When you are the executor of an estate you have many duties and selling the estate’s real property may be one of them. You may be wondering if you can sell a house without probate.
Probate is a lengthy process. You may wonder about the probate timeline and how soon you can put the house on the market. Read on to learn all you need to know about putting an estate home on the market for some fast cash and how long the entire probate process will take.
Starting the Probate Process
Real property is generally the largest asset in an estate. No one may sell the property until they receive the authority to do so by the court.
The Probate Court appoints a personal representative/executor to the estate. That person handles the distribution of all assets, including the sale of the home if appropriate.
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Upon appointment of the personal representative, the court will issue letters of authority. The executor uses these letters to show they have the authority to manage estate assets.
Following the appointment of the executor, the opening of probate is published in the local newspaper. The notice to creditor 4-month waiting period begins.
The personal representative may take steps to sell the property during this time period. They must make sure they do the following to protect their fiduciary obligations:
- Work with a knowledgeable realtor and experienced probate attorney
- Make sure you have court approval prior to selling the property
- Have the property appraised by a licensed appraiser to establish a date of death value
- Give consideration to the market analysis to determine the asking price
- Keep all beneficiaries informed and in agreement regarding the sale of the home
The personal representative provides the title company with a copy of their letter of authority and the estate tax identification number. The personal representative signs the sale documents and any other paperwork necessary to secure the sale. If the home is not sold during the probate process the home is distributed to the beneficiaries, who then must handle all real estate transactions themselves.
That is why it is important to be in contact with a company that uses the latest technology and digital processes to get you a great sales price, quick offers, and an easy closing.
Proceeds from the sale of real estate may be necessary for paying claims by creditors against the estate. Distribution of any remaining proceeds must not take place until after the waiting period for creditor claims is passed.
The time it takes for an estate to progress from opening to closing varies from state to state based on state probate law. Each case is different and the value of assets, disputes among the beneficiaries, designation of the executor, and other factors may play a part in determining the timeline.
Time to Complete Each Step
Although there are National Probate Court Standards, there is no federally established timeline. Below is a quick overview of the time various steps in an estate take. We will then take a closer look at some of these areas.
- Send formal Notice of Probate—1 to 2 months
- Prepare and file Petition for Probate—1 to 4 months
- Court hearing on Petition for Probate—3 to 4 months
- Issuance of Letter of Administration, Letters of Testamentary, orders for probate, duties, and liabilities—3 to 4 months
- Notice to creditors—3 to 6 months
- Notice to Department of Health Services (if receiving medical benefits)—6 to 12 months
- Inventory of estate and appraisal of estate’s value—6 to 12 months
- Deny or accept creditor claims—6 to 12 months
- Pay creditor claims—6 to 12 months
- Pay state and federal income taxes—6 to 12 months
- Pay administration costs—6 to 12 months
- Obtain tax clearance records—8 to 15 months
- File petition for final distribution and accounting—7 to 15 months
- Hearing on petition for final accounting and distribution—8 to 16 months
- Order approving final accounting and distribution—8 to 16 months
- Distribution of assets to beneficiaries—9 to 18 months
- Entry of final discharge order—9 to 18 months
- Final distribution of estate assets which concludes estate probate—9 to 24 months
Managing an estate requires attention to detail. It is a good idea to use an estate executor checklist to make sure you complete all steps.
Send Notice of Probate
It may seem obvious that everyone has knowledge of the open estate if they attend the funeral, but that does not satisfy the probate court. You must send a formal Notice of Probate to all beneficiaries and heirs, legally called “interested parties.”
The time in which this must be complete is established by state probate law. If you complete this step prior to your hearing of the executor appointment, obtain a signed waiver of process and consent to probate from each person. This shows the court that all beneficiaries agree the will is valid and are agreeable to you being the executor.
By having these documents at your petition hearing, you are more likely to be granted an independent administration, meaning the court is less involved in the handling of the estate.
File Petition for Probate
You must file a petition for probate, a valid will if one exists, and the death certificate with the court. If beneficiaries have not signed a waiver of process and consent to probate, the court will need to establish the validity of the will.
The court will schedule a hearing to open the probate case, approve and appoint the designated executor, or hear any objections to the appointment. The court will issue the executor a letter of authority, which allows them to conduct all fiduciary duties of the estate. Once the executor receives court approval and has their letters of authority they may then begin fulfilling their duties.
Give Notice to Creditors
The first official duty is to give notice to all creditors. This process requires you to go through the decedent’s paperwork to find any outstanding bills. You may also request a credit report to identify any potential creditors.
