Profits In Probate Real Estate - Part 2 8.
The typical objections are:
(1) The Will was not properly drawn, signed or witnessed, according to the
state’s formal requirements;
(2) The decedent lacked mental capacity at the time the Will was executed;
(3) There was fraud, force or undue influence; or
(4) The Will was a forgery.
If the Will is held invalid, the probate court may invalidate all
provisions or only the challenged portion. If the entire Will is held invalid,
generally the proceeds are distributed under the laws of intestacy of the
probating state. (….in the chain of heirs who gets what.)
All personal and real property will eventually be disposed of, so be
sure you stay in touch with the PR.
NO WILL?
If a person dies without a Will (known as dying "intestate"), the
probate court appointed Personal Representative receives all claims
against the estate, pays creditors, and then distributes all remaining
property in accordance with the laws of the state.
The major difference between dying testate and dying intestate is that
without a valid Will an intestate estate is distributed to beneficiaries in
accordance with the distribution plan established by state law; a testate
estate is distributed in accordance with the instructions provided by the
decedent in his/her Will.
The duration of a probate varies with the size and complexity of the
estate, the difficulty in locating the beneficiaries. If there is a Will contest, or
anyone objects to any actions of the Personal Representative, things can
really drag out. Some matters have taken decades to resolve, but most are
settled within a few months.
9.
PROPERTY EXEMPT FROM PROBATE
Most states allow a limited amount of several types of property to
pass to certain beneficiaries free of probate, or through a simplified probate
procedure. Real and personal property owned as a joint tenant passes to
the surviving co-owners without going through probate.
Other types of benefits, such as a life insurance policy or annuity
payable directly to a named beneficiary, bypass probate. Money from IRAs,
Keoghs, and 401(k) accounts transfer automatically, outside probate, to the
persons named as beneficiaries. Bank accounts that are set up as payable-
on-death account (POD for short) or an "in trust for" account with a named
beneficiary also pass to that beneficiary without probate.
If a Living Trust holds legal title to property, that also passes to the
beneficiaries without probate. (The Trust is a legal entity, which survives
after decedent’s death.)
KNOW YOUR STATES PROBATE LAW
You don’t have to be a probate expert, but you do need a general
understanding of the procedures in your state. Go to www.findlaw.com
Click on "Cases & Codes" near the left hand, top portion of the
screen. Scroll down the page to the list of states. Click on your state and
look for the statutes governing probates. They will look something like the
following:
Title 14 - TRUSTS, ESTATES, AND PROTECTIVE PROCEEDINGS
CHAPTER 1 - GENERAL PROVISIONS, DEFINITIONS AND PROBATE
JURISDICTION OF COURTS
CHAPTER 3 - PROBATE OF WILLS AND ADMINISTRATION
UNIFORM PROBATE CODE
As this is written the following states have adopted the Uniform Probate
Code in its entirety (in some cases with significant modifications):
10.
Alaska - Adopted 1990 Revision of Article II and 1989 Revision
of Article VI-- Title 13, Chapter 6, Section 5 to Title 13,
Chapter 36, Section 100
Arizona - Adopted 1990 Revision of Article II and 1989 Revision
of Article VI-- §§ 14-1101 to 14-7308
Colorado - Adopted 1990 Revision of Article II and 1989 Revision
of Article VI-- §§ 15-10-101 to 15-17-102
Florida - Adopted 1989 Revision of Article VI-- §§ 655.82,
711.50 - 711.512, 731.005 - 731.302, 735.101 - 735.302, 737.101
- 737.512
Hawaii - Adopted 1990 Revision of Article II and Part 3 of 1989
Revision of Article VI-- §§ 539-1 to 539-12, 560:1-101 to 560:8-
101
Idaho - Adopted Part 3 of 1989 Revision of Article VI-- §§ 15-1-
101 to15-7-307
Maine - Adopted Part 3 of 1989 Revision of Article VI-- §§ 1-101
to 8-401
Michigan - Adopted Part 3 of 1989 Revision of Article VI-- §
§
700.1101 to 700.8102, §§ 701.1 to 713.6
Minnesota - Adopted 1990 Revision of Article II-- §§ 524.1-101
to 524.8-103
Montana - Adopted 1990 revision of Article II and 1989 Revision
of Article VI-- §§ 72-1-101 to 72-6-311
Nebraska - Adopted 1989 Revision of Article VI-- §§ 30-2201
-
30-2902
New Mexico - Adopted 1990 Revision of Article II and 1989
Revision of Article VI-- §§ 45-1-101 to 45-7-522
North Dakota (PDF) - Adopted 1990 Revision of Article II and
1989 Revision of Article VI-- §§ 30.1-01-01 to 30.1-35-01
South Carolina - Adopted Part 3 of 1989 revision of Article VI-
-
§§ 35-6-10 to 35-6-100, 62-1-100 to 62-7-604
South Dakota - Adopted 1990 Revision of Article II and Part 3 of
1989 Revision of Article VI-- §§ 29A-1-101 to 29A-8-101
11.
