Trust and Probate
Trust Sales
If you ask me, every homeowner in California should have their house in a Trust. Avoiding the expensive, and lengthy process of Probate in California should be a concern of any homeowner that has a loved one, or family they would want to leave their house to should they pass away (and remember people, even though it’s an unpleasant conversation to have, it is GUARANTEED to happen to ALL of us! Don’t put your head in the sand! Accidents happen to 30yr old 1st-time buyers… You don’t have to be old to die!)
A Trust protects your assets when you die so a loved one can inherit your possessions in a more simple and smooth process.
For the most part, a house sale that is in a Trust is similar to a house sale that is a standard sale. Two of the biggest differences pertain to disclosures and responsibility of the Trustee to the beneficiaries.
Disclosures are critical in a house sale. Home Owners need to disclose all they know about the house – the good and the bad to educate new buyers and protect themselves from a buyer saying they hid some material information and open themselves to a lawsuit.
In a Trust sale, the Trustee(s) is exempt from filling out many of disclosures. Typically, they have never lived in the house, or at least not for years, so they aren’t held responsible for knowing if there was leaking, floods in the house from overflowing toilets, roofs leaking and so on. Buyers who purchase homes in Trust Sales need to be aware they won’t be provided detailed Seller Disclosures and will need to rely on inspections for more information than the Trustee will provide.
Additionally, the Trustee or Trustees (the person(s) handling the sale of the house for the beneficiaries – they could be the sole beneficiary or there could be multiple beneficiaries), also has a responsibility to do what’s in the best interest of the beneficiaries and communicate each step of the way. It is not uncommon for parents to name all their adult children as the Trustees so they have equal responsibilities.
Sometimes this can cause issues if the adult children don’t agree during the process, but that’s another issue I can discuss another time.
For this explanation, we will assume the Trustees agree on the house sale. They will work closely with me to ensure the best/highest sale price of the house is achieved and the process goes smoothly.
Often, the Trustees don’t have the financial means to cover costs of cleaning out the house, debris clean up, light remodeling that may be necessary to get the house ready for sale, etc. I can help with facilitating all these steps, and can even provide services at no upfront costs so the financial burden is limited! Ask for more information on those services.
Another option we provide to Trustees is to sell the house completely “as-is.” Meaning, not lifting a FINGER! They can take the items they want out of the house, leave the rest (and I mean EVERYTHING they don’t want), not fix one thing in the house or make it look presentable…and I can bring in multiple cash buyers to bid on the house.
The buyer will pay all the fees associated with the closing; from closing costs with the Title Company to my commission. The overall sale price won’t be as high, but the net in your pocket may be the same, if not higher, than if you take the time to hire people to remove everything, do an estate sale, paint, change out light fixtures, etc. to get the house ready to show it to the public.
And…have all the traditional closing costs to include. Net in your pocket, not to mention absolutely no stress, maybe a much better fit to close the sale and move on with your life. This type of sale can take as few as 5 days to get the money in your bank account as opposed to upwards of 3-6 months to get the house ready to sell if you go the traditional route. Have a look at this website page for more information to see if this is something you’d want to consider.
Probate Sale
When someone dies without a Trust, all their assets must go through the probate process through the California Courts before being disbursed.
This can take anywhere from 6 months to 2 years. Additionally, it can be quite costly – literally upwards of $60,000! Note my comment above; Get a Trust set up if you own property in California – a Will won’t enough to bypass the Probate process if you pass away and own property. Even if there was a Will done by the decedent, the courts are required to be involved in the disbursement of the assets in the Will.
Probate sales are much more involved and require special education to facilitate the house sale. A judge in the Probate Courts will be assigned to oversee the person who is the administrator of the estate. The administrator is the person in charge of managing all the assets; usually the closest living relative –or sometimes an Attorney or someone appointed by the court.
It can be a complicated process, and as mentioned, time-consuming and costly. I don’t want to overwhelm you with too much information, but one step of the sale may include the sale needing to be approved by the court – I go to the court with the attorney and present the house sale to a judge.
Sometimes, that step is not necessary. Either way, the process can take upwards of 6 months to close the house sale from the time of an offer being presented. This is partially dependent on how quickly the Attorney can get the court case scheduled.
The listing agent also needs to educate the buyer’s agent on the process and the uncertainty of the length of time the sale could take. There are typically higher earnest deposits required as well. There are the occasional Probate sales that can take the typical, 1 month to complete, but each situation is unique and I work closely with the attorney to understand the situation.
Please make sure the Realtor you hire to help when you are selling a loved one’s house during the Probate process understands how things will proceed! It can literally turn into a nightmare of headaches and costs if they don’t know what they are doing!