A person’s passing can begin a series of complicated events. The distribution of assets and possessions is one of the most highlighted events, with the funeral and memorial often being the only two that surpass it. Things can get even more complicated when there’s a house involved that goes into probate. Do you know what can happen to houses in probate?
In some cases, you may simply inherit a house that is in probate. Such beneficiaries are typically a surviving spouse or single surviving child. Once the probate process is complete, that beneficiary will become the owner and have the power to decide whether to keep living there, sell the home, or rent it out as a way to make some money. Inheritors should bear in mind that they may be liable for estate or inheritance taxes depending on what state they live in and their relationship to the deceased.
Sold, with Proceeds Distributed to Heirs
Leaving one child to inherit a house while other children are left out can cause a major rift in the family. If there are to be multiple inheritors of a house in probate, the house will often be sold with the proceeds distributed amongst the heirs. Selling the house could trigger capital gains taxes. Whether short-term or long-term capital gains taxes must be paid will depend on how long the house has been owned.
Sold to Settle Estate Debts
Many people die without paying off their debts. Those debts must be settled before assets can be distributed. The money to pay off those debts comes from the estate. In some cases, that may mean that the house has to be sold to pay off outstanding debts. In that case, any money left over from the sale and paying off the debt can then be disbursed as directed by the will.
Regardless of whether you’re the beneficiary or the executor, it’s helpful to know what can happen to a house in probate. If you’re the executor of the estate, it’s your responsibility to ensure that the assets and possessions of the deceased are disbursed per the will. If you’re a beneficiary, understanding what can happen to a house in probate can make it easier to understand what is happening and why. Let that knowledge serve you as you go forward.
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