After someone dies, what happens to their home or other real property? Will you be held responsible for anything?

When a loved one passes away, there are lots of important matters you have to address right away.  Once things have settled, a new question comes into play, what happens to their possessions and their home? For some people this can be a difficult subject to talk about, but making plans ahead of time can help your family with a quick and smooth transition.  

This is a checklist that will walk you through the sequence of steps if you ever find yourself dealing with inherited property.  

Who’s in Charge?

The first step is to determine if the deceased person has a will, trust, or any other form of estate planning that would outline how their possessions are to be handled.  It should also tell you who is in charge of carrying out the provisions. I would highly recommend that anyone who owns property, to have their estate planning completed sooner than later.  Without having a will it can become a very messy situation. The last thing you want to do is have family fighting each other over control and money.

In such cases where there is no will or an assignment of power of attorney, and probate court proceedings are necessary, the courts will choose someone to be the executor. Typically it would fall to a spouse, but if they are unable to fulfill this role, the job may be passed onto children, parents, siblings, and continues down the family line. You may hear this referred to as “next in kin”.

For those who have a will or trust, everything is already spelled out and immediately 100 times easier.  The decision of who is in charge has already been made and the assigned executor and/or the successor trustee will be responsible for settling their deceased loved one’s estate. 

What if You’re in Charge?

Being in charge is a large responsibility and requires some leg work. Your tasks include collecting all the necessary documentation of the deceased’s death, notifying proper governmental departments and administrations,   taking inventory of their assets, settling debts, and keeping track of it all.   For real estate, one of the first steps is to get an appraised value at the time of death and to determine if there is any debt on the property.

With large estates it may be in your best interest to hire an attorney for help, or you may just want one to look over all your work if you are feeling lost or confused. Seeking legal consultation is always a good idea, and working with an agent who has handled these types of transactions. Handling family affairs can be emotional and can get messy, so having additional shoulders to carry the weight will make the experience lighter and less stressful. 

What if there is a mortgage on the property?

Is there an outstanding debt on the property? Who is responsible for that debt and how is it handled?  What have you realistically inherited? 

If the heirs or beneficiaries wish to keep the home, they must assume the loan or refinance the home. The good news is that mortgage acceleration clauses that are typically “due on sale” are waived when a property is transferred via death, so no family members will get hit with the entire balance due. A mortgage acceleration clause is when the bank says the whole balance is due now because of non-payment.  Upon a death this is relaxed.

There are many cases where none of the heirs or beneficiaries wish to move in and assume responsibility for the property, and in this case the simple solution is to sell. At this point, it would be in your best interest to bring in a qualified agent, they can help you assess the property, suggest any needed updates, and get the property listed for sale with as little stress to the family as possible.  

Remember, You Are Not Alone!

I have had many meetings with a table full of families trying to come together and make the right decisions about how to handle the property they have just recently inherited. Personally, I have also had to oversee the proceedings for my own family member’s estates as they have passed away.  While this is a distressing time, remember that there are people out there ready and willing to help ease your burden in your time of need. 

If you have any questions about how to handle a person’s real estate once they have passed away, please do not hesitate to contact me. This is a part of my job that I take very seriously and pursue with great care as it’s a life event that I have experienced myself more than once.  I know it can be hard on loved ones, but can be alleviated with the help of professionals like myself.