A client recently asked about the best way to prepare a home for sale after his death to avoid family conflict in dividing the funds. As seniors, we know we shouldn’t care what happens after we die. But we like control. It’s natural and healthy to want to control our life and our decisions for as long as possible. This senior citizen tip is on probate, trusts, and selling a home after death.
Many seniors believe a will prevents problems in the sale of their home. But a will does not protect a home from problems including a low sale price. In fact, a will may complicate and prolong the sale leading to a lower price.
Wills, Probate, and Living Trusts
A will automatically triggers probate. Probate is a legal process that transfers assets to the estate to be sold. The funds are used to pay your debts first. Any leftover funds are distributed to those named in the will.
Probate means “to prove”. Probate is time-consuming and costly. Costly in legal fee and ongoing management of the estate. Probate confirms the will and creditors. Probate also pays off your debt and spreads the remaining assets to heirs and beneficiaries named in the will.
A better alternative, Living Trusts, protect estate assets and avoid probate. Unlike probate, assets are divided as named in the Living Trust without going to court. The administrator of the trust can sell the house at any time.
When a person dies without a Living Trust, the court is petitioned to open probate. Usually, someone named in the will petitions the court. If there is no will, the state opens probate.
The court appoints a personal representative to oversee the affairs of the estate through probate. This means paying ongoing costs including property taxes, utilities, and maintenance. Payment is usually from estate funds. If there are not enough funds immediately available, the personal representative can pay out of pocket and get reimbursed later. When funds are lower than expenses, the court may close the probate early insolvent.
The personal representative has many duties. And the court expects good record keeping. Also good record keeping is important for reimbursement . Some courts require a bond and supervision of the personal representative if there is concern of mishandling the estate.
With a will, many believe the home can be sold at any time. But the sale of the home cannot happen until two conditions are met. First, the court appoints the personal representative. Second the letters testamentary are issued. The letters let creditors know about the estate to submit a claim. The personal representative will need to show proof of these to a real estate agent to list the home.
Selling a Home after Death to Avoid Family Conflict
Senior clients prepare a will to control the distribution of their assets. But a will does not guarantee control. While the courts try to distribute assets by your wishes, the truth is they may be sold to pay debt first. Also, heirs and beneficiaries can dispute the will. Disputes slow probate further costing more money for the estate. A Living Trust keeps you in control of selling a home after death to avoid family conflict.
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