Probate is the legal process of settling an estate in court after a person dies. It includes the identification and inventory of the deceased person’s property, payment of debts and taxes, and distribution of the remaining property as directed by the will. If there is no will, the property will be distributed according to state law.
The probate process transfers legal title of property from the decedent to his or her beneficiaries. The personal representative nominated in a will is responsible for probating the will. If no personal representative was named or there is no will, the court will appoint one.
If a person dies with a will (“testate”), the probate court determines if the will is valid, hears any objections to the will, and supervises the process of paying creditors and distributing the remaining property according to the terms of the will. If a person dies without a will (“intestate”), the probate court appoints a personal representative, determines the decedent’s heirs, and supervises the process of paying creditors and distributing the remaining property in accordance with the laws of the state.
Having a will does not avoid probate. The need for probate depends on the property owned by the deceased person and whether they owned it alone or with other persons. For example, if a person owned a piece of real estate in Hyde Park Utah solely in their name at the time of their death, probate would be required to transfer title of that property from the deceased to the beneficiary. However, if the real estate was owned by the decedent along with another person in joint tenancy with right of survivorship, then a probate proceeding would not be necessary to transfer title of the property to the surviving joint tenant. In Hyde Park Utah, if an estate is worth less than $50,000, it may be possible to avoid probate by the use of an Affidavit for Collection of Personal Property. If the value of a decedent’s personal property exceeds $50,000 or they owned real estate in their name alone, then the estate will need to be probated.
Probate begins by filing an application with the probate court and ends when all debts and taxes are paid and all assets are distributed. The applicable probate laws are generally those of the state in which a deceased person resided at the time of their death, as well as any state in which the deceased owned real property. Multiple probate proceedings may be required if a decedent owned real property in more than one state at the time of their death.
How the Real Estate Foreclosure Process Really Works
Regrettably, this is the day and age where a prevalence of foreclosures keeps creeping closer and closer to home. Many hopeful sellers are wondering what is involved in a foreclosure and what steps can be taken to thwart such an occurrence. Following is a timeline of events when a property becomes “delinquent” on payments.
The Breach Letter is a formal letter sent to you in an attempt by the lender to avoid foreclosure action. The lender hopes this letter will encourage you to contact them to work out an agreement called a Foreclosure Workout. With the age of foreclosures, we have seen the case where a homeowner is delinquent by 3 months, or more, and still hasn’t received this letter.
Foreclosure Workout (Reconveyance, Forbearance, loan modification)
Foreclosure workout assistance is typically done during the initial phase of the pre-foreclosure stages. Lenders are more than willing to attempt a plausible scenario to stop the delinquency and bring the loan current. There have been occasions where the lender is willing to lower interest rates, change adjustable rate mortgages to fixed, forgive delinquent amount owed and even wipe out junior liens they may hold if the value of the property is less than what is owed. If a work out plan is not initiated within approximately 45 days of the Breach Letter your case is normally referred to an attorney to file foreclosure action.
The lender will refer your case (delinquent loan) to an attorney or trustee, usually with 90 to 120 days, who then files a petition in court to foreclose your mortgage and get the lender the right to sell the home to pay off the outstanding balance of your loan. The average time between attorney referral and the foreclosure sale varies by state. In Hyde Park Utah, an NOD (Notice of Default) can be filed 90 days after a mortgage payment was due. With current regulations in CA, the lender now needs to personally contact the homeowner to advise them of their rights, what steps can be worked out, etc, before a NOD can be filed.
Junior Lien holders
These are also known as secondary or other lien holders. It refers to lenders, people or the government who may have a recorded lien against the property. Your primary lender may contact junior lien holders to determine the status of your loan with them. Once contacted these other lien holders may initiate separate foreclosure action to protect their interest pursuant to the terms and conditions of the mortgage or deed of trust. In today’s market, we are seeing less and less junior lien holders filing for an NOD because the value of the property is less than what any junior lien would receive in a trustee sale. Any junior lien holder is still responsible for senior liens.
