What Realtors and other San Diego Professionals Need to Know About Probate

What You Need to Know About Probate

A Guide for Professionals

By Kristina R. Hess, San Diego Probate Attorney and Counselor at Law

  1. Scenario I:  Real Property Owner Dies Without a Living Trust (and no survivorship on title).  The estate must go through Probate before the property can be sold.  There are 3 big evils of Probate:  It is Slow (over a year, more if people contest issues); Public; and Expensive (approximately 5% of the gross estate — fair market value of real property – not the equity)!
  2. Scenario II: Real Property Owner Dies With a Trust but title to the property is not held by the Trust?  What then?  A Probate petition must be filed in order to ask the court to confirm that the real property is an asset of the Trust.  This is commonly referred to as a Heggstad Petition based upon the court case by that name.  If the Trust does not list the property with specificity on a schedule or somewhere in the Trust itself,  the estate may not be able to avoid a full blown Probate.  If the real property was listed with specificity (by APN, or by address) on a schedule attached to the Trust, evidencing the Grantor’s intent to create a trust in the real property – then, the petition should be granted and the property will become part of the Trust.  However, while not taking years, the petition process at a minimum will take a couple of months and involve court expense and legal fees.
  3. What if the estate would like to sell the property while a Probate is pending?  Is there anything that can be done?

Yes, under the IAEA (Independent Administration of Estates Act) the representative may list the property for sale.  However, first certain conditions have to be met.  The property must have been appraised by the probate referee and the estate’s acceptance of any offers is contingent upon notice and court approval.  Additionally,other potential buyers will have the opportunity to out-bid the buyer – but must out bid by 5% with no conditions.

The benefit of this procedure is the estate does not have to wait for completion of the probate to sell the property; the downside is the procedure takes a few months, involves court and attorney expenses, and limits the field of buyers to one who is willing to risk losing to a higher bidder.

Of course, it is ideal if everyone who owns property puts the property into a living trust, but, statistics tell us that a large percentage of people do not engage even a basic level of estate planning.  If you find yourself in a potential probate situation, or have clients in this situation who need to get their loved ones’ house sold, contact a San Diego Probate Attorney.

This article is intended for general information only and is not intended to provide legal advice.  If you need legal advice, consult with a lawyer directly.