What is probate?
Probate is a process that occurs when a person with assets passes away. Simply put, it is a legal process to clear and transfer the deceased person’s assets to the appropriate beneficiary, be it a person, entity, corporation, or charity. Each state has its own rule concerning the dollar-amount value at which an estate must go through the process of probate. The set of statutes, limitations, and laws defining and governing this process vary by state, so be mindful that learning the particulars of specific states’ process is essential if you plan to be able to navigate the process successfully. You may want to consult with an attorney to ensure that you are sufficiently educated concerning the potential parameters and criteria with which you may be dealing. Your local title company may be able to answer some questions as well.
How long does probate take?
Typically, a simple probate will take approximately six months. If there are multiple properties, several people, or large amounts of money and assets involved, it could take years to sort through everything and wrap up the process. Creditors must be allowed time to make claims against the estate if the deceased has left behind any outstanding debts. There is a specific time period in which such claims must be filed, and if there is no claim filed within that window of time, creditors may not sue the estate or its beneficiaries.
During probate, the executor, administrator, or personal representative obtains the death certificate; has appraisals of the properties completed; determines the amounts of any debts, income, property tax, estate-inheritance tax or a state tax filed; and pays any outstanding debts. He or she pays creditors, court fees, and attorneys’ bills, and files claims or denies claims. The representative may then sell any assets or properties in order to satisfy these debts—all of this is done before the heir and beneficiaries are considered entitled to and granted anything, and is all accomplished within a set time frame, as there is a deadline by which to complete the necessary forms and claims. Once these steps have been completed, the PR will petition the court for a hearing to close the probate, and will distribute the assets to the heirs and beneficiaries, as well as to the attorney and to him or herself for payment.
Depending on the circumstances of a person’s passing, the probate process will either be testate or intestate. When a person leaves a will and/ or amendments to the will (codicils), the situation is termed testate; in the absence of a will, an intestate situation has occurred. When a final will and testament has been left, the document will name a person whom the deceased designated to oversee and carry out the terms he or she set forth. This person is now generally referred to as executor, although a few jurisdictions may retain the use of the feminine form of the word executrix when appropriate. Some states also refer to this position as a personal representative. The probate court will work with the executor to clear the deceased’s assets for distribution to any heirs.
If a person passes away intestate, or sometimes testate, someone will be appointed to serve in a similar capacity to that of executor; this person is referred to as the administrator or personal representative. The courts must follow a set procedure when appointing a personal representative. Each state has its own state’s will, known as a default will. When a person passes away without leaving behind a will of their own, the default will goes into effect for the deceased person’s assets, and the court-appointed personal representative looks after the decedent’s assets and investments, protecting them and distributing them according to the state’s default will. Unfortunately, in the absence of a personal will, the person(s) that the court deems to be the heirs are not necessarily the people to whom the decedent would have wanted to bequeath is or her estate.
How can we as investors help those in this situation?
Now that you have some understanding of how the process of probate works, you may decide that you would like to learn how to assist families during this time. Sometimes an investor approaches a family while the estate has already gone through probate, and sometimes it is still in the process. In some situations, the family may not even be aware that the estate must go through probate. In any situation, we can assist them and, with the services of a qualified attorney, can purchase the property through the use of a contract, even if probate has not been completed. The contract then is processed by the court, and once the court accepts and approves it, the investor may close on the property.
How might we find these probates or people?
During the course of our lives, we all build a personal network of friends, family, and acquaintances. This network can lend a hand when it comes to passing on information for us. When you decide to work with bereaved families in this way, let the people in your life know your plans. There is no substitute for word-of-mouth when it comes to networking and securing new business. You may also choose to contact grieving families directly. When you choose to contact someone directly to offer your assistance, you must be sensitive, caring, respectful, and, above all, tactful. Let them know who you are, what you are offering, and how they may contact you. Keep it short, sweet, simple, and sincere.
In closing, I recommend that you begin to make a list of individuals, organizations, and others who regularly have involvement with families immediately before or after the passing of a loved one. As you begin to interact with those who you have listed, you will think of more categories to include, and your list will continue to grow. Spend some time thinking of how best to approach each person or organization you have listed, and provide them with some information on you and the services you provide. Explain to them the benefit of the services you offer to grieving families, such as much-needed income to a family left with towering medical bills and funeral expenses and an inherited property they have no use for. Ask them to pass along your information any time they come into contact with someone in need of those services.