If you are going through the probate process and are stuck in the courts, it can feel frustrating and overwhelming. All of your hard work handling everything should pay off in one way or another. In our latest post, we will help you better understand probate and help you learn how to sell a probate property in Houston.
What Is Probate?
Probate occurs when someone dies and heirs receive property listed in a will and the debts of the deceased estate are paid off. If you have to deal with the probate process, it is best to deal with a probate attorney as the process moves through the courts. They will be able to provide you with advice, help you handle debt payments, tax situations, and guide you through an often stressful process. You will need to take an inventory of the estate’s assets and locate all estate planning documents. You will want to notify all creditors and pay off any outstanding debts with money from the estate. There will also need to be income taxes filed, which include a possible inheritance tax. Depending on the situation and if there is a will present, the process can take 6 months to over two years. Learn more about if there is a holding period.
Probate Related Definitions
- Decedent: The person who has died is referred to as the decedent.
- Beneficiaries: People named in a will, or in the case that there is no will, is determined to by the court to receive assets from the decedent’s estate.
- Estate: All of the decedents assets. Cars, houses, land, cash, and personal belongings are just some of the items.
- Will: This is the legal document in which a decedent has outlined how he or she would like assets distributed among their loved ones.
- Executor: The person who will be in charge of inventory of the decedent’s assets; pay debts of the estate; pay taxes of the estate; file lawsuits for claims owed to the estate; and distribute assets from the estate to the beneficiaries as named in the decedent’s Last Will and Testament.
- Administrator: The person who will carry out the duties of an executor, if one was not named by the decedent. The court will often appoint one of the primary heirs to act in this capacity.
Texas does not have an inheritance tax, meaning no death-related taxes are ever owed to the state of Texas. There is a 40 percent federal tax, however, on estates over $5.34 million in value. Over 90 percent of all Texas estates are exempt from federal estate taxes. Under current federal tax law, estates with a value of less than $5.4 million are exempt from estate taxes. That leaves personal state and federal income tax. These tax returns cover the period from Jan. 1 through the date of death of the year that the person died. If the decedent was married at the time of his death and he and his spouse filed joint tax returns, then the executor and the surviving spouse will jointly file the tax return, and both will sign it. Any income generated by the decedent after the date of death should be reported on the estate’s income tax return rather than on the decedent’s personal income tax returns. Also note, the estate’s income tax return is different from the estate tax.
Muniment of Title
When a will is probated as a Muniment of Title, no executor or administrator is appointed to administer the estate. A Muniment of Title should be considered when the estate has no unsecured debts and the only assets involved are real property and cash accounts. A muniment is usually not advisable when the estate includes publicly traded securities, bonds, and similar assets because the transfer of these types of assets often requires an executor or administrator with authority pursuant to Letters Testamentary. Note that a will can only be admitted as a Muniment of Title in probate if it has been more than four years since the death of the decedent.
Why Would A Probate Home Need To Be Sold?
When a person dies and there are outstanding expenses owed or ongoing expenses such as a mortgage payment, the estate may not have enough income to pay these debts. The executor of the estate may be forced to sell the property in order to avoid foreclosure. If the house is not required to be sold by the court, you will need to wait until the probate process is completed before attempting to sell the house. However, you can plan ahead by speaking to one of our team members and giving them the property basics. We will be able to provide you with a tentative offer, so you can know what to expect once your house has cleared the probate process.
Selling The Property
Even if the property was not left to an heir, the executor of the estate will be tasked with handling the sale of the home. An interested buyer must provide a deposit along with a written offer. Before the offer is approved by the courts, the court will ask if there is anyone who would like to make a higher offer for the property. Once the court approves the offer, there be an opportunity to have the property inspected before the sale of the home is finalized. Once this process is completed, escrow will be able to close within only a couple of weeks. The proceeds of the sale are used to pay any outstanding debts, with the remaining balances going to the heirs as outlined in the will.
Selling a house going through probate or that was inherited in Houston may seem daunting due to all of the legal proceedings, but it can be done. If there are multiple heirs, it is important to make sure everyone is all on the same page. While the executor of the estate has the authority to list and sell the property, it is best to get everyone in agreement ahead of time. You don’t want to have anyone contest the sale or create problems within a family if you can avoid it. If you are looking for a quick way to sell a probate property please reach out to us, we would love to help. Brilliant Day Homes