What Transpires with a Residence during Probate?
Upon an individual’s demise, their assets and property typically undergo the legal procedure called “probate.” Because assets involved in probate are essentially frozen, those assets are often inaccessible to the intended beneficiaries until the probate process concludes. This can pose a challenge when the asset in question is a home. The Indianapolis attorneys at Frank & Kraft discuss what transpires with a residence during probate.
Understanding Probate
Probate is the legal mechanism that provides oversight for the administration of a deceased person’s estate. Probate typically involves verifying the decedent’s Last Will and Testament (if one exists), cataloging and assessing assets, and providing creditors an opportunity to file claims against the estate. Ultimately, the remaining assets are distributed to designated beneficiaries or legal heirs at the conclusion of probate.
Handling a Home in Probate
The fate of a home in probate hinges on various factors, including the presence of a Will, the estate’s liquidity, and the total value of filed claims against it. Once probate commences, all estate assets, including the home, undergo assessment. Creditors are notified, enabling them to file claims that are settled using estate assets. If approved claims surpass the liquid assets’ value, including cash, bank accounts, and securities, assets may be sold, potentially necessitating the sale of the home to access the equity located within the home’s value.
An often-overlooked threat to a home during probate is Medicaid. If the decedent received Medicaid benefits during their lifetime, the Medicaid Estate Recovery Program (MERP) might place a lien on the house equal to the benefits paid. Exceptions may apply if surviving family members, such as a spouse, child under 21, or disabled adult dependent residing in the house, prevent its seizure. They can potentially file a hardship waiver with the MERP program to safeguard the property.
Once all claims and expenses, including taxes, are settled, and if the home was not sold, the Executor prepares the requisite legal documents to transfer ownership to the named beneficiaries in the decedent’s Will. In cases of intestacy, where no Will exists, the home is inherited by the decedent’s intestate heirs following Indiana’s intestate succession laws.
Occupancy of the Home during Probate
Consulting an experienced probate attorney is crucial to grasp the intricacies of probate. Generally, individuals residing in the home, such as a spouse or children, can continue doing so during probate. The property may even be rented out, with the proceeds contributing to the estate. The Executor, however, is responsible for maintaining and overseeing the property throughout the probate process.
Expanding on this topic, it is noteworthy to mention that the duration of the probate process can vary, and it may take several months or even years to complete. During this time, the home may require ongoing maintenance, and decisions regarding its management may need to be made by the Executor. Additionally, if the home is rented out during probate, the rental income becomes part of the estate assets, providing potential financial support for settling claims and expenses.
Furthermore, the involvement of a probate attorney becomes instrumental in navigating the complexities of real estate transactions within the probate context. Legal expertise is often necessary to ensure compliance with applicable laws, address potential disputes among heirs, and facilitate the smooth transfer of property ownership.
The probate process can significantly influence the fate of a residence, and the involvement of legal professionals is crucial in navigating the intricacies associated with probating real estate. The Executor’s responsibilities include managing the property, addressing creditor claims, and facilitating the transfer of ownership to designated beneficiaries, all of which contribute to the overall resolution of the decedent’s estate.
Do You Questions about a Residence in Probate?
For more information, please join us for an upcoming FREE seminar. If you have additions questions or concerns about what will happen to a residence during probate, contact an experienced Indianapolis probate attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
Paul Kraft is Co-Founder and the senior Principal of Frank & Kraft, one of the leading law firms in Indiana in the area of estate planning as well as business and tax planning.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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