In my last column, I discussed “probate,” and answered some of the questions I am frequently asked. The most common question is “Why should my (or my parent’s, etc.) estate go through probate?” This is a fair question, especially since no law requires probate.
The type of assets owned by the person who passed away (the decedent) is perhaps the most important factor in determining whether probate is necessary. Certain assets require specific types of registration or documentation to establish ownership. Examples include real property (land) or investments. Other assets, such as one’s personal effects, do not require any kind of documentation to show ownership. If the decedent’s estate includes land or similar assets, probate may be the best (or only) way those assets can be properly distributed.
For example, when a person dies owning a home, the home is commonly sold and the proceeds divided among the beneficiaries (i.e. children). However, the buyer of that home will want to make sure he/she will be the actual owner before turning over payment.
The documentation to show ownership of a home is called a “deed.” If the homeowner has passed away, who will sign the deed to transfer the property to the buyer? A buyer will not accept a deed signed by someone who was not an owner of the home. Probate provides a way for the deed to be properly transferred even if the only owner is deceased.
In probate, the judge gives authority to the “personal representative” (sometimes called an “executor” or “administrator”) to sign the deed on behalf of the decedent. With that authority, the title company is willing to guarantee that the buyer will be the actual owner if he/she pays the money to purchase the home. Without probate, that home may never sell because a buyer can’t have that assurance.
If you have seen some try to avoid probate by adding someone else’s name to the deed, in my next column I will explain why this can be very dangerous.
© 2016 Steven J Wright