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November 2, 2006
PROBATE AND YOUR HOUSE
Many people express concern when faced with going to probate court. If having your house go through probate is what has you worried, then you should read on to find out about the peculiar rules that apply to real estate. It’s not as bad as you thought.
First, a few basics, so that everyone understands what probate really means. Your will is a document that tells your executor how you want your property distributed, and your will only covers “probate property”. Probate property is property that is in your name alone. Common examples of property that does not go through your will, and probate, are jointly owned items, such as joint bank accounts and jointly held real estate. IRA’s, retirement accounts, life insurance and annuities are other assets that pass outside probate.
Let’s say that you own your home jointly, and one of you pass away. Is it probate? The answer is no, because it is jointly owned. On the death of any joint owner, there are some steps you should take to maintain a clear title on your property:
1. If the person who died had less than $1 million in “taxable” assets on his death, you should file an “Affidavit of No Estate Tax”. The Massachusetts Department of Revenue automatically places a lien on the real estate whenever one of the named owners dies. If over ten years have passed since the death, an affidavit is no longer required.
2. The Affidavit mentioned above and a certified death certificate should be filed at the registry of deeds in the county where the property is located.
Alright, we now have just one of the original joint owners of the property remaining, and we have filed the affidavit and death certificate. The title is clear. Let’s continue down this road until the last joint owner dies. The property is now probate property, because it is owned in the decedent’s name alone.
If the only probate asset of the last survivor was the real estate, his Will must be filed. The Will, death certificate, petition for probate and associated forms are filed at the Probate Court.
Let’s say that his will leaves everything to his children, Billy and Bobby. This is where the rules regarding real estate are much different than other assets.
The law says that, title to real estate passes to the heirs immediately upon the death of the owner. The instant Billy and Bobby’s dad died, they owned the property. If it was rental property, they should tell the tenants to pay them the rent from now on. They should also realize that they are responsible for properly insuring the house and paying the expenses of the house. Allowance of the will is proof that they own the property and there is no requirement that the executor deed the property to them. The executor is legally a stranger to the property.
Personal property such as cash, investments, vehicles and personal belongings are items under the control of the executor. Unlike real estate, title to these assets vest in the executor, and due to the one year limit for claims brought by creditors, the executor is under no obligation to made distributions until the end of that one year period.
There are certain limited instances when the executor will have the power to sell the real estate. This occurs when the executor obtains a “license to sell” from the court when money is needed to pay debts or if the will gives the executor the power to sell.
This article gives general information and not specific advice on individual matters. Persons wanting individualized advice on matters discussed should contact an advisor experienced in those matters. To the extent this article provides information on legal matters, it is based on law in effect in Massachusetts on the date of posting (laws in effect in other states are often quite different).
Ronald H. Surabian is a CPA and attorney who works at the Elder Law Center in Saugus, Massachusetts. He also holds Masters in accounting and a Masters in tax law. He currently serves on the board of directors of the Massachusetts Chapter of the National Academy of Elder Law Attorneys. If you have any questions please call me at the Elder Law Center, One Essex Street, Saugus, MA 01906 (781)233-4444. To view this or any prior article, please visit our web site at www.elderlawcenter.org