The two main areas of pain people experience when they are left to deal with a home in probate is
- the emotional and relational strain it puts on the family and
- the financial strain it puts on the Administrator and the family.
There is one simple solution to these challenges but I’m afraid that if you’re reading this article, this option has come and gone. That option is of course to have the property put into a Trust. The Trust names a trustee to handle the affairs of the estate preventing the court from getting involved and in most cases even preventing anyone from disputing the disposition of the assets.
Important Note: I am not an attorney or tax professional. I am just sharing my opinions and experiences on the subject. ALWAYS seek the advice of a high quality professional in the area you need help.
If a trust was in place, the individual (Trustee) would essentially have instructions to dispose of the property as they see fit in accordance with the terms outlined in the Trust. Even when everyone who hasn’t visited mom or dad in 15 years wanting their piece of the pie start showing up, it is in black and white who gets what and they would have a hard time arguing the point. In a probate however, the decision of who gets what is left up to the court. You’d be amazed at how good people are at arguing why they should be the beneficiary even though that was never mom or dad’s intention.
I know personally I don’t want ANYTHING left up to the court when I have the ability to control the outcome.
However, if you find yourself an administrator of an estate in probate there are a couple of things you can do to help ease the pain and hassles associated with it.
#1. As soon as possible after the passing of your loved one, have a meeting with the primary heirs and establish who will be handling the estate and distributing the assets. Once this has been established, have everyone sign a document that states that they agree to these terms and agree to let the specified person proceed without interference.
I’ve seen people do this and by doing so, they end up with something in place they can refer to when someone starts to get a little squirly and wants (or needs) right now what they think they are due. You can pull out that signed agreement and say, “Remember when we agreed…you’ll get what’s due to you when it’s all done”. Now is this a legally binding agreement? Not likely unless you have your attorney draw up a binding agreement that the probate court would approve. Either way, the heirs who have signed the agreement have in a sense made a form of psychological commitment to the administrator to let them do the job.
As simple as this may sound, it can be effective and save lots of hassles from heirs who think they are smarter, more deserving or just have an urgent financial need and want things to happen yesterday. They need to understand the process and be patient with it.
One more tip is to do this as close to the beginning of the probate as possible. Why? In my experience, usually in the beginning family members will either be most accepting because of their emotional state or they will be most adversarial and then you’ll know where everyone stands and can deal with them appropriately instead of waiting until you’re near the end.
#2 See if you can get the heirs to sign a power of attorney essentially doing the same as above. I’ve never had anyone do this on one of my transactions but I have heard the idea discussed and it’s worth checking out with your attorney.
#3 If there’s a house involved, sell it as quickly as possible. And I mean like right now. Why? In my experience, the heirs know in the beginning it will take time to get the home sold so they’ll be a little patient. But after a few months, suddenly every heir becomes an expert in home sales. Even though they are seven states away, they suddenly know what home values are where the subject property is located and how much the home should have already sold for. They are full of advice and get very upset when you don’t do what they say. They quickly start to think you, the administrator, are incompetent and you must not know what you are doing. Not trying to discount the heirs desire for closure here but I’ve seen it over an over again. The stress level can become unbearable.
Another good reason to sell the house as fast as possible is because as you may already know that as administrator, you are also responsible for the financial upkeep and security of the property and it’s contents. I’ve seen administrators who find themselves considering bankruptcy at some point because they have had to pay their own mortgage payment along with the mortgage payment of the subject property for much longer than they had expected. Likewise, while many probate properties are vacant, if there are antiques or other valuables in the property and they get damaged or stolen, you can be held responsible.
I had someone contact me who was the ‘new’ administrator appointed by the court to get the home sold because under the previous administrators watch, they had hired a real estate agent and the home sat on the market for about 7 months. At some time in the 7th month, someone backed a truck up to the vacant home and took EVERYTHING! Apparently the home was filled with valuable antique furniture and other expensive items. Not good. Now that’s less that the heirs get to divide amongst themselves.
This is even another really good reason for getting the home sold really quick. It creates urgency amongst the heirs to come get what they want before it gets sold or taken to the dump (or stolen). This saves you lots of time and energy later.
There are two methods I use when I list a home for sale that accomplish two things:
- Sell the home fast (almost always within the first 3 weeks)
- Get the maximum value for the home every time.
Something you may not realize is that probate properties are prime targets for investors who are looking to score a deal on a house. The reason is because they know that the administrators likely want to dump the property before it gets too expensive to manage. Often times they’ll buy the property for as little as 70% of the actual value. Don’t let this happen. Mom and Dad worked hard to have something to leave the family. Don’t give it away when you don’t need to.
The methods I use make sure you get maximum value for the property and I’d be happy to discuss these methods with you about your Southern California probate property.
Just call The Probate Agent 714-900-2710
