways to Avoid Probate: There are several methods to avoid probate for real estate, including establishing a revocable living trust, using joint tenancy, utilizing a transfer on death deed, or creating a life estate deed.
  1. Appointing an executor or administrator
  2. Taking inventory of the estate
  3. Hiring a probate attorney
  4. Potentially selling the property to pay off debts or distribute assets to beneficiaries

Selling Real Estate in Probate

If the probate property needs to be sold, a real estate agent experienced in selling probate real estate is often contacted [2]. The property may need to be appraised, listed, and marketed. The highest bidder may need to appear in court to submit their bid, and court permission may be required to finalize the sale [2].

Avoiding Probate for Real Estate

There are several methods to avoid probate for real estate [1, 4]:

  1. Revocable living trustThe creator of the trust names themselves as trustee until their death and designates a successor trustee and trust beneficiaries to manage and distribute the assets or estate after their death.
  2. Joint tenancyAdding a joint tenant to the property’s deed allows the property’s ownership to automatically transfer to the joint tenant upon the owner’s death, bypassing probate.
  3. Transfer on death deedA transfer on death (TOD) deed allows the owner to choose a beneficiary to inherit the real estate property upon their death.
  4. Life estate deedA life estate deed grants the owner the power to use the property during their lifetime and then transfer the property to another individual upon their death.

References

  1. Farah, B. F., Roberts, K. L., & Ganor, S. B. (n.d.). Avoiding Probate for Real Estate. Farah, Roberts & Ganor, Ltd. Retrieved from https://riverlaw.com/avoiding-probate-for-real-estate
  2. Crace, M. (2023, March 14). Probate In Real Estate: An Introduction. Rocket Mortgage. Retrieved from https://www.rocketmortgage.com/learn/probate-real-estate
  3. Yale, A. J. (2021, October 20). How Does a Probate Sale Work? The Balance. Retrieved from https://www.thebalancemoney.com/how-does-a-probate-sale-work-4772241

FAQs

What is probate?

Probate is the legal process of administering the estate of a deceased person, including identifying and valuing assets, paying debts and taxes, and distributing the remaining assets to beneficiaries.

Is real estate subject to probate?

Whether real estate is subject to probate depends on how the property is titled. If the property is solely owned by the deceased person or owned jointly without any “magic words” on the deed, it is considered probate property.

How can I avoid probate for real estate?

There are several methods to avoid probate for real estate, including establishing a revocable living trust, using joint tenancy, utilizing a transfer on death deed, or creating a life estate deed.

What is a probate sale?

A probate sale is the sale of real estate that is part of a deceased person’s estate. Probate sales are typically ordered by the court to pay off debts or distribute assets to beneficiaries.

How long does probate take?

The probate process can take anywhere from several months to several years, depending on the complexity of the estate.

How much does probate cost?

The cost of probate varies depending on the value of the estate and the complexity of the process. However, probate fees typically range from 3% to 7% of the estate’s value.

Can I sell real estate that is in probate?

Yes, it is possible to sell real estate that is in probate. However, the sale must be approved by the court, and the proceeds from the sale will be used to pay off debts or distribute assets to beneficiaries.

What happens to real estate that is not subject to probate?

Real estate that is not subject to probate will pass directly to the beneficiaries named in the deed or other estate planning documents.

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