When a loved one passes, an otherwise stressful time compounds when there is a blur of details to sort out and consider. Having real estate on the table can further complicate the situation. Sadly, it can also be a time of much confusion for family members. They are waiting for the estate to be settled and understand any potential distribution of assets. When it comes to real estate inheritance transfer, it’s best to have as many details pre-planned as possible. This ensures family members will have less stress and conflict at the time of the transfer.
In this article, we’ll explore real estate transfers and how the transfer of property after death without a will or trust works. By understanding how these processes typically go, those planning their will and loved ones handling the transfer can have a smoother experience.
How Does a Real Estate Transfer Work?
When one inherits property, there is often a layer of stress that comes with it. It helps to understand the most reliable and efficient methods to transfer or receive a piece of inherited property. This allows the process to be expedited once the time comes. While there are numerous options for those planning their estate, the two most common real estate planning tools are wills and trusts. These are both legal documents that establish a relationship with the deceased and living loved ones or colleagues that describes the nature of the real estate inheritance transfer.
There is also the unfortunate yet common scenario of someone passing who has not made preparations for their assets. When it comes to the transfer of property after death without a will or trust, a probate court must make the determinations of how to distribute the inheritance. Let’s explore all of these options for those planning their estate and looking to understand how this transfer process might look.
What is a Will?
A will is a legal document. It details how you’d like your assets and belongings to be distributed after passing. Creating a will is one of the most common ways property is transferred from one party to another. Regardless of the level of assets, all adults should have a will, mainly because without one it may come down to courts facilitating their idea of a “fair” distribution of assets to descendants. With a will properly prepared and set up correctly, there is no doubt over who and where to allocate assets.
A will names the “beneficiary,” or the individual(s) who will receive the real estate property. Once named as a beneficiary of a property, that person may be left liable for mortgage payments, taxes, and outstanding liens on the title for the property they receive. When this occurs, the first thing a beneficiary should do is reach out to a reliable real estate attorney. With their attorney, they can settle several legal items before placing the property on the market or renting it out to others.
What is a Trust?
The other common method for real estate inheritance transfer is through a trust, which is a fiduciary connection where the deceased gives another party authority to distribute assets for the benefit of their beneficiaries. A trust is an entity that bestows a legal obligation upon a third party referred to as the “trustee” to hold assets for the benefit of an heir or family members, also called beneficiaries.
An individual can sign an agreement to put property into a trust at any time, becoming the “trustor”, and the trust can become active upon their passing. The trustor directs the passing of assets to the trustee based on the instructions outlined in the trust. If you’ve inherited a piece of real estate through a trust, it might be necessary to work with the trustee if your intentions are to sell. Many advantages come with choosing a trust, but one needs to iron out all logistics through the trust before selling property.
Transfer of Property After Death Without a Will or Trust in Place
Wills and trusts are the two most common methods of planning a real estate transfer, but certainly not the only ones. Numerous other tools can guide how property and assets are distributed among family and loved ones. Some of these include joint ownership (where a co-owner such as a spouse inherits the property), tenants in common (business partners or siblings inheriting property simultaneously), or transfer-on-death deeds which allow the deceased to transfer the house’s deed and claim any new owner upon passing.
When the deceased has made no arrangements, a probate court will handle the matter of real estate inheritance transfer and distribution of assets. Even when a will is in place, it used as a guide in the probate process, but does not avoid it altogether.
What is a Probate?
Probate is the process by which local courts step in to help distribute property and assets of someone who has passed. If they did not implement a will, trust, or other estate planning tool to guide the distribution of these assets, the property in question is subject to the determinations of probate court. Probate court is the least ideal of these scenarios, and you should try to avoid it if you’re planning an estate and want to provide a smooth process for loved ones after passing.
There are numerous challenges of having to go through a probate process. Let’s explore a few of these factors when handling an inheritance transfer without any legal planning in place.
Lost Time
Anyone who has tried to have a lien removed or dealt with the court in any fashion knows that they can often move at a less than ideal pace. This is only magnified when it comes to appointing ownership in a real estate scenario. The probate process varies state-by-state. It is subject to the laws and guidelines of the state the property is located in. The inheritance transfer process can take months to several years to sort out depending on the nature of the estate and family.
Lost Privacy
Probate court also often comes at the expense of the family’s privacy. While trusts keep information about beneficiaries and family members disclosed, probate involves the extensive recording of legal information for public records. This can be worrisome for those who want to keep sensitive and private information private. Probate court makes public who is involved, how much money is in the estate, and what types of property are in question.
Lose Money
In addition to privacy and time, you have to factor in sunken costs within a probate scenario. With no will or trust to guide the distribution of assets, the court has to figure out who is the rightful descendant and beneficiary to the transferred property. This process isn’t free and to do so they need to expend resources. Personal representative fees, attorney fees, court fees, and potential appraisal and accountant fees are just a few to consider. These costs add up quickly, but you can easily prevent them with proper estate planning.
Three Key Property Solutions Specializes in Purchasing and Working with Inherited Properties
Inheriting a property from a spouse, parent, or distant relative is a challenging experience for many reasons. It requires thoughtful planning, in addition to time, money, and communication. You must communicate with family members and lawyers to prepare an inherited property for rent or for sale. Amidst what can be an overwhelming process, it helps to have an EASY option to sell an inherited property that is less burdensome in terms of time, stress, and energy. The good news is that Three Key Property Solutions can help. Contact us today to see how we can help you navigate any real estate inheritance transfer. Learn more about how we can help beneficiaries sell their newly inherited property.
