So you’ve been tasked with selling a house in probate. Here’s what to do next and how to avoid probate when possible.
Selling a house in probate.
There’s no getting around the fact that selling a house in probate is probably one of the biggest and most drawn-out hassles you’ll face–especially in California. The reality that you and your family may be actively grieving through the process doesn’t make it any better.
The good news is, you typically have straightforward steps to follow {See below}. However, you’ll want to avoid probate because honestly, if you can avoid selling a house during a probate administration in California, you certainly should. Read on to learn more.
When Selling a House in Probate Becomes Necessary
You may need to sell a house in probate if the deceased person has debts that liquid assets can’t satisfy.
In some cases, the person who has passed didn’t leave a will, so the only fair way to distribute assets evenly becomes selling the house in probate and splitting the proceeds.
In other cases, the will may leave the house to multiple people, but those individuals don’t want to share ownership of a physical house. Usually, selling and splitting it makes more sense.
Unfortunately, the decision to sell doesn’t always get a unanimous vote. This can lead to court challenges and hurt feelings among people who otherwise care about each other. In heartbreaking cases, this can even lead to people not talking for years.
But let’s say for a moment that we’re in agreement and you’re ready to move forward. Here’s what you’ll do.
Learn More: The Probate Process
3 Steps to Selling a House in Probate California
1. File the Initial Probate Petition
When filing the initial probate petition, apply for “full” powers under the California Independent Administration of Estates Act (IAEA). This allows you to sell a house held in the probate estate without a formal court hearing process, as long as no one objects to the sale.
Note: Never assume all beneficiaries are okay with the sale, or you’ll get caught off guard later, adding to the complex probate process. Communication is key. Get your information and thoughts in order, then have the conversation with the house’s beneficiaries.
2. Work with a Realtor who Specializes in Probates
Work with a realtor who specializes in sales through the probate court process. There are special forms that must be used, and few realtors fully understand this process.
Don’t make the mistake of just asking “can you handle a probate house sale.” Make sure they’ve handled many situations involving probated house sales.
3. Send Notice of Proposed Action to all interested parties
Send written notice to everyone who has an interest in the sale of the property. In most cases, interested parties will be the beneficiaries.
And don’t forget: sales proceeds must be held in an estate account; they can only be distributed upon court order. If you’re the personal representative for the estate, you may already have this account set up.
Why You Should Avoid Probate Instead
All kinds of issues can arise. For example, the house isn’t selling at the listing price. Now, you have to go back to everyone to get written consent to lower the price. Sometimes, beneficiaries don’t have the same sense of urgency you do, and they can be inconsiderate of the fact that you’re taking on all of this work of settling the estate and selling a probated house.
How to Avoid Probating a House
Sadly, once the loved one who owned the house is deceased, your options are limited. But often, after going through lengthy probate, a person realizes they don’t want their own children to go through that same process. You can prevent these probate fiascos by having the owner set up a trust instead. Setting up a trust and placing the house in it:
- Avoids probate
- May offer tax benefits
- Allows you to designate how assets in the trust are used (e.g., to care for a special needs adult) and who will manage those assets. See Special Needs trusts.
- Can ensure your affairs are properly managed if you become incapacitated
- Provide you with flexible options as needs change
Estate Planning for the Future
Selling a probate home in California can be a long and arduous task. Best to avoid probate when you can by exploring your options. Setting up a trust is just one crucial step you can take toward a smoother process for your beneficiaries after you’re gone.
To learn more about estate planning for complex situations, don’t leave before you’ve read our blog about estate planning and downloaded our free estate planning checklist.