You must mail a Notice to Creditors to any companies or persons to whom the decedent may have outstanding debt. The creditors have a specific amount of time, generally 3-4 months, to respond claiming outstanding funds are due them.
Debts must be paid from the estate assets in the order the responses come in. All debt must be paid prior to distribution to beneficiaries.
One of the most time-consuming tasks is to inventory all assets. You will need to follow proper procedures, including the use of official probate forms from your court. This inventory will become part of the official estate records.
Assets that must be in the inventory include:
- Real estate, bank accounts, automobiles
- Stocks and bonds
- Life insurance and retirement plans
- Wages and business interests
- Intellectual property
- Debts or judgments they are due money on
You will need to file the inventory with the court when you close the estate. There are some assets that are not subject to probate, including:
- Property held jointly with rights of survivorship
- Real estate held jointly
- Motor vehicles with a title of joint ownership
- Financial accounts held jointly
- Life insurance, financial accounts including IRAs with a beneficiary or pay-on-death designation
When a title shows two or more owners it automatically transfers to the survivors. When an account contains a designated beneficiary the funds are paid directly to that person without going through probate.
The court uses the inventory to determine the cash value of the estate. To reach this figure they use the date of death value or the alternative valuation date six months following the date of death. A professional appraisal is generally necessary to determine these values, especially for real estate.
Real Estate Sale
If real estate is going to be sold during probate, the sale will proceed in much the same manner as any other real estate transaction. As executor of the estate, you are able to list the property for sale, make counter offers, accept offers, and close the sale without approval from the court. The real estate closing documents will be part of the paperwork you submit when closing the estate.
Buyers may realize it is an estate property and look for a bargain, thinking owners want to make a quick sale. The range of offers that the estate can accept may be under the direction of the court. Generally, an offer must be within 90% or more of the probate court’s appraised value to be acceptable.
Once the property has an acceptable offer a Notice of Proposed Action must be mailed to all beneficiaries. This notice advises them of the terms of the sale. They then have 15 days to respond if they have any objections.
If no objections are made, the sale proceeds as agreed. If objections are made by any heirs or beneficiaries, a court hearing will take place and the court will determine if the offer is acceptable
The time it takes to list, sell, and close is obviously dependent on the current real estate market, location of the property, and time it takes to complete any inspections the buyer requests.
Using final accounting forms you obtain from your local court, you will need to track and record all business transactions made on the decedent’s estate. You must present this documentation to the probate court for their review. This advises the court of the financial situation of the estate.
This accounting includes the beginning cash value of the estate, amount of debt, any fees and taxes paid, deposits received, and proceeds from the sale of property. Your supporting paperwork for this filing includes the inventory of assets, appraisals, and the bill of sale for any items sold on behalf of the estate. If distribution of property bequeathed to specific persons in the will is complete file the receipts signed by recipients with the filing.
Final Distribution and Closing of Estate
When the final distribution of assets can be made depends on your state probate law. Some states allow the distribution to take place during the probate process, others require that to wait until after the final probate hearing.
The court will want to make sure that every effort was made to pay all debts prior to asset distribution. As executor of the estate, you have a fiduciary obligation to handle payment of debts responsibly.
If it is found that you did not notify creditors, or that bills were not paid prior to the distribution of assets to beneficiaries, you may be held personally liable. Once your final accounting has the court’s approval the judge will order the probate estate to close and distribution of assets can be made. That concludes your obligations as executor of the estate.
Make Sure You Have the Authorization to Sell
One mistake many people make is assuming that because their name is in a will as executor of the estate that they can immediately begin the distribution and sale of real property. Doing this is a violation of state probate laws.
Beyond maintaining the integrity of a home, such as keeping the heat and electricity, mowing the grass, or plowing the snow, you must have a court’s permission to take any action that affects assets. If a person dies intestate (without a will) the court will appoint a person to serve as the estate’s executor.
Even prior to the appointment as executor, you may contact a real estate company to obtain an idea on the value of the property and establish a relationship so that once you obtain approval you can quickly proceed with selling the home.
Sell Your Real Estate During Probate
Now that you understand the probate timeline and your obligations, you know that once you have approval you may sell the decedents real property during probate. You also know that getting that property listed and sold prior to the closing of the estate is the easiest way to handle the process.
If you have any questions about listing a property for sale please, submit your address and create a seller account. We make buying and selling easy. You can also check our other blogs for more great information on buying and selling your property.