Safeguarding, maintaining, and ultimately selling off a family home tends to be one of the biggest and most time consuming responsibilities executors face when bringing the affairs of a loved one to closure through the public process of probate. Read on for guidance from attorneys.
Most Valuable Asset
Absent proactive estate planning, a home must proceed through state probate protocols. Though there is nothing inherently wrong with probate, designated fiduciaries, such as executors or personal representatives, are likely to find that the probate process takes time and diligence. Meanwhile, beneficiaries can become impatient and resentful, especially since homes are often the most valuable family asset to be passed to the next generation. Conflicts over family homes can even result in probate litigation, so estate law experts at Chuhak & Tecson recommend that the designated fiduciary promptly initiate the probate process and obtain court approval (aka “Letters of Office”) to act on behalf of the estate, while proceeding to:
Identify any liabilities, including mortgages, on the real estate. If there is a mortgage on the property, you or your attorney should notify the mortgagor that the mortgagee (the decedent) has died….Identify all outstanding utilities due….The property will need to continue to be insured….
Identify a realtor…Obtain a comparative market analysis (CMA)….CMAs and appraisals determine the value of the real estate….Listing the property at or above the market or appraised value will protect you, as personal representative of the estate, from liability and potentially reduce capital gains tax at sale.
Obtain an Employer Identification Number (EIN) and open an estate bank account….You can obtain an EIN for free through the IRS….Once you have the EIN, you should open an estate bank account.… Any proceeds from the sale of the real estate will be deposited into the estate account.
Other practical advice which personal representatives and executors may find helpful while managing the affairs of deceased loved ones include: The Probate Process Explained; and Do’s and Don’ts for Executors.
Proactive Estate Planning
Resolving the outcome of a family home tends to be complex and intense because of a common parental desire: leaving it equally to multiple children. Unfortunately, this intention can cause problems and delays, as multiple beneficiaries work to agree on questions related to keeping the home, paying the mortgage, or selling it and dividing the remaining proceeds: “Any option requires all beneficiaries to be on the same page. One or more beneficiaries can buy out the shares of the other beneficiaries, although higher home prices and mortgage rates could make it impractical for one or more beneficiaries to buy out the other beneficiaries.” Because property has ongoing upkeep expenses, like utilities and insurance, maintaining it while making arrangements to sell it, can quickly become a real drain on the estate: “The longer it takes to list and sell a property, the more it will cost the estate and the less money the legatees will receive.”
Attorney Nicholas Zausch reminds us that careful estate planning for family homes can curtail a lot of expense and stress down the road:“Proactive planning, like titling the property in trust or as joint tenants, for example, can save you and your loved ones time, money and a lot of headaches.”
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