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Probate Real Estate 101: All You Need to Know

Probate Real Estate

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Real estate probate refers to the legal process that must occur after a homeowner passes away.

We’ve helped over 1,500 people that have inherited real estate get their money faster during the probate process and we decided to share what we found.

When a property is in probate, it is either sold or the ownership transfers to another person. Where estate sales take care of personal belongings like jewelry, furniture, and other items, transferring the deed on a real estate property is different and you have to wait until probate is finished.

With that, we’ll just right into what happens when real estate is probated.

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What is Probate Real Estate? 

Regardless of whether it’s a buyer, seller, or an heir, probate real estate always means that someone who owned real estate died. For the heirs to have the title to the real estate belonging to the deceased person, they must go through probate – an official court process – to transfer the title.

Without going through the probate process, the heirs cannot sell, convey, or transfer the real estate.

It’s necessary to hire a probate or estate attorney who will represent you as you go through the process. The probate lawyers are who will help you:

  • File legal documents with the court
  • Gather estate planning documents
  • Collect funds from life insurance
  • File income tax returns
  • Help you sort through the deceased person’s debts
  • Help you gather records of the deceased person’s assets

Don't Wait for Probate

What is the Typical Probate Process?

In real estate (other types of property can be held in probate, too), the process involves an attorney opening a court file. This legally moves the deceased’s property to its rightful heirs and formally transfers the title. After the title is transferred, the heirs can choose to sell the home or transfer the title to someone else.

It generally involves:

  • A single home – usually the deceased’s primary residence
  • One or more heirs who wish to sell the real estate or do a buyout of other heirs – usually the spouse or adult children who wish to sell the real estate
  • The heirs list the property and enter into a contract with a buyer
  • The heirs retain an attorney for probate if the property isn’t already in probate court.
  • All heirs and beneficiaries are notified that the petitioning process has begun. They may use the probate hearing to express objections. Because probate hearings are public records, it’s possible the hearing date will be listed in the local newspaper. The probate hearing most likely has to occur in the county where the property is located.
  • The probate transfers the deceased’s title to the heirs.
  • After the title is transferred, the heirs collect money at closing.
  • At closing, the real estate agent receives their fees, instead of having to wait until the probate process is finished.

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When is Probate Needed?

Different states have different statutes for probate. For instance, in the state of Florida, some estates won’t need to go through any kind of probate. If the deceased didn’t have any assets in their individual name, then no probate is necessary. If the person leaves behind only a few assets, heirs or beneficiaries can go through a shortened version of probate known as summary administration.

If the estate holdings aren’t eligible for the simpler administration, formal probate.

There are only a few situations where the probate process takes place. 

If Only One Spouse is Listed on the Deed

Deeds that have been titled with only one spouse, and one survives the other not on the title, probate is required. There are issues, known as spousal elections if this happens.

Tenants in Common

In this scenario, there isn’t a husband and a wife (though there are a few exceptions to the rule). This is more like a boyfriend/girlfriend, siblings, business partners, etc. This kind of deed doesn’t have any special language regarding automatic transfers. Because of this, if persons 1,2.3, and 4 are on the deed, and person 3 dies, probate is required.

If there is a sole owner with no legal will and no heirs, a property will go through probate so that the title can be legally transferred. The court appoints an estate representative to handle issues in situations like this, according to probate law.

When It’s Possible to Avoid Probate

There are some situations where it is possible to avoid probate.

Tenancy By the Entirety

In situations where both the husband and wife are alive and both of their names are on the title, and one spouse dies, the surviving spouse automatically gets the title transferred to them. It’s much the same as joint tenancy with rights of survivorship, except it’s just for married couples.

Joint Tenancy with Rights of Survivorship

This deed includes language that indicates whomever on the deed is still alive has the right to the property. Whoever is the final survivor gets the title. It avoids probate until the last person on the title passes away.

