We’ve shared a lot of information about the probate process recently, but what we haven’t covered is what happens when probate for property requires that the property be sold to cover the expenses of the estate. Today we’re going to cover that situation in detail and share what you need to know.
Probate For Property Sold to Settle An Estate: What You Should Know
When we talk about selling assets of an estate to settle that estate, we are usually talking about selling real estate. In some rare situations, however, other property of the estate may need to be sold to settle estate debts. This does not happen often simply because it is the job of the estate executor to preserve the estate assets so that they can be distributed to beneficiaries.
When is the Sale of Estate Assets Warranted?
The sale of estate assets is usually only carried out when creditors of the estate need to be paid, but other circumstances may also warrant a sale; for example, should the government exercise eminent domain.
The Order of Business For the Executor of the Estate
When serving as the executor of the estate for a property, the appointed individual must carry out business in a specific order. They must first gather all assets of the estate and once this is done, they must then settle any debts of the estate before beneficiaries receive their inheritance.
Settling the estate requires that any creditors are paid, taxes are filed, and the final expenses of the deceased are paid. In many instances, with proper planning, the deceased has planned ahead and all of these expenses are provided for so estate assets don’t need to be sold. In other instances, however, the estate simply does not have the available funds to cover these outstanding expenses and the executor must sell estate assets to cover those expenses.
What is Sold to Cover Estate Expenses?
Sometimes, if a debt is minimal, smaller assets of the estate can be sold to cover outstanding expenses, but most of the time, it is the real estate that is sold to gain access to necessary funds.
What Happens When Estate Assets Are Sold to Cover Expenses During Probate for Property?
When the executor of the estate is forced to sell estate assets in order to cover estate debts, the executor is always best served by hiring a probate real estate professional. Probate real estate professionals are trained in probate specific property sales and are familiar with the specific paperwork required with this type of sale.
The first step in selling a property to settle a probate estate is to have the real estate appraised. This appraisal will help to set a selling price for the property. By law, real estate sold in probate must be sold for at least 90% of the appraisal value.
The property is then listed for sale and marketed by the probate real estate professional.
In order to sell, an offer on real estate being sold in probate must be accepted by the seller and then submitted to the probate court for approval. If the court approves the sale, a date of finalization is set by the court.
Once this process is complete a Notice of Proposed Action is mailed out to all heirs of the estate. If any heirs have a problem with the sale, they have 15 days to pose those objections to the court. If objections are made to the sale, the objector can force the sale to be supervised directly by the court.
If no objections are made, the court will then enter the “over bidding” process. Essentially this means that the judge will ask if anyone in the court for the probate process wishes to bid on the property. At this time, bids may be made on the property in increments set by the court. The “buyer” who agreed to purchase the property and who put a 10% deposit down on the property is permitted to attend and bid during the overbidding process.
The highest written offer is almost always the offer accepted by the court on real estate sold during probate. The administrator of the estate may, however, set acceptable alternatives prior to overbidding. For example, a bid that is lower than the highest bid but that is all cash would have priority over the highest bid is that was not an all-cash offer.
Once the sale of a property has been confirmed, a conveyance is executed. A conveyance is simply an order to transfer the property from one party to another. The conveyance refers to the court order confirming the sale. A certified copy of the order is then recorded along with the conveyance.
What Happens When There Are Funds Remaining From a Real Estate Sale?
The purpose of selling real estate in probate is to pay creditors and debts of the estate. Many times the funds gained from the sale of real estate exceed the debts owed by the estate. In this case, once all outstanding debts and creditors are paid, the remaining funds are divided among the beneficiaries of the estate. The probate court handles this fund distribution.
Looking For An Attorney For Probate For Property in Florida?
If you live in or around the St. Petes are and are going through the probate process and are looking for a reputable probate attorney, Weidner Law can help. Just pick up the phone and dial 727-954-8752 to arrange a time for your consultation. The sooner you get a probate attorney on your side, the sooner you can get back to focusing on your own affairs.