5 Mistakes

Mistake #1: Inadequate Asset Protection

Valuable property and assets are vulnerable to loss, theft, or damage. I hear about the $200,000 of cash that is “stolen” from the safe multiple times yearly from client after client. Safeguarding assets is crucial, but when taking these steps, ensure that you respect the rights of others.

To avoid this mistake, the following steps can be taken:

1.  Promptly notify financial institutions to freeze the deceased person’s accounts, preventing unauthorized transactions and potential financial losses.
2. Secure physical assets, including real estate, by implementing necessary precautions such as changing locks, ensuring appropriate insurance coverage, and protecting valuable possessions. Compliance with the legal rights of other property owners is essential.
3. Create a comprehensive inventory of the deceased person’s assets, including detailed descriptions, photographs, and relevant supporting documents to ensure their protection.
4. Identify and protect digital assets, such as online accounts and intellectual property, by compiling a list with login credentials. Consult with legal professionals to establish measures for their protection and transfer.

Mistake #2: Neglecting Outstanding Debts and Creditors

Unaddressed debts, particularly those secured by property, can have significant financial implications.

To avoid this mistake, consider the following actions:

1. Conduct a thorough review of the deceased person^‘s mail to identify outstanding bills and assess potential risks associated with non-payment.
2. Notify income sources, such as the Social Security office, of the beneficiary’s passing to reduce the accumulation of future financial obligations.

In 2022, I watched an estate lose just under $30,000 to a reverse mortgage company because the heirs waited too long to open probate and delayed probate by fighting over small details in front of the judge. They almost lost the house to foreclosure by the Reverse Mortgage Company but were able to close escrow on the day before the foreclosure sale. The house was sold to two of the children to keep it in the family. The $30,000 loss could have easily been avoided if the family members (l) recognized the reverse mortgage as a problem, (2) opened probate immediately to get the mortgage paid off, and (3) addressed interpersonal disputes outside of court before applying for probate.

Mistake #3: Unnecessary Court or Sales Delays

Small errors and objections can lead to substantial delays in probate proceedings, resulting in increased costs and potential loss of real estate due to foreclosure.

To avoid these delays, follow these recommendations:

1. Foster open discussions with family members to reach an agreement on the probate plan, minimizing potential objections before filing petitions.
2. Ensure all variations of the deceased person’s name are included on the probate petition for accurate representation based on bill analysis and chains of title examination.
3. Conduct a meticulous review of the forms required for probate, seeking assistance from paralegal services to reduce errors and ensure accurate completion.
4. Provide comprehensive and accurate information to the attorney, including details about spouses, children, extended family, and relevant history, as it may impact the filing process.

In late 2021, I was brought into probate after another person had started it. The client was in a rush to sell the house to a buyer. Escrow had already been opened, and they were one week away from closing. Still, the Administrator could not provide escrow with “Letters of Administration” (a court document) that had the same name as the name that appeared on the title. The Letters of Administration had the decedent’s middle name spelled out instead of just the initial (i.e.

“Henry” instead of These small mistakes cause big delays. The buyer waited a few weeks but canceled before the court could change the Letters of Administration to add a new variation of the decedent’s name. Ultimately, the estate found a new buyer, and all it cost was delays and unnecessary stress, but small mistakes can mean big problems!

Mistake #4: Inadequate Management of Real Estate

Insufficient management of real estate assets during the probate process can result in various financial complications.

The following management-related mistakes are common:

l . Neglecting Property Taxes: Timely paying property taxes is crucial to avoid accumulating penalties, interest, or tax liens. Stay aware of property tax deadlines, ensure prompt payments, and budget accordingly. Seek guidance from a licensed realtor or attorney regarding property tax obligations and facilitate their payment. To avoid: For each parcel of real estate, check with ‘the county tax assessor and update the address for tax statements.

Defaulting on Mortgage Payments: Failure to make timely mortgage payments on a property with an outstanding mortgage can lead to foreclosure and significant financial losses. Prioritize mortgage obligations, communicate with the lender, and explore options such as assuming the mortgage or selling the property to repay the loan. Consult with a licensed realtor or attorney for guidance to prevent foreclosure. To avoid: Identify the mortgage statement in the mail or email. Or, identify the Deeds of Trust in the chain of title with the help of a Realtor. This will inform you of whether the mortgage exists and may identify the amount and payment address if you find statements, Still, the mortgage company will not release information to you until you are the estate administrator.

Inadequate Maintenance and Repairs: Neglecting regular maintenance and necessary repairs can diminish the property’s value or lead to costly damages. Evaluate the property’s condition, promptly address maintenance issues, and undertake necessary repairs to preserve its integrity and enhance its potential sale value. To avoid: Work with the realtor to identify local professionals who can provide inexpensive regular maintenance. By keeping the pool clean, the yard mowed, and the bushes trimmed, you can ward off vandals who see the empty home as a target.

Collaboration with a licensed realtor or property management professional can effectively identify and manage maintenance needs.

Mistake #5: Failing to Act Due to Fear of Costs

Misconceptions regarding probate expenses often deter individuals from taking action. However, an attorney’s probate fees are primarily governed by statute, limiting the fees attorneys can charge. Unfortunately, due to the mistaken belief that attorneys will deplete the entire estate, individuals may delay opening probate. Consequently, they may incur unnecessary fees or even risk losing real estate that could have saved. Recognize that taking steps to open probate preserves the estate’s assets, ensuring rightful heirs receive their share rather than settling for what remains.

Avoid this costly mistake by speaking with professionals as soon as possible to evaluate your options.

Fees and Commissions

Real estate agents work on commission, meaning they work for free until the property sells. They are highly motivated to provide the best advice possible and maximize the value of your home because a higher retail price generally means a higher paycheck for them. Their commission is percentage-based, typically between four and six percent, which means the rest of the proceeds go to you, the estate.

Risk

Seeking advice or additional information from real estate agents is a low risk since no cost is involved. Without financial commitment, you can benefit from their expertise, market knowledge, and insights.

Maximize Your Results with a Real Estate Agent

Here are the recommended strategies that will save you the most money by using the free consultation services of a real estate agent:

Select a Realtor with Probate Understanding:

Choose a real estate agent who possesses a strong understanding of probate transactions. While most agents can perform the necessary tasks, those experienced in probated estates are better suited for your needs. Their probate expertise enables them to recognize situations where prompt and appropriate action can result in cost savings. It can be difficult to locate and identify experienced agents; consider a tip I provide in the “Next Step” section to connect with a great real estate agent. (Also read the last tip in this section for more information about this topic.)

Capitalize on the Real Estate Agent’s Expertise in Assessing Equity:

Rely on the real estate agent’s expertise to evaluate the property’s equity. They can provide accurate estimates of the net sale value, which will help you and other heirs determine if opening probate is worthwhile. Moreover, the real estate agent can offer valuable advice and tips on avoiding unnecessary and costly repairs that may reduce the inheritance received by family members.

Leverage the Real Estate Agent to Retrieve the Chain of Title:

Engage the real estate agent to retrieve the chain of title for the property. This becomes particularly valuable when completing probate petitions. By examining the deeds, you can identify any variations in spelling or name that must be included on the initial petition submitted to the court. Identifying these variations ahead of time is essential to avoid delays and potential complications during probate or sales transactions. Provide the deeds to your attorney if you have legal representation or use them independently if handling probate. Real estate agents often have convenient digital access to title records, making retrieving and evaluating the necessary information easier.