How to Sell A Kansas City Home in Probate with KC Elder Law
KC Elder Law –
Elder Law and Estate Planning for Kansas and Missouri
Can Help with How To Sell A Kansas City Home in Probate
I’m Ben Souchek with The Sierra Group and Home Downsizing Solutions, and my company provides multiple selling solutions for individuals that want to sell a home. One topic that we’ve worked with numerous times over the past 20-plus years, have been with people that are going through the probate process. And today I want to welcome a special guest, Ken Herring with KC Elder Law, with offices in Lee’s Summit, Missouri, Kearney, Missouri, and Overland Park, Kansas.
What Is Probate and How Does Property Pass When A Person Becomes Deceased
Ken Herring: Well, that’s a great question and I get asked that all the time. Matter of fact, one of the questions I get asked is, “Ken, I have a will, so doesn’t that avoid probate?” Well, that’s not true.
There’s basically four ways to pass your property when you die. Anything that’s just in a person’s name alone, without anybody else’s name on the account title or asset, goes by court order through the probate process whether you have a will or whether you don’t have a will. But your will in probate only controls those assets that are just in a person’s name without anybody else’s name on the account title or asset.
Probate involves lawyers and judges and court costs and filing and deadline and paperwork.
There’s a couple of simple ways to avoid probate, but a lot of people don’t know that even if you do not have a will, the state, or every state that I know of, already has one written for you, that will pass your property to how people are related to you, which may or may not reflect your wishes as well.
So if you died with things in your name and you did not have a will to express what your wishes are, or in other words, your last will and testament are instructions to the court to follow what your wishes are and who you want to inherit your property. But if you don’t, the state has one based upon, like I said, how people are related to you going up and down so to speak. To children, grandchildren, parents, and then to, of course, spouses. And then, of course, to brothers and sisters and nieces and nephews. So I always encourage everybody to have a will in place so that your wishes are reflected.
Now, there are other ways to pass your property when you die. There’s also what’s called joint ownership with rider survivorship. When two or more people, like a husband and wife, own assets or property together and one person dies, it automatically comes to survivors. No questions asked, pretty automatic. Does not avoid probate, only postpones it until the death of the surviving co-owner unless the surviving co-owner does something to add somebody else’s name to the title or the account, or it will wind up going to probate.
Another way is what I call beneficiary designations. Just like life insurance, IRAs, 401Ks, annuities, where you pay out to specifically named individuals, you can do that with real estate, cars, boats, bank accounts, titles, anything that has a title or some sort of certificate of ownership. It’s called transfer on death, or pay on death, TOD or POD abbreviated for short, which many of you, I’m sure, have used or even seen those terms.
And the fourth way is what’s called a funded revocable living trust where the trust document directs the trustee to distribute the property according to the terms of the trust agreement. A trust is a will substitute. It does the very same thing a last will and testament does except a trust avoids probate.
Most people are very highly motivated to minimize or avoid probate. Probate fees start at 5%, so they can eat up a big chunk of what you have in no time at all, plus they involve lawyers and judges and court costs and filing and deadline and paperwork. So most people are very highly motivated to minimize or avoid probate.
So joint ownership, pay on death, transfer on death and a revocable trust all avoid probate, but that doesn’t eliminate the need for those who inherit to have to deal with those property after that person dies.
Ben Souchek: That’s a lot of information to process right there, but obviously it’s a very important topic, and so I’m sure it’s very useful for people that are watching this.
Why Do People Fear Probate
Ken Herring: A lot of people have heard horror stories about probate, and that is true. I know somebody, a trust officer friend of mine, who involved in a probate that was very complex, that lasted like 12, 13 years. The family was fighting over property, it was hard to locate. You have to get appraisals, very, very complicated. Most probate for most ordinary people can be completed in a couple of months, maybe a couple of years. But the point is that you can avoid probate by adding someone’s name to your property as a beneficiary or joint owner. I prefer, I think a beneficiary is much better, particularly when it comes to real estate.
Now there are some drawbacks to just adding someone’s name as a beneficiary. And that would be that, in many cases, not all, but in many, there’s no provision for successor or alternate beneficiaries if the initial people that you name do not outlive you.
For example, in Kansas, when you transfer a real estate at death and the person that you name in that document to inherit passes before you, there’s no automatic provision to go to someone else. So you want to make sure that you have those kind of backup or alternates and that’s why, in many cases, a trust is superior to a beneficiary designations. Not all the time, but many times, particularly, like I mentioned, with real estate in Kansas and other assets such as bank accounts, for example, I’ve had a bank personnel tell me, “Well, Ken, we’re not in the business that determining who someone’s heirs are. If they don’t put their name on the account to inherit, and we’re not going to try to figure it out or assume who they want it to go to.” And that’s why it’s important to have a will to state what happens to your property if the people that you name on, beneficiaries, do not survive you.
Now, a trust does that automatically. But in life insurance many times you can have alternates, but there’s many assets that do not allow you to do that. And therefore you can have some unintended consequences and a real big mess on your hands if you do not plan for all contingencies.
Are Laws Similar From State to State with Probate
Yes, it is. It’s very general. Although the particular time periods of when someone can file a claim against creditors may be different. Some States, they’re six months, some states they’re a year, four months. The point is that, yes, the rules are generally the same. However, the particulars in each state may differ as far as the filing requirements and other timetables.
Are There Mistakes That Could Be Avoided With Probate?
