Mom and
Dad passed away and the real estate is not vested in a Living Trust.
You may
need to go through probate court to pay off everyone, if there are disputes you
probably need an expensive attorney in California. See the percentage scale
they can charge, it’s huge.
The cash back cap is $166,250. Inheritors can claim the assets with a simple sworn
statement (affidavit) or can go through a streamlined summary probate process. Cal.
Probate Code § 13100.
1.
Find the will. The
executor named in the will starts the process. If there's no will, or the
person named to serve as executor isn't available/doesn’t want the duty, then a
family member may ask the court to be appointed as the administrator/PR of the
estate. The personal representative (PR) of the estate asks the court
that full authority be given to administer the estate under the Independent
Administration of Estate Act, known as IAEA. The PR accepts a fiduciary
duty to all the people in the chain of connections.
2.
The PR files the
will, along with a document called "Petition for Probate," with the
probate court in the county where the deceased person lived. There is a filing
fee of around $450.00.
The heirs, devisees, and beneficiaries may know where all the
mortgage bills, tax bills, bank accounts, life insurance policies, brokerage
accounts, and maybe they don’t. It is the PR’s job to hunt down the money and
the debts called the assets and liabilities.
.
3.
PR applies for a
taxpayer ID number for the estate and opens an estate bank account. The PR orders
and files with the court, an inventory and appraisal of all probate property.
Inventory and Appraisal form filed with the court. Ask your lender for an
appraiser recommendation they have to be independent and certified. Then wait
for court approval before you publish in the MLS or auction. The list price
needs to line up with the appraisal.
4.
Next the Notice of Proposed Action is given to all the heirs
that the house is being sold. Unless the Will waives bond or all the heirs
waive bond, then the PR must post a bond as an insurance policy against losses
due to the PR’s wrongdoing. Next, the Notice of Petition to Administer Estate
must be filed and served to all heirs within 15 days before the first court
hearing. Probate Code 8121 requires that the probate be published in a
newspaper of general circulation in the city where the decedent resided at the
time of death.
5.
The “Statement of Duties and Liabilities” is filed by the PR.
The Letters Court Form is needed before you can sell the house to be filed. The
certified “Letters” form allows the PR to sell the house, access the deceased’s
bank accounts, pay the creditors or take actions that are required to
administer the estate.
6. After PR accepts an offer from a buyer, petition the probate
court for a hearing to confirm the sale of the real estate. The wait before the
hearing varies, depending on the current load of that county court’s calendar
7. Secure a deposit from the buyer of 10% of the purchase price. Secure
the deposit before the scheduled date of the court hearing.
8. Advertise the sale of the real estate along with the price
that the buyer offered with a local newspaper. This advertisement tells the
public of the sale of real estate. This allows open bidding at the court
hearing among any interested parties.
9. Attend the court hearing and wait for the bidding process to go
forward. Bids proceed in increments of $500 above the offer from the intended
original buyer’s offer. The buyer of the real estate must be allowed to bid, as
well say if a family member wants to purchase the stated buyer can out bid them.
The bids are unconditional. The winner of the bidding must present a cashier’s
check to the probate court for a deposit on the real estate after confirming
the bid which acts as the earnest money deposit to escrow.
10.
If a new buyer outbids
the original buyer, you will need to refund the deposit to the original buyer.
11.
Close the real estate
contract by completing the sale. All proceeds go to the estate account. Payoff mortgage, taxes, insurance...
The PR has full authority then the estate does not have to sell the
house for the required 90% minimum of the value listed in the I & A Form.
The I & A Form must be filed with the court within four months after
issuance of Letters (Probate Code 8800). The PR must also file a change in
ownership statement with the County. The PR also needs to file and mail a form
called “Notice of Administration of the Estate” to all known and reasonably
ascertainable creditors and to the required public entities (such as the
Department of Health, California Victim Compensation, and the Franchise Tax
Board). After the house closes the sale, creditors are paid, and taxes have
been accounted for, then the estate can be put to rest by petitioning the court
to close the estate. Heirs CANNOT use any of the proceeds from the sale of the
house until the court approves the distribution of the proceeds.
It is possible to sell real estate during the
probate process without getting court approval. The Independent Administration of Estates Act allows
Executors to sell real estate owned by the estate as long as they notify all
beneficiaries at least 15 days before the real estate sale. As long as there
are no objections from the beneficiaries, the sale can proceed.
Personal advise:
I have seen an attorney eat up all of an estate out of loyalty or greed.
Get everyone to be reasonable and fair, follow the will.
Laws vary a bit by State
This is for California
