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Can You Sell a House Before Probate?
Experiencing the death of a loved one can be devastating.
Afterwards, there's the long, arduous process of settling the affairs of the deceased, otherwise known as the probate process.
Sometimes, the inherited home acts as a constant reminder of the loss, so it is understandable that you may want to dispose of the property as soon as possible. You may even be wondering if there's a chance of skipping probate altogether.
So, can you sell a house before probate?
To answer that, we put together a guide to demystify the probate process and help you in the process of selling inherited property.
What is the Probate Process?
Probate is a legal process that involves the review, administration, and distribution of a person's assets after death.
Probate seeks to accomplish the following:
- Establish a will's validity
- Provide a complete inventory and determine the appraised value of a decedent's assets
- Locate and contact all the other beneficiaries
- Determine whether the deceased person has enough assets to cover liabilities
- Ensure that all of the deceased person's debts and taxes are paid off
- Ensure that the assets of a deceased person go to its intended beneficiaries or creditors even if a will is absent
On average, the whole process takes six to nine months and probate fees can cost between 3% to 7% of the estate's value.
All in all, the process consists of four phases:
Pre-Petition Phase
In this phase, the only thing you need to do is prepare the documents (decedent's will, death certificate, and probate petition form) necessary to start the probate proceedings.
Appointment Phase
Probate begins as soon as the will, the death certificate, and the probate petition form is filed in the county court of the deceased person's residence.
Afterwards, the probate court appoints an estate executor or personal representative (usually a family member named in the will, or a neutral third party) to manage the proceedings.
Administration Phase
The executor then sends out a notice to all creditors, beneficiaries, and heirs to notify them that the estate is in probate.
Bank accounts, bonds and stocks, luxury item collections such as art, cars, and watches, and real property all form part of the probate estate.
Once the accounting of all assets is completed and all outstanding debts are paid off (sometimes through the sale of the probate property), the probate case enters the closing phase.
Closing Phase
The executor will use the remaining funds to settle the court fees, attorney's fees, and taxes.
In the final stage of probate, it is time to distribute assets (or any residual value left from the property sale) amongst the heirs and beneficiaries.
Do You Need a Probate Attorney?
Probate law can be complicated.
They also differ depending on the state you're in. Sometimes, you may find that the estate doesn't even need to go through probate after all.
Therefore, it is generally a good idea to consult with a probate attorney who can walk you through the nuances of the probate proceedings. What's more, a lawyer can also tell you whether you can sell a house before probate is completed.
Can You Sell a Deceased Person's House without Probate?
Technically speaking, the answer is yes.
You can absolutely look for potential buyers or list the inherited property with real estate agents. There is no legal impediment standing in your way from accepting a cash offer or trying to sell a house before probate is completed.
However, for you to be able to close the deal, you will need to see the probate process through to avoid legal consequences and to ensure that you have ownership of the property you are selling.
What are the Ways to Avoid Probate on a Deceased Person's Estate?
Probate can take some time, so you might be wondering if there are ways to avoid it but still operate within legal bounds.
Proper estate planning can definitely save you the hassles of dealing with inherited property, and these are the options open to you:
Living Trust
If there are multiple beneficiaries, this is the way to go.
A living trust is a legal tool which names a person as the beneficiary, and the property owner as the trustee. For instance, you can be the beneficiary with your parents as the trustee.
Living trusts can either be:
- Revocable - a trust that can be amended within the trustee's lifetime
- Irrevocable - a trust that cannot be changed
Once the trustee dies, ownership of the estate automatically passes on to the beneficiary.
However, you must remember that a living trust only allows you to skip probate. It is not a tax shield. Therefore, you must still pay all tax obligations in an estate sale.
Jointly Owned Property with Right of Survivorship
This is also known as joint tenancy. This means when one of the co-owners passes away, the property passes automatically to the surviving owner, who then has full legal right over the estate.