Life Estate Deed aka Lady Bird Deed

Florida is a state that allows for enhanced life estate deeds. These deeds allow for residents to maintain their eligibility for Medicaid during their life, while still keeping assets in the family.

Many states have a Medicaid Lookback rule, which prevents people from transferring assets for the purpose of qualifying for Medicaid. Most states look back five years. The Lady Bird deed automatically passes the assets to the beneficiaries without probate. It also prevents the state from taking the property to recover any costs of Medicaid benefits used by the deceased.

Trusts

Property held in a trust – either in a land trust or an Irrevocable Trust typically avoids probate. If a revocable living trust includes property and hasn’t been changed to remove the property from the trust at the time of death, it too can avoid probate.  However, there may still be issues with trust administration.

Real Estate Agents Selling Probate Real Estate

Many real estate investors look for probate properties. They often want to work with a real estate agent experienced in dealing with probate properties.

If you’re ever contacted about probate homes, there are a few questions you should ask, such as:

  • Is this the only property? If there are more properties, how many are there? Where are they located?
  • Is there a mortgage or a reverse mortgage on the property? If so, who is the lender? You must notify known creditors to whom there are outstanding debts.
  • Is anyone paying taxes?
  • Did the deceased person own any commercial property?
  • Did they own any vacant land?
  • Is there a will? Probate will occur while the will is reviewed for authenticity. If an authentic will is present, there’s an executor who is generally the one who initiates probate.
  • If there’s no living will, who are the surviving family members?
  • Is there a trust? In Florida, any assets held in a living trust may pass to the heirs without going through the local probate courts. The catch is the trusts have to be created before you die. And it’s not just your real estate, but all your assets have to be transferred into the trust. You remain the trustee until your death, and then it passes to your successor.

The answers to these questions will help determine how long the probate process may take. It will also help you relay information to potential buyers.

For people who plan on buying probate real estate, it’s important to know that you shouldn’t have any real expectations on the closing date until the attorney and real estate owner mention a hearing date. That’s a court date for the probate case to be heard at the local courthouse.

How Long Does The Probate Real Estate Process Take?

Unfortunately, few legal proceedings are quick. Multiple factors influence how long a property stays in probate court. From opening the case with a probate attorney to closing, the entire process could take anywhere from six to 12 months, and in some situations, it can take even longer.

Need an Inheritance Advance?

If you have probate real estate but don’t want to wait for it to go through court, you can get an advance on your probate distribution. When you work with us, we’ll review the petition for probate and any documents surrounding your probate case. After you fill out your application, we’ll crunch some numbers and if eligible, you’ll receive your inheritance cash advance within three business days – sometimes sooner. We wait for your probate so you don’t have to. And when the estate is settled, your advance is paid in full. You’ll receive the remaining inheritance cash.

Ready to find out more or get the process started on your probate property? Contact us today!

Sources:

Lady Bird Deed in Florida

https://www.floridarealtors.org/news-media/news-articles/2020/10/probate-real-estate-what-you-need-know

Legal Disclaimer: Please note that Inheritance Advanced is not a lender. Inheritance advance does not provide probate loans, inheritance loans, or estate loans, rather, an advance on a portion of proceeds signed over to Inheritance Advanced. Inheritance Advanced is also not a probate attorney and any information in this article should not be misconstrued as legal advice. We recommend that you seek the advice of an attorney, CPA, and tax attorney regarding any decisions pertaining to your probate.

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Our Inheritance Cash Advances help heirs receive a portion of their inheritance payout in just a few days. We then wait and are paid directly out of your share when the estate finally closes. We wait for probate so that you don’t have to. Click below and fill out our short form to receive an advance immediately.

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Get Your Inheritance Money Now!

Our Inheritance Cash Advances help heirs receive a portion of their inheritance payout in just a few days. We then wait and are paid directly out of your share when the estate finally closes. We wait for probate so that you don’t have to. Click below and fill out our short form to receive an advance immediately.

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