• You can stop foreclosure NOW!
• With the right help, virtually any foreclosure situation can be successfully resolved. There are programs to help stop foreclosure regardless of your situation.
• Know your OPTIONS and take ACTION!
• When facing foreclosure many people needing helpfeel embarrassed and do not know what to do. That’s understandable. But waiting and hoping is not a good strategy. You must act fast to protectyour rights.
• THERE ARE MANY WAYS TO SAVE YOUR HOME AND CREDIT FROM FORECLOSURE INCLUDING –Reinstatement Forbearance Agreement Mortgage Modification A Sale Short Sale Others Short Sale.
• Why a Short Sale Can Be a Great Option? When the lender accepts a short sale, the homeowners avoid getting aforeclosure mark against their credit which is very important in repairing one’s future credit. Having a foreclosure on your credit is worse than abankruptcy. It can take as little as one year after a bankruptcy to beeligible to purchase another home, whereas it takes as many as three tofive years after a foreclosure.
• What is a Short Sale? When a lender agrees to a short sale, it means that they agree to take lessthan the total amount owed on the mortgage and fees incurred. Most lenders are willing to consider a short sale in order to limit their expenses. Theyrealize that in a foreclosure auction, a buyer has to come up with ALL CASH at the time of the sale, so the pool of buyers is very small and at manytimes, nonexistent.
• What Do We Need to Begin the Short Sale Process?We (or our Realtor) will do all the negotiations with your lender orlenders. To get the short sale underway, the lender will require the following items which we can help you with.Signed Loan Authorization Form, which allows us to talk to your lendersabout your loan.

Most Recent Loan Statement from Each Lien Holder *whichgives us all theneeded information. Completed Financial Worksheet, which acts as a summary of your budget. Last 2 Years Tax Returns. In particular, the first two pages of eachreturn. Last 2 Months Pay Stubs. Last 2 Months Bank Statements, if you have a bank account. Financial Hardship Letter. This is a one page handwritten summary of why you are behind on the loan and why you need this need the short sale alternative.

• Two Issues to be Aware Of Once the short sale is complete, the lender may pursue a deficiency judgment for the unpaid balance. We seek, however, to get lenders to waive this right and many are willing to do so.
• Short Sale Approval The written document received from the Short Sale Servicing Lender stating the terms of a release of a lien on property so it can be sold.
• Arms Length Transaction. This form may be required by the Lender for execution by the Seller as one of the terms of an Approval to Short Sale.
• Authorization Letter – A document that is signed by the seller that gives permission to, a third party vendor, realtor, and title agent to speak on their behalf.
• Bankruptcy – A Federal Court proceeding in which a debtor seeks relief to work out a payment schedule or erase debts.
• Brokers Price Opinion (BPO). The Short Sale Lender hires a Real Estate Agent to view the property and provide the Lender with information on other sales in the area.
• Comparables (Comp) – Properties that have recently been sold that are comparable to the property being negotiated for short sale in terms of si-ze, location and amenities, Used by the Lender and Investor to determine today’s fair market value and their release price on the Approval Letter.
• Contingency – A condition or requirement that must be met before a contract is legally binding. An Approval from a Short Sale Lender may include contingencies.
• Coordination – Short Sale Coordination refers to the part of the process that involves getting all the required documentation from the sellers, realtors, and title agents and uploading that information to a Short Sale lender’s database and having it recognized by the Lender.
• Deed-in-Lieu – A deed given by a borrower to the lender to satisfy a debt and avoid foreclosure.
• Deficiency – The difference in what a lender gets paid for a loan compared to what is owed on the loan.
• Delinquency – Failure to make mortgage payment on time.
• Equator – A database provided by Bank of America made for Short Sales.It is a place where all financial documents and short sale information can be uploaded and reviewed by a negotiator team and/or negotiator. The goalof equator is to cut the short sale time in half.
• Equity Deficient -A property is Equity Deficient when, if sold, sales proceeds would not fully pay off existing mortgage debt.
• Fannie Mae (Federal National Mortgage Association FNMA) – A company that acts as a source to lenders of financing for home mortgages that operates pursuant to a federal charter. In a Short Sale Fannie Mae may be the Investor. Federal Housing Administration.
• An agency of the U.S. Department of Housing and Urban Development (HUD). FHA mainly insures residential mortgage loans made by private lenders. In a Short Sale FHA may be an Investor.
• FHA Home Loan – A mortgage home loan that is insured by the Federal Housing Administration (FHA). Also knows as a government insured loan.
• Financial Documentation – The documents required by a Lender before a Short Sale will be acknowledged in their database. Which includes; proof of income, banks statements, tax returns, a breakdown of items paid and income flow mapped out on a worksheet, and a letter describing the hardship of the household.
