While inheriting property from a relative or friend may sound appealing, there are financial considerations and steps to be aware of before making any new plans. Probate court is likely involved, whether a will existed or not. Probate is the name of the process that handles the estate of the deceased. A will determines who property goes to, and in absence of a will, the court may decide who inherits any real estate. Here are some of the more common issues that arise because of mistaken assumptions.

1. The Probate Attorney Doesn’t Represent You

The probate attorney represents the estate of the person who died, not the heirs. They might facilitate deals in the process of moving property, but this is in the interest of the estate.

2. Even with a Will, Probate is Not Necessarily Avoided

Probate can only be avoided if a will is set up in a way where passing on items of an estate is legal. This is usually done with a trust, which can be less expensive than the probate process and takes less time for property to transfer. Each state has its own laws surrounding how titled and deeded property is inherited. Typically, however, probate is a smoother process with a will that states how the estate is to be distributed.

3. Inherited Property Isn’t Likely to be Free

If the inherited home still has a mortgage, the heirs named for ownership are responsible for taking over those payments if keeping the property. An exception would be if a will stated explicitly for the finances of the estate to pay off the remaining amount owed on the house. Costs to refinance the home, cover utilities, insurance, property taxes, and maintenance are all the heir’s responsibility after the close of probate.

4. Multiple Heirs Must Agree on What to Do with the Property

It’s common for a parent to leave property to adult children as heirs. Family dynamics could complicate this if each heir has a different idea for what to do with the home. The options are to

∙ Own the home jointly and share all associated costs.
∙ Sell the home and distribute the proceeds equally.
∙ Agree upon one heir buying out the others’ shares in the property and own it solely.

Note that owning the home jointly requires decisions such as who will live in the home. Will the joint owners rent and manage the property together? As a joint owner, you must consider whether the other heir is someone with whom you want to be in a long-term business relationship. If the home is sold or one heir buys out the other’s shares, the executor of the estate must agree to the fair market value of the property.

5. Wait Until Probate is Complete Before Occupying the Property

While it may be allowed for you to immediately occupy inherited property, it can be risky. The property isn’t yours legally until the estate is settled. That may make it impossible for you to properly insure the home during probate. There may also be an issue among family members with regard to all the possessions still inside the home. If a person intends for an heir to occupy his or her home immediately upon their death, provisions are best made in the will ahead of time.

Real Estate Term of the Week

Probate: A legal process in which a will is reviewed to determine whether it is valid and authentic. Probate also refers to the general administering of a deceased person’s will or the estate of a deceased person without a will.

Platinum Service Realty