We frequently handle real estate transactions that involve the estate of someone who has passed away. Most often these transactions are no different than a regular Owner sale. After the Will of the deceased has gone through probate, only the names of those signing the legal documents for the sale of the estate need to be changed and the rest is standard procedure. But what are the implications of selling real property if the Will states children, or minors as the beneficiaries of the property being sold? We just closed on a property here in Burlington where this was exactly the case and there were many bumps along the road to settlement and one final lesson learned.
A short rundown of the situation:
The deceased named her niece and two nephews beneficiaries of her real property in Alamance County. At the time of her death, the nephews were about 16 and the niece about 14. The family decided to wait until the boys turned 18 so they would only have to pay legal fees to set up Guardianship for the girl. No problem so far, and good financial sense.
Here’s where the first issue presented itself: the family waited until the boys came of age and they did set up the Guardianship for the girl, but they did so in Person County where they live. After the property was listed and subsequently went under contract, the locale of the Guardianship was caught by the closing attorney and needed to redone and filed in Alamance County where the property sits. An “Order Allowing Sale of Minor’s Real Property” and additionally, what’s referred to as a “Report of Private Sale” had to be filed with the court…along with that came a 10 day upset bid period! Yes, the sale was tied up in the Alamance County Superior Court for 10 days, allowing anyone to place a cash payment of 5% of the current contracted sale price and bump the current buyer.
This cost my sellers over $3,000 in additional, unexpected legal fees, hours of time spent dealing with paperwork, extended the closing out by several weeks, compelling the buyer to ask for “Buyer Possession Before Closing” because their lease ran out on their current apartment, and plenty of stress for both parties caused by several possible outcomes or worse, more unknowns.
We arrive at our main lesson for how to handle real estate when it comes to your Will. First and foremost, find a reputable estate attorney and have them help you with your assets. Set up a Revocable (Living) Trust with successor trustees over the age of 18, in which to place your real property instead of naming individuals as beneficiaries in your Will. A Living Trust allows for the assets within to be exempt from will probate after the creator has passed away. And as the name implies, a Revocable Trust allows the creator, or the “Grantor”, to modify or dissolve the trust while still alive which is a great way to handle the possibility of passing on your property while still having full control during your lifetime.
The legal matters that arise with the sale of real property are why we as real estate agents are here, to assist you in finding proper legal counsel and help you handle the unknown. As stressful as these matters can be while they are happening, for us, it’s an invaluable experience that we can then pass on to the next person in need.
*Disclaimer: I am not an attorney. This information is presented only for general educational and information purposes and is not intended as legal advice. As with all legal matters, please consult with a licensed attorney before you make any decisions or take any action.