Tenancy by Entirety or Community Property Law
This option is only available to married couples.
Tenancy by entirety is similar to joint tenancy-- the surviving spouse gains full control of the property upon the other's death without having to go through probate.
Not every state recognizes tenants by entirety, particularly in a community property state, where the term community or marital property is used in its stead.
Death Deed
In some states, you can skip the probate process via a Transfer upon Death deed.
This is a document that transfers the ownership of an estate directly to the heir while avoiding the hassles and expense associated with probate.
Similar to a living trust above, a death deed does not protect you from taxes and costs associated with the sale of the inherited home.
Independent Administration of the Estate Act (IAEA)
If you are the personal representative, you can sell a house before probate is completed as long as you operate within the legal bounds of this Act.
It should be noted that you must not have a vested interest in the property--and therefore, you cannot sell a house to yourself. You also must notify all of the estate's interested parties regarding the sale.
Frequently Asked Questions: Selling Probate Property
Is it Required to File a Will in Court?
Probate laws vary from state to state, but filing a will is always required whether or not the estate will be required to undergo probate.
Failure to file a will can get you in serious legal trouble if the heirs or creditors are disenfranchised and they decide to sue.
What Happens if a Person Dies without a Will?
If a person dies without as will, or a will is declared to be legally invalid, the person is said to have died intestate.
When this happens, probate is required and the responsibility of administering and distributing probate property falls to the probate court.
How Soon Can Probate Begin, and Is There a Time Limit to Initiating the Probate Process?
Some states, such as California, require the executor to file the will within 30 days after a person's death to initiate the probate proceedings.
But generally, there is no time limit in initiating the proceedings.
However, there is no benefit to be gained from delaying the filing, so it is advisable to file the petition for probate as soon as possible.
Can Probate be Completed without the Involvement of Probate Court?
Yes. There are instances wherein probate can be completed without involving a probate court or with minimal court supervision, so-called informal probate.
In certain states, informal probate is filed with the probate registrar, outside the supervision of the probate court.
This can be done as long as the estate's interested parties agree, and the estate has no uncertainties or legal and administrative entanglements.
The executor, or the legal personal representative, is expected to discharge the probate property completely and correctly.
What Happens if There are Not Enough Liquid Assets to Pay Off Debts?
In certain cases, the decedent may not have left enough cash to pay off the creditors.
When this happens, the executor will have to sell a house before probate is completed and use the proceeds to get the debts paid.
If the funds still aren't enough, the executor will negotiate with creditors. This is known as abatement.
Once the debts are cleared, all the funds remaining (if there are any), will be distributed to the beneficiaries.
Are There Assets that Don't Need to Undergo Probate?
Not all assets have to go through probate upon a person's passing. These assets include:
- Retirement accounts with a named beneficiary
- Property held in a living trust
- Property held in joint tenancy, tenancy by entirety, or those considered community property
- Wages or commissions due to the decedent
- Funds, stocks, or bonds registered with a Transfer-on-Death form
Is There a Threshold Amount for an Estate to be Exempt from the Probate Process?
If the estate is small enough, it is possible for the heirs to skip probate entirely.
In some states, you may be able to file an affidavit to collect real estate with fair market value of up to a certain amount.
The threshold amount differs from state to state while others only grant this leniency for property other than real estate, so it would be best to consult with a probate lawyer regarding this matter.
Do I Need Probate to Sell My Mother's House?
Unless your mother's house is held in a living trust, named for you in a death deed, or includes you as a joint tenant, you need to complete the probate process before you will be able to sell.
Closing Thoughts: Do You Need Probate to Sell a House?
In its very essence, probate is all about protecting the assets of the deceased and making sure it passes on to the rightful beneficiaries.
The question "Can you sell a house before probate?" has a very involved answer as seen above; but the answer is yes-- for as long as probate isn't required to begin with.
Whether you are looking to sell a house before or after probate is completed, most homeowners certainly want to sell fast.
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