A grace period, usually 30 to 60 days, may be granted to allow you to bring the mortgage current. If requested, you will have to demonstrate evidence that you can bring the loan current such as proof that you have one of the following conditions:
1. Have a contract for the sale of the property and a closing date.
2. Have an insurance settlement or one pending.
3. Have or are pending an approved funding from another source.
4. Have an approved “Relief Provision” completion date.
The suspension of payments for a specified period of time, usually no more than 18 months, from the date of the first payment. At the end of the suspended period the borrower may be expected to resume payment under a Liquidating Plan. This plan is used to assist borrowers experiencing a temporary loss, or reduction, in income that is expected to be restored at a later date. Most lenders provide Special Forbearance in any situation for which there is documentation and relief is warranted.
Long Term Special Forbearance
In certain situations Special Forbearance can be extended up to 24 months.
If you had a mortgage as a civilian and then later entered the military, you may be entitled to Military Indulgence granted under the terms of the Soldiers’ and Sailors’ Civil Relief Act. There are two components of this provision:
1. Interest Rate Reduction
This requires the lender to reduce the interest rate to 6% from the time the borrower begins active duty to the date of release. However, just entering the military is not enough; you must show that your income was significantly reduced as a result of entering active duty and that this has caused your financial hardship. If you qualify, this benefit is retroactive to your date of enlistment.
2. Additional Forbearance
In certain cases related to the financial hardship usually associated with the loss of greater civilian pay the veteran may request special consideration in the form of a reduction in the monthly mortgage obligation. The difference between the scheduled payment and the reduced payment is referred to as arrearage. Upon release from active duty the borrower is responsible for bringing the arrearage current. Note: Most lenders will not normally foreclose on a delinquent borrower that has been granted Military Indulgence. In fact, it might policy to offer the borrower Additional Forbearance in this situation. If you cannot make payments you should seek a court order granting a stay of the mortgage obligation until you’re released from active duty.
Assumption: An enforceable “due-on-sale” clause is waived to allow a qualified buyer to assume the mortgage of a delinquent borrower.
In order to avoid foreclosure, the lender and borrower agree to accept the proceeds of the sale to satisfy a defaulted mortgage even if the sale results in less than the mortgage balance. In order to be eligible for this option you must be experiencing financial hardship as a result of involuntary reduction in income and an unavoidable increase in expenses that exceed income. Unavoidable causes include:
• Lay-off or loss of job
• Disability, or prolonged illness
• Death of a mortgage contributor
• If self employed, a business set-back
You will have to accept the following conditions:
1. Listing the property for sale will not delay initiating or continuing foreclosure action, but the terms of the agreement will be honored pursuant to a sale before the foreclosure date
2. You agree to maintain the property
3. You agree to off-set any of the lenders losses (usually negotiable)
4. You may have a tax liability if any of the debt is forgiven. There are specific laws in place (both Federal and State) which override this possibility.
5. The property is free of liens. If other liens exist, the lender must agree to the workout pursuant to the eligibility requirement for an assumption
6. The lender retains the right to negotiate and approve the transaction.
Deed-In-Lieu of Foreclosure
This method, offered to homeowners by the defaulted lenders, is established to avoid foreclosure by voluntarily surrendering the property by deeding it to the lender as satisfaction for the debt. It is appropriate when . . .
1. The property has been on the market as a Pre-foreclosure Sale for three or more.
2. There are legal obstructions to foreclosure action
3. Deed-in-lieu allows the lender to take possession of the property sooner than would be possible through foreclosure.
You may be eligible for this option if you meet certain hardship requirements outlined in this document and all junior liens are removed. Many individuals who have gone this route later realize that their credit isn’t salvaged by doing a Deed in Lieu and shows up on their credit report just as derogatory as an actual foreclosure.