Utah - Original 1969 version still in effect-- §§ 75-1-101 to
75-8-101
Numerous other states have adopted the Uniform Probate Code
in an incomplete form.
==============
=
Take a look at a couple of sections of the California probate code as
an example of what you may find in yours:
72-3-605. Personal representative to proceed without court
order -- power to invoke jurisdiction. A personal representative
shall proceed expeditiously with the settlement and distribution
of a decedent's estate and, except as otherwise specified under
this code or ordered in regard to a supervised personal
representative, do so without adjudication, order, or direction
of the court, but he may invoke the jurisdiction of the court,
in proceedings authorized by this code, to resolve questions
concerning the estate or its administration.
72-3-613. Transactions authorized for personal representative.
Except as restricted by this code or otherwise provided by the
will or by an order in a formal proceeding and subject to the
priorities stated in 72-3-901, a personal representative, acting
reasonably for the benefit of the interested persons, may
properly:
(1) retain assets owned by the decedent pending
distribution or liquidation, including those in which the
representative is personally interested or which are otherwise
improper for trust investment;
(2) receive assets from fiduciaries or other sources;
(3) perform, compromise, or refuse performance of the
decedent's contracts that continue as obligations of the estate,
as the personal representative may determine under the
circumstances. In performing enforceable contracts by the
decedent to convey or lease land, the personal representative,
among other possible courses of action, may:
(a) execute and deliver a deed of conveyance for cash
payment of all sums remaining due or the purchaser's note for
the sum remaining due secured by a mortgage or deed of trust on
the land; or
(b) deliver a deed in escrow with directions that the
proceeds, when paid in accordance with the escrow agreement, be
paid to the successors of the decedent, as designated in the
escrow agreement.
12.
Once you have a general understanding of the probate system in
your state you will not only be in a position to reap some very satisfying
rewards, but you are ready to provide a valuable service to the estate and
its heirs. Don’t be intimidated by the law. A motivated PR will help you.
Now that you have targeted the opportunity let’s move step-by-step
closer to the reward.
It’s The Law!
Here is the problem. You want to buy real estate at a bargain price.
That property can often be found in the estate of a deceased property
owner.
The hurdle that stands between you and the property is twofold. First
there is the PR (and heirs) of the estate. Second is the court and
attorneys. It may be easy to deal with the first. Sometimes not so easy to
deal with the second.
Each state may treat the Will and its provisions a bit differently, but
here are the four primary ways real property can be sold from probate:
1. Public Auction: This is a rare occurrence and is only found in special
cases, such as large tracts of land, etc. Auctions of this type are widely
advertised and seldom produce bargain buys.
2. Public Sales: Advertised a number of times in newspapers and sold by
bid. This has proven to be a poor way to find a bargain. The same
seasoned investors who bid at foreclosure auctions can be found at these
sales.
3. The Heirs sell the Property: Sometimes property is willed to one or
more heirs. The court during the probate proceedings will transfer title to
them. You can contact them directly and possibly make a good buy,
Especially if they live out of the area, or better yet, out of the state.
4. Private Sale: It often is possible for the executor/administrator/PR of
the estate to sell the property without advertisement and without court
approval. This document and accompanying materials are designed to provide authoritative information in regard to the subject matter covered in it. It is for illustration purposes only and presented with the understanding that the author and publisher are not engaged in rendering legal, accounting or other professional opinions. If legal advice or other expert assistance is required, the services of a competent professional should be sought. |
