Probate Sales vs Trust Sales
Probate Sales...
When the owner of a property dies, and there is NOT a trust, most of the deceased persons assets, including their home, cannot be administered with without going thru a probate process. (8 Exceptions To Probate)
California probate is nothing more than a title clearing process. The state judge appoints the personal representative, the personal representative collects all the assets, pays all the valid debts from the assets collected and distributes the money to the rightful heirs. This whole process is supervised by a state judge and usually takes about one year to complete.
Time is money! The longer the Probate process takes, the more expenses are depleted from the estate. It’s extremely important to work with an Attorney and a Real Estate Agent specifically trained and certified in the probate process. An inexperienced Attorney or Real Estate agent often leads to the process taking much longer than necessary.
How soon can the home(s) be sold?
This will depend largely on if the Personal Representative or Executor has ‘Limited’ or ‘Full authority’.
If the Personal Representative has ‘Full Authority’, selling the home is much simpler and quicker. This leads to more potential buyers, which likely means a higher sale price. Also, as the home can be put on the market for sale and sold sooner, the cost of holding and maintaining it is significantly lower.
While the probate process may continue for months, a property can be listed and sold in as little as 3 months, including the buyer taking possession of the property
Here are invaluable links to questions & answers regarding the Probate process provide by Paul Horn. Paul is an Attorney and CPA and one of a less than 1% of California State Bar Certified Specialist in Estate Planning, Trust and probate Law. A great resource for your Probate and Trust Legal questions.
Trust Sales..
Unlike Probate Sales, the sale of a home which is owned in the name of a Trust generally DOES NOT need any Court approvals. The authority to dispose of any assets held in the name of the Trust, including Real Estate, lies with the surviving Trustee(s). If the original Makers of the Trust have passed away, the Successor Trustee or Co-Successor Trustees are able to avoid the Probate process and distribute the assets held in the Trust easily based on the Maker’s wishes.
The Trust documents designate who is/are the Trustee(s). These need to be located as they are generally not recorded anywhere. Without them it is likely that Probate will be required even if the assets are in the name of a trust.
Depending on the directives and intentions of the Maker(s) of the Trust, the sale of Real Estate is very similar to the standard real estate sale. As the Trust didn’t pass away (die), Probate is avoided. You do not need a Personal Representative/Executor. For all Trustees, especially Successor Trustees, it is a good idea to consult with a qualified estate planning attorney to help understand the wishes of the original Makers of the trust, no court approvals are needed.
The assets, including Real Estate, can be sold immediately if that is the wish of the surviving Trustee(s). However for Successor Trustees, the wishes of the Makers of the Trust should be followed based on the judgment of the Successor Trustee(s). Possibly the Maker of the Trust wanted the home kept as a place for the kids to live until they turn 21, and then sold.
To complete a home sale, the surviving Trustee, or the Successor Trustee(s) simply need to provide part of the Trust Documents to the Title Company for verification and there are some additional forms needed for the home sale. Otherwise the sale of a home is the same as a normal sale. A REALTOR who is experienced in Trust Sales can easily assist Trustee(s) in this process. Much simpler than Probate.
By planning ahead, creating a Trust, and taking the step to place the primary assets like real estate in the name of the Trust, the Maker(s) of the trust likely avoided the requirement that any surviving heirs would have to go thru the Probate process saving significant time, money and stress on the heirs.