What happens to real estate when someone passes away

Selling an Estate Home.

What happens to real estate when someone passes away.

When family and friends pass, it is difficult enough to handle, without the added financial burden of selling a loved one’s home. If you find yourself in a position as an estate trustee, here are some helpful tips on where to start, and common questions on how best to navigate yourself through the process:

1. Begin the Probate Process

Probate is the process by which a deceased person’s last will and testament is legally approved by the courts. It is also when the courts officially confirm the appointment of the executor of the estate. Not all estates have to go through this process, however, 9 times out of 10, it ends up being a requirement. There are some exceptions to estates that have to go through probate, so it’s recommended that you check with an experienced lawyer if you believe your estate should not be subject to this process.

2. Divide the household goods

While going through the probate process and getting the house ready to put on the market, it is prudent to go through furniture and personal items that have been left in the house. This can be a bone of contention amongst the family members. First and foremost, the will must be followed. This process can take time, and can be complicated, so be sure to start as soon as possible. That way, once the home is listed for sale, there are no concerns about property in the house that potential buyers may want.

3. How Much is Probate and When Do I Have to Pay It?

Probate is calculated out depending on your province, and is based on the amount of the estate.Here is a calculator for probate in Ontario:

Here is a calculator for probate in Ontario:

Probate Tax Calculator

Once probate is granted, the fees must be paid from the estate – typically from the estate bank account. If there is no money in that account, and they deceased has no other assets convertible to cash, the fee becomes the responsibility of the heirs to cover that fee.

4. Can I list the property before probate is completed?

Yes, the property can be listed for sale before probate is granted. It needs to be disclosed, however, that the estate is awaiting probate. If an offer is accepted, a clause must be inserted stating that the closing of the property must be completed after probate is granted. Typical timeframes for probate are 2 weeks to 6 months, depending on the local Courts and any complications in the will.

5. What if the property is a cottage or investment property?

The same rules apply to cottages and investment properties, in that probate must be granted in order to complete a sale. There are, however, different tax implications for these properties, as opposed to the deceased persons principal residence. It is recommended that you contact an experienced tax accountant to determine what taxes are payable from the proceeds of the sale of any properties and investments.

If you are named executor of an estate or are starting the estate sales process, contact Knight Realty for more information on the process.

 

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