Estate administration does not have to be complex or confusing when you are clear on a few key terms.
Understanding the world of probate, estate, and trust real estate is simple when you know the definitions of these commonly used terms.
Understanding estate administration
- Estate administration means that the sale of a real estate and personal property is allowed if a person fits one of the following criteria:
- Incapable of managing basic needs or financial affairs
- Child under the age of 18
- If the person is deceased.
The majority of these sales are considered “probate.” That means they are supervised by a Probate Court, either in the county where the real estate is located or in the county where the probate is filed.
What is a fiduciary?
A personal representative is also called a fiduciary. Do not let that term confuse you. A fiduciary is a personal representative who administers the sale of a property. That person is either
- An executor named in a will
- An administrator appointed by the court if there is no will, or if a will doesn’t name an executor or the named executor doesn’t want to serve
- A conservator – a person appointed by the court to care for the person/estate
- A guardian for a minor
- A fiduciary collects the assets on the estate. Then this person pays the debts that best protect the interests of those involved.
Reasons to sell a probate
There are many reasons why a fiduciary might deem it necessary to sell a property. Often it is because of one of the following:
- To pay debts, bequests, family allowances, or for the expenses of administration and taxes
- The will directs the property be sold
- The property is a drain on the estate
- The property can’t be easily distributed to more than one person
- Arguments among the heirs
- Conditions of the market
Two types of probate sales should be familiar – sales requiring court confirmation and sales without court confirmation.
A sale that requires court confirmation might grant exclusive rights to sell a property. These sales take longer than standard sales because of the additional court processes involved. The goal is to protect and promote the interest of the beneficiaries. After a transaction is confirmed, the bidder has to deposit at least 10% of the purchase price for the sale to move forward.
When a fiduciary has full administrative powers or if the property is held in a non-court supervised trust, court confirmation of a sale might not be necessary. The length of time to complete this kind of sale is similar to conventional real estate. However, the executor is exempt from disclosure, unlike in an ordinary sale.
When you understand the differences in probate, estate, and trust real estate, you are better equipped to make informed decisions about the process.