Forbearance (repayment plan)
This is a formal Repayment Plan and it is based on the Special Forbearance provision and is the preferred workout option because it is the least costly workout alternative. It is usually considered when delinquency is the result of; The death of a contributor to the monthly mortgage payment and this does not necessarily have to be a person on the mortgage; or Illness, catastrophe, or natural disaster for which the borrower is not insured; or Any similar or contributing factors. Repayment plans may be customized to fit most any need or solution; however they cannot exceed 24 months.
Modification (replacement mortgage)
This is a change to the terms of the mortgage in order to remove a delinquency and avoid foreclosure. Modification includes reducing the interest rate, extending the term of the mortgage, negative amortization, replacing an adjustable rate with a fixed rate and capitalizing the delinquent payments. Modification is appropriate when the potential for a Repayment Plan is needed due to a permanent or long term reduction in income. Other lien holders having a recorded interest in your property must agree to subordinate their interest to the new loan.
How Does Probate Work For Real Estate Properties?
If the responsibility for disposing of a real estate asset in probate falls on you, you’ll have to understand the way probate courts sell real property.
The Executor Of The Estate
If you will be handling the estate, you’ll need to have the court name you as executor of the estate. In a testate scenario, the executor will be named in the deceased individual’s will. While you act as executor, you’ll want to hire a probate attorney to help guide you through the probate real estate process. Your probate lawyer will represent you through the entire process and help you with anything that arises, and is paid by the estate. You may confer with the attorney as needed to work through the probate process.
Take Inventory Of The Estate
When you take inventory of the estate, make sure to gather important documents and information. This might include estate planning documents such as the will, living will or power of attorney, assets such as stocks, bonds, cars or life insurance, and debt.
Contact A Real Estate Agent
If there is a home to be sold, it’s also important that a home appraisal is conducted and a real estate agent experienced with selling probate real estate is contacted. The agent will pull comparables for the area and read the appraisal to determine what the asking price on the property should be.
After taking inventory of the estate, you’ll have a better understanding of the finances of the deceased individual. With this information, you’ll first need to notify known creditors to whom the deceased person owes money and pay out their claims with money from the estate. You can also use the estate to pay other debts. Once these debts have been paid, you’ll need to file income tax returns for the deceased individual.
Wait For Assets To Be Transferred
The final step in the probate real estate process is waiting for the assets to be transferred. If the property is not being sold in court, the estate will be legally transferred to the beneficiary after all bills and creditors are paid and the executor petitions the court to transfer the assets. On the other hand, if the property is being sold in court, it first needs to be listed. After the price is decided, the property will be put on the market. Once an offer is submitted and terms are negotiated, a notice will be mailed to all heirs of the estate giving a 15-day period to object to the sale of the property. If no one objects, the sale of the house will be officially processed in court.
Revocable Living Trust
One of the easiest ways to avoid probate for real estate is with a living trust. With a living trust, the creator of the trust will name themselves as trustee until they pass away. They’ll also name a successor trustee and trust beneficiaries to manage and distribute the assets or estate when they die. After passing, the trust can’t be changed. The owner can use or sell the property, but the property belongs to their trust, not to them personally.
Joint tenancy is another way to avoid probate for real estate properties. You can put a joint tenant on your property’s deed if you’re the sole owner of the property. Then, when you die, the property’s ownership will automatically go to the joint tenant without going through the probate process.
Transfer On Death Deed
A Transfer On Death (TOD) deed can help you avoid probate by choosing a beneficiary to inherit your real estate property at your death. You’ll remain in control of your property during your lifetime and can even have the right to revoke the TOD deed.
Life Estate Deed
A life estate deed will give you the power to use your property during your lifetime and then transfer the property to another individual when you die. You’ll avoid probate with a life estate deed, but you’ll also lose the opportunity to sell, mortgage, or make decisions on behalf of the property without the agreement of the other beneficiaries. Two types of life estate deeds are traditional life estate deeds and enhanced life estate deeds.
Free Initial Consultation with Lawyer
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506