Well, as I mentioned, joint ownership and pay on death are easy ways to avoid probate. And as I mentioned, in some instances, there’s no automatic succession. And also with regard to personal property, in many States like Missouri and Kansas, you can just make a list of those personal items in your house. Or basically personal property is considered things that do not have titles like a lawnmower, like a piece of jewelry, like a watch. And so, if you want those to go to any particular person, it’s important to make those provisions. And you can make a list. I have known people that put stickers on things. I knew one family that had a Monopoly auction for all the personal property in the house. And it really depends on the family.
I had one situation many, many years ago where the mom did all she could to leave her the bulk of her assets to her two daughters. However, they couldn’t get along. And they could not be in the house at the same time to determine who got what, and they would fight over every single thing that their mom had as far as personal property in the house. Matter of fact, I had one situation many years ago, mom had a mink coat and the daughters both wanted it and they both wouldn’t budge. And finally, I had to say, “Well, you know what, neither one of you going to get it. I’m just going to sell it because you can’t decide who gets it.”
So those are the kinds of things. A lot of it are just families who can’t get along or fight over things. And so the more you can do to express what your wishes are on who gets what, even if it is a personal property like a piece of jewelry or something else like that, do all you can to make a list or somehow communicate that to somebody else.
Ben Souchek: Okay. And last question, I guess, to kind of wrap things up, is… And again, thank you for joining me here today because this is a very important topic and one that I don’t think a lot of people probably even think of until it’s potentially too late. And hindsight’s always 20 20, so you look back and know what you should have done in the past.
For people, especially with real estate, real property, what are some things people should do, besides obviously calling your office to get a consultation with you or another attorney in your office?
What Advice Would You Give To People About Probate And Selling A House In Probate
Ken Herring: Well, first of all, that’s a great suggestion. The first thing to do is contact your attorney. And of course we would love to be your attorney. But with regard to a real estate, it’s important to have… Usually it’s a parent, a grandparent, and a lot of times the children or the grandchildren, really they don’t have a good handle on the assets that the parent or grandparent may have. So it’s kind of being investigator, a sleuth, trying to find things out. A lot of times you can do that by getting bank statements in the mail and working with someone who realizes that there may or may not be a close relative in town.
So you want to work with somebody who’s, of course, trustworthy and understands all the issues with regard to selling personal property as well as real estate. So even if the property passes outside the will, like beneficiary designations or a trust, and it is put up for sale, it can be sold by the trustee or by the beneficiaries.
And it’s important to work with somebody who understands all of those issues, and access to the house and dividing the personal property. So there’s a lot of trust involved and a lot of work involved by the person who’s stepping up to the plate to help with that.
Ben Souchek: And if I’m correct, and I should know after 20 plus years, an executor is the person with that task? If something is in probate, then that executor is the one tasked with liquidating or distributing those items. Is that accurate?
Ken Herring: Yes, that’s exactly true. Although I will say this, another misconception is I have people telling me, and someone said this the other day. He said, “Well, I’m appointed mom’s executor.” Well, first of all, the only person who can appoint an executor is the court. And once again, if there’s no assets subject to probate, then there’s no executor appointed. And it’s usually the task that falls upon the person who’s distributing the assets either by, like I said, transfer on death or joint ownership. And they are the ones who will pay the bills.
So let’s say mom and daughter have a bank account together. Mom passes. The account now belongs to the daughter and she’ll be responsible to pay mom’s bills and wrap up her affairs and maybe see that the things in the house are divided and distributed between other family members.
Family Dynamics Can Play An Important Role With Probate
This is kind of off the subject, but a lot of times I’ll get a call that goes something like this. My sister’s on the account with my mom. And doesn’t she have to share that with us? Or with me?” No, it doesn’t matter what the will or trust or the estate plan is, it’s how the bank accounts are titled. And most families with multiple children where one may be on there for convenience because the others live out of town, it’s kind of understood they’re supposed to split it or share with the others, but that doesn’t always happen.
That’s what I call unintended consequences. So a lot of times, I guess what I’m saying is it’ll go as smooth as the family dynamics allow, and as ugly, so to speak, as the family dynamics. So most families get along fine, but you’d be surprised at how ugly things can be once a parent has passed and the siblings have to work things out.
Matter of fact, the worst situations I’ve found are blended families. And you would be surprised at how often if one spouse passes, the surviving spouse is ready to cut out the step kids. And so I always tell people, “That can happen, and you need to make provision and work with somebody who understands all those contingencies that that can happen.”
Learn More About How KC Elder Law Can Help With Probate and Estate Issues
The name of our law firm is KC Elder Law. Our phone number is (913) 338-5713. And our website is www.kcelderlaw.com. And we have a lot of information, not only with regard to probate and asset distribution, but asset protection planning if someone needs longterm care.
And so there’s a lot of information on our website about Alzheimer’s and nursing home and assisted living and veterans’ benefits, which I help a lot of veterans get benefits that they’re maybe not aware of. So there is a lot of information on our website, KC Elder Law and our phone number’s (913) 338-5713 and I, or anybody else in the office, will be happy to help any way we can. Thank you for the opportunity to talk with you today.
Ben Souchek: Absolutely, Ken. Thank you. And hopefully, I’m sure a lot of people watching this will get a great benefit out of it. And certainly call Ken or KC Elder Law for more information if you have any additional questions. Thank you and have a great day.
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