Does a House Need to Go Through Probate?

Video

Good morning, folks. We’re back. It’s Andy Stautz at Stautz Law and we are talking about basic estate planning. And probate. Today we’re talking about a very common scenario which is inheriting a house.  

Does a House Need to Go Through Probate?

So I was asked the other day, “Ohh, well, my parents’ house is coming to me in the will. But I’m not ready to open a probate estate yet. Can I sell the house right now?”  

And the answer is no, you can’t. Not if there wasn’t planning done in advance.  

Probate Avoidance Planning for a House

So if you plan in advance, you can put a house in a trust so that it passes automatically outside of probate, or you can record a transfer on death deed. Which is another way to transfer house outside of probate: transfer on death deed, which I’ve talked about elsewhere. It’s like a beneficiary designation on a retirement account. It just works.  

So that and the trust are kind of two main planning techniques.  

Indiana Probate Procedure for Houses

But of course once the the homeowner has has passed, well, it’s too late to do any advance planning. So now you’re dealing with… You’re dealing with a house that needs to pass the title in an orderly way, and that’s what probate is, and that’s what probate’s for. 

Now, Indiana has a small estate procedure that is much simplified. But the limit for that is $100,000 at the moment. It was lower before. So if there’s any significant equity in the house, you can’t use the affidavit procedure to transfer a house title.

[EDIT: For completeness’ sake, I should have mentioned that Indiana does allow a “devolution affidavit,” which can provide evidence of a transferred house title, even above the small-estate limit and even without probate. The use of devolution affidavits is controversial, and is beyond the scope of this introductory talk.]

You probably don’t want to anyway, because you might have problems down the road selling the house, clearing a title check at sale, getting a mortgage against it if you want one.  

So really what you need to do is open a probate estate: that can be unsupervised, maybe, you know depending on how many beneficiaries there are, or the status of the rest of the estate, whether there is a will that provides for unsupervised administration….  

But the minimum cost you’re looking at there is probably, uh, $3000 and up for a probate administration, and that’s what you have to do before you can… Before you can sell the house. Right? you have to get title to the house before you can sell it.  

So you can’t just… You can’t just take the house. Say, oh, well, it’s going to be mine and then sell it right away. So that’s a real speed bump for a lot of people. And something you should plan ahead for.  

You know, if you want your heirs and beneficiaries to be able to get rid of the house right away. Or sell the house. If you want to make it easy on them, you need to do some advance planning.  

If you want to make it easy on them, you need to do some advance planning

And on the flip side, if you are probably inheriting a house. You know you need to, you need to be prepared to go through probate, which is going to be an expense. And it’s going to be a delay. So it’s probably going to be a few months before you’re ready to actually sell that house. So that’s just kind of how it works.  

It can get more complicated once you’re in probate, if you know that if there’s a contest, if for some reason it’s a supervised administration. And if it’s a supervised administration, you need to go to the court and ask permission to sell it and and, you know, get permission to say, OK, we think this is a fair market value sale, whatever. UM. So it can be really tedious a 

Benefits of Estate Planning for Probate Avoidance

And that’s why a lot of my estate plans when people come to me ahead of time, we were able to plan around that and make sure we’re not dealing with probate. That’s why probate avoidance is is worth the upfront cost: because it saves you, after death, you know, time cost, legal fee cost, risk of conflict or contest amongst beneficiaries and heirs.  

Planning looks expensive up front, but it avoids problems later.  

If you didn’t do the planning and you’ve got if you’ve got a house that you need to do something with? Yep, a probate administration is going to be the way. You know. I’m happy to handle that for people, too, it’s just kind of two different roads and you got to decide which one you want to be on. 

So. I hope that clarifies the probate transfer of houses. If you want to talk about that topic or any other estate planning probate topic with me. You can book online here at the website or give me a call.  

Thanks for watching! Bye.