Below is an overview of the legal process to help you get a basic understanding when it comes to a person passing away without a will in place. Remember, always consult with legal counsel regarding such matters.
Probate is the legal term for collecting assets and debit of the deceased party—the means to pay the creditors and distribute the remaining balance to beneficiaries. The court oversees the process. Depending on the case, it can take as long as a couple of months to several years. On average, probate cases before the court usually take less than two years.
Three Phases of the Probate Process
Appointment (1-2 months) – The case gets filed before the court. At this point, an executor or administrator gets appointed. It transpires in the first and second months of the process. The court then issues a letter of testamentary, also known as a letter of administration. For closing on a real estate transaction, this action is required. The letter outlines the authority of the executor/administrator. The power granted, for example, allows for the signing of contracts or disbursement of funds.
Administration (2-8 months) – during this phase, the administrator/executor gets to work for all parties involved. They will search for outstanding debt, check the debt’s validity, and collect all estate assets. They will contact the decease’s creditors as well. The administer/executor is appointed to resolve these issues, and the letter (see Appointment) allows for assets to be sold to service the debt or produce liquidity. Depending on the complexity of the debt, this could be a lengthy process.
Closing (9-12 months) – sends a completed final accounting report before the probate court. Here is where assets are outlined and allocated to beneficiaries based on the law. It also closes out the case.
Did you know… The male title of probate administration is an Administrator. The female title of probate administration is Administratrix.
Selling Probate Real Estate
There are two means of selling real estate property through the probate process.
Probate Confirmation: The advantage here is complete documentation provided and approved by the probate court. The advantage is that it restricts heirs and beneficiaries from fighting the sale. A court confirmation sale creates a competitive bidding process whereby the highest possible price is acquired. Of course, the winning bid is subject to the court’s approval.
This sales process takes longer; the court system may take two months to schedule a confirmation sale’s hearing. Then roughly another two weeks to get the court order clearing the closing of a real estate transaction.
Now, your bid is accepted doesn’t mean you’ve won. The confirmation hearing allows for the highest bidder. Therefore, someone can be standing in the courtroom and overbid your offer.
A potential buyer’s deposit could be tied up for months before completing the final transaction. Confirmation sales usually attract real estate investors who can afford to wait out the legal process.
Non-Confirmation Sale: It’s no different than how real estate customarily gets sold. The difference here is the additional paperwork required from the court. The benefit for the administer is it saves time and may be easier to sell to a larger pool of buyers. Here, a real estate agent can market and sell the property.
The flipside is beneficiaries/heirs may be more likely to fight against the sale for various reasons. Underlining family disputes may lead to parties not trusting each other. They may even contest the administer, believing he didn’t get the best deal on their behalf. For these reasons, the administrator/executor usually seeks the courts to approve the non-confirmation sale.
In Closing…
As stated earlier, this is an overview. Any case before a court will vary in length of time and complexities. You should meet with an estate planner or estate attorney to get a will or trust created for when that unfortunate moment occurs. Please remember that a court-appointed administer/executor is compensated first for their work through those same assets to be disbursed.
Jerry Molet