Though the process may seem a bit more intricate, these properties often hide remarkable deals that savvy buyers can't afford to ignore. For sellers looking to list trust and probate real estate, the support of seasoned professionals can be a game-changer.
In this article, we'll uncover the essential aspects of trust and probate real estate, catering to both buyers and sellers in the vibrant Long Beach, California market.
Decoding Trust Real Estate: An Overview
Trust real estate is an intriguing concept, rooted in the practice of placing a property into a trust by its owner, known as the settlor. Upon the settlor's passing, the property's ownership is transferred to a trustee, responsible for overseeing it for the benefit of the beneficiaries. Trustees also bear the weight of various legal responsibilities and become the go-to point of contact when it comes to selling a property held within a trust.
The Intricacies of Probate in Real Estate: What is it?
Probate in real estate pertains to the legal process that follows the death of an individual with assets, necessitating a review of their will and assets. When beneficiaries step into probate courts, the assets of the deceased are safeguarded.
If a will exists, asset distribution can be relatively straightforward. However, in cases where no will exists (intestacy), probate law dictates the equitable division of assets.
Most frequently, the primary asset subject to intestacy is a home. In scenarios involving multiple heirs or complexities, it's common to sell the home, ensuring a fair distribution of proceeds. To sell real estate through probate, the executor of the estate must be officially designated by the probate court, allowing them to enlist additional assistance in the property's sale.
Pros and Cons of Probate Properties in Long Beach, CA
Enticing Pros for Buyers:
The good news? Probate properties in Long Beach often offer substantial cost savings. These properties are typically priced significantly lower than their market counterparts, presenting buyers with exceptional opportunities. For investors engaged in property flipping, probate real estate can pave the way for substantial profits.
Notable Cons for Buyers:
The bad news? The downside of purchasing probate properties primarily centers on the lengthy process. Buyers must wait for the probate process to conclude before they can finalize their property purchase. Potential delays and cancellations can arise from various claims and disputes. Furthermore, given that the previous homeowner has passed away, buyers may face challenges regarding accountability for property issues post-purchase.
Exploring Trust Types
There are two principal trust categories that need to be considered as they significantly impact the process of selling property in Belmont Heights, Seal Beach, Belmont Shore, and other desirable areas of Long Beach.
1. Revocable Trust or Living Trust
This is a popular trust as it provides flexibility as it can be altered or canceled at any time during the settlor's lifetime, without the need to consult beneficiaries. If the settlor (or grantor) is alive, they can even sell a property held in a revocable trust and retain the profits within the trust. Alternatively, the trustee can facilitate a title transfer to the settlor for selling the property.
2. Irrevocable Trust
In stark contrast, an irrevocable trust cannot be modified once established. It places the trust's control entirely in the hands of the trustee, with changes requiring unanimous approval from the beneficiaries. Irrevocable trust properties come with unique benefits, including exemption from estate taxes after the settlor's passing and protection from creditors. Selling a home within an irrevocable trust necessitates approval from all beneficiaries, and the trustee can choose to retain the property within the trust while distributing the proceeds among the beneficiaries.
Some Probate Properties Don't Need Court Confirmation: Here’s Why
In certain cases, probate properties can bypass the need for court confirmation. This typically occurs in two scenarios:
- When the property is a Trust Sale
- When the Executor/Administrator of the estate has been granted "full independent powers" under the Independent Administration of Estates Act (IAEA)
If a probate property is designated as a Trust Sale, it may not necessitate court confirmation. In such instances, the property can be listed for sale by the Administrator without the need for extensive court involvement. Once an offer is accepted, the estate's attorney takes action by sending out a Notice of Proposed Action. This notice outlines the terms and details of the proposed sale, and it is distributed to all heirs involved in the estate.
Full Independent Powers:
When the Administrator possesses "full independent powers" as granted by the IAEA, a similar process unfolds. The Administrator can opt to list the property for sale and, upon accepting an offer, initiate the distribution of a Notice of Proposed Action to the heirs. They, in turn, have a 15-day window to voice any objections to the sale. If no objections arise within this timeframe, the sale proceeds smoothly without the need for a court hearing.
(It's important to note that, regardless of the specific circumstances of the probate transaction, it is highly advisable for sellers to collaborate with an attorney experienced in probate property sales and a Realtor well-versed in the nuances of the probate market. This partnership serves to safeguard the estate's best interests throughout the process.)
Navigating the World of Trust and Probate Real Estate Transactions
If you're eager to explore trust and probate real estate opportunities, Long Beach offers several avenues for buying and selling these unique properties.
Work with a Trusted Real Estate Agent
For most sellers, working with a trusted real estate agent remains the preferred method for selling probate properties. Finding the right agent can be facilitated through collaboration with a probate attorney or left to the discretion of the estate's executor. When seeking an agent, it's crucial to identify those specializing in probate real estate, as they possess comprehensive knowledge of the unique laws and processes associated with probate sales. Additionally, they can assist in property preparation and effective marketing.
Take it to Auction
Auctions can be a preferred choice for selling probate properties, particularly if the property is considered valuable. The competitive nature of auctions often results in higher sale prices. Both public and private auction companies offer their services, with the latter handling property marketing and appraisal on behalf of sellers.
Learn More About Trust and Probate Properties and Decide if They Are a Good Fit for You
Trust and probate real estate transactions may seem complex, but they offer unparalleled opportunities for buyers and sellers alike. Whether you're on the hunt for a unique property or planning to list your trust or probate real estate, teaming up with an expert who understands the local market and specializes in these types of sales is essential.
In Long Beach, there's no better partner than Ginette Skelton, offering expert services and unwavering support throughout your transaction journey. Click HERE to contact her today.