Does Real Estate Have to Go through probate? Anybody who passes away in Washington State with an estate net worth of over $100,000 likely needs to have their estate go through probate in Washington State. Probate is the process of paying creditors of the person who passed away while distributing assets so beneficiaries in line to inherit the assets. With the increase in home values in Washington State, comes the likelihood that more estates will need to go through the probate process and will have to contemplate what to do with real estate they may inherit individually or as a family. The probate process in Washington state is fairly straight forward and not complicated if all beneficiaries get along and are on the same page when it comes to how to administer assets. Therefore, for most estates, having to go through the probate process is not so bad.
Once a beneficiary inherits real estate, they will inherit it at the value on the date the person who passes away (the decedent) actually passes away. This is now called the step-up basis value which means that you would not need to pay capital gains on the prior appreciation in the property but would be responsible for any appreciation from the basis point forward. I had the chance to discuss whether real estate has to go through probate in Washington state and other options when it comes to inherited property on 1150am KKNW and you can listen to that radio segment here:
What Are My Options When I Inherit a Home?
Once somebody passes away you will need to determine if the decedent left a will and if so, discuss with the named personal representative the wishes of the decedent. If the decedent left no will and the real estate of the decedent was not placed in a trust or subject to a transfer on death deed, the property will pass intestate per the laws of Washington State and may be subject to the probate process.
Once a personal representative is appointed by a Superior Court in Washington, the real estate may be administered. Once creditors are paid if valid claims are filed, the property can be transferred to beneficiaries to live in or rent out, listed for sale on the Multiple Listing Service (“MLS”) or sold off market to a private party.
If the beneficiaries wish to live in the property or rent the property out, a quit claim deed or personal representatives deed may be signed by the personal representative along with a Washington State excise tax affidavit and provided to the county recorders office in order to transfer the property.
If the parties wish to sell the property, then the personal representative may sign all listing documents, contracts to sell and deeds when the time comes. Beneficiaries looking to sell on the MLS may be able to get the most exposure and eyes looking at a property but typically that also comes with Real Estate Broker fees that can be over 6% as sellers typically have to pay the buyers broker as well. Also, some buyers and their lenders may require the property to be in a livable condition and may require certain repairs to be completed prior to the closing of the sale.
Selling real estate off market to an investor, builder or possibly an end user may also be a possibility. Typically offers received off market will be less than what you could get if the property was listed on the MLS, but you don’t have to pay broker fees (unless you use a broker to solicit offers), may not have to complete any repairs, may not have to deal with contingencies or waiting on financing from buyers as the offers may be all cash. If you sell off market it is recommended that you at least have a broker or attorney working with you so that you understand all the terms of the agreement and that the transaction will go smoothly. There may also be other complications along the way and you will want to make sure that you have a clean title, not subject to any judgments or liens on the property prior to soliciting offers. Otherwise, this could be a headache for all parties to deal with if the property is sold prior to the resolution of these claims as they may be discovered by escrow prior to closing which could hold up a sale.
Should I help my Family Member Avoid Probate?
Keeping assets outside the probate estate of the decedent can be a good idea if the decedent wants beneficiaries to have easy access to real estate or property. With Real estate this can be done with a revokable transfer on death deed that is recorded against real estate prior to somebody passing away. When the decedent passes away, beneficiaries only need to provide a death certificate and transfer the title to the property outside of probate.
A property may also transfer outside of probate if the real estate is in a trust. This trust can be a living or revocable trust which becomes non revocable when somebody passes away. Whether one of these options is right for your family will depend on your situation and could make sense to administer a property quicker or make sure a specific party or parties receives the property outside of the probate process.
If you are a beneficiary of real estate and curious if real estate has to go through probate, need help listing the probate property for sale, want help soliciting offers for the probate property or just need to open a probate case in general, Symmes Law Group can help so give us a call at 206-682-7975 or contact us to get the counsel you need.