After someone dies, what happens to their home or other real property? Will you be held responsible for anything?
When a loved one passes away, and the dust has settled, a new question comes into play: what do you do with the real estate? This might be an awkward topic to talk about, but it’s a real life situation that many people don’t know much about. My grandma recently passed away and my family and I found ourselves in this situation so I wanted to help anyone else who might be in the same shoes.
When someone passes and has a property they left behind to their heirs, it’s called an inherited property. This is a checklist that will walk you through the sequence of steps we found ourselves in.
Who’s in Charge?
How an estate is settled is determined by how it is set up, if at all. The first step is to determine if the deceased person has a will, trust, or any other form of estate planning that would outline how the real property is to be handled and who is in charge of carrying out the provisions. I would highly recommend that anyone whom you love who may be knocking on heavens door sooner than later to get their estate planning completed. Without having the will of the deceased planned out it can become a very messy situation. The last thing you want to do is have all the siblings fighting each other over control and money.
In such cases where there is no will or an assignment of power of attorney, and probate court proceedings are necessary, the courts will choose someone to be the executor. Typically a spouse or registered partner will fill the role first. If he or she is unable to fulfill this role, then the job is passed onto their children, parents, brothers/sister, and continues down the family line. You may hear this referred to as “next in kin”.
For those who have a will or trust, the decision of who is in charge has already been made. The assigned executor and/or the successor trustee will be responsible for settling their deceased loved one’s estate. This is why I would recommend having everything planned out ahead of time.
What if You’re in Charge?
Being in charge can sound like a compliment, but it is also a very hefty responsibility and requires some leg work. Your tasks include collecting all the necessary documentation of the deceased’s death, notifying proper governmental departments and administrations, taking inventory of their assets, settling debts, and keeping track of it all. For real estate, one of the first steps is to get an appraised value at the time of death and to determine if there is any debt on the property.
Seeking legal consultation is always a good idea, and working with an agent who has handled these types of transactions is always of great benefit. Handling family affairs can be emotional and get messy, so having additional shoulders to carry the weight can make the experience lighter and less stressful. Hey you can always blame the Realtor, right?
What if there is a mortgage on the property?
Once it is decided who is in charge and how the real estate is to be inherited, what have you realistically inherited? Is there an outstanding debt on the property? Who is responsible for that debt and how is it handled?
If the heirs or beneficiaries wish to keep the home, they must assume the loan or refinance the home. The good news is that mortgage acceleration clauses that are typically “due on sale” are waived when a property is transferred via death, so no family members will get hit with the entire balance due. A mortgage acceleration clause is when the bank says the whole balance is due now because of non-payment. Upon a death this is relaxed.
What if you can’t make the monthly payments or wish to sell? There are many cases where none of the heirs or beneficiaries wish to move in and assume responsibility for the property, and in this case the simple solution is to sell. In most cases I’ve seen the siblings will agree on a sales price and list the property for sale.
You’re Not Alone!
If you think about it, most people move because of a major life event: job transfer, birth of a baby, divorce, and death. A vast majority of my business and clients have been spouses, siblings, and other succeeding family members who are trying to navigate their deceased loved one’s last wishes and all of the legal and Real Estate facets of their estate. Many of my meetings have been at tables full of families trying to come together and make the right decisions about how to handle the property they have just recently inherited. Personally, I have also had to oversee the proceedings for my own family member’s estates as they have passed away.
If you have any questions about how to handle a person’s Real Estate once they have passed away, please do not hesitate to contact me! This is a sector in my field that I take seriously and pursue with great care as it’s a life event that I have experienced myself more than once, and I know it can be hard on loved ones, but can be alleviated with the help of professionals like myself.
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Fulton Grace Realty