• First Mortgage – A loan that is the primary lien against a property.
• Foreclosure – The legal process by which a borrower’s interest in mortgaged property is taken away because of a default on the loan. This includes a forced sale of the property at a public auction with the proceed of the sale being applied to the mortgage debt.
• Freddie Mac (Federal Home Loan Mortgage Corporation) – A federal agency within the Department of Housing and Urban Development (HUD) which in sure residential mortgage loans made by private lenders. Freddie Mac can be the “Investor” on a short sale.
• Government National Mortgage Association (GNMA or Ginnie Mae) – A government owned corporation within the U.S. Department of Housing and Urban Development (HUD) created by Congress to assume responsibility forthe special assistance loan programs formerly administered by Fannie Mae.
• Gross Monthly Income – Pre-tax income including overtime that is regular or has a reasonable expectation of being guaranteed. Salaries are generally the principal source but other income may qualify if it is significant and stable.
• Hardship – An event (death, divorce, loss of job) that affects above rower’s ability to make a mortgage payment according to the terms originally agreed to.
• Hardship Letter – An explanation to the Lender that states your specific hardship(s), and asks them to approve a short sale for your property.
• Home Equity Line of Credit (HELOC) – A mortgage loan that allows the borrower to obtain money based on the amount of equity in the property. Often, a second mortgage on a property is recorded in the public records behind the first mortgage lien. Most Lender’s will require a deficiency if the 2nd mortgage on a Short Sale is a HELOC.
• Homeowners Association – An association that manages the common areas of a planned unit development, also known as (PUD), or condominium project.
• HUD-1 Settlement Statement – An accounting of all expenses incurred in the transaction and a reconciliation of all funds received and dispersed by the Title Agent on residential transactions. Also see Closing Statement.
• In Review – Refers to the time in a short sale when the Servicing Lender as sent all required documentation to the “Investor” and is waiting for are response in regards to a release price on the property.
• Investor (on current mortgage loans) – In a Short Sale, Investor most often refers to the government agency or private company that insured residential mortgages so Lenders would lend money for purchase of real estate. A release price must be obtained by servicing lender from an investor on most short sale transactions.
• Lender – In a Short Sale the term Lender most often is referring to the Short Sale Lender.
• Lien – A legal claim against a property that must be paid off when the property is sold. A lien is created in the public records by the mortgage when money is borrowed to buy a home and/or the property is used as collateral on additional loans.
• Loss Mitigation – Home mortgage lenders look to limit losses on delinquent mortgages by working out solutions with borrowers through their Loss Mitigation Departments.
• Modification – The act of the Lender changing any of the terms of the mortgage.
• Monthly Debt – A borrower’s monthly expenses including food, credit cards, car payments, food, insurance and other expenses. See Required Seller Documents.
• Mortgage – a legal documentation that a property is used as security for payment of a debt.
• Mortgagee – The lender.
• Mortgagor – The borrower.
• Negotiation – The term commonly used to refer to the process of working with a lender to obtain a favorable Short Sale Approval.
• Note – A legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.
• Notice of Default (NOD) – An official notice filed and recorded by a designated trustee at the request of a lender indicating lender has commenced foreclosure action.
• Notice of Default Purchase Agreement (NODPA) – The NODPA is used by investors purchasing a seller’s home on which a Notice of Default has been filed.
• Notice of Trustee Sale – An official notice that is posted, mailed,published/advertised and recorded by trustee at the direction of lender indicating lender’s intention to sell the property at public auction. The notice includes a specific date, time and location.
• Postponement – Trustee Sales may be postponed by the first at the direction of the lien holder. Notice may be given in advance or at the time and location specified for the intended sale.
• Preliminary net sheet – An estimate of net proceeds from sale with expenses, including unpaid loan balances and fees, subtracted from the sales price.
• Private Mortgage Insurance (PMI) – Borrowers buy this insurance to protect the lender from non-payment of the loan. If your loan has PMI, the Short Sale Servicing Lender will negotiate with the PMI company to release the PMI.
• Pre-Qualified – A borrower that has written evidence, that the lender of their choice, has analyzed their financial situation and preliminary determined the borrower’s ability to repay a loan. Written Pre-qualification for buyers of Short Sales seeking new financing is required by Short Sale Lenders.
• Pre-Foreclosure Sale – A procedure in which the Investor working with the Servicing Lender allows a borrower to avoid foreclosure by selling the property for less than the amount that is owed to the lender, another term for Short Sale.
• Preliminary HUD – A common term used for HUD that is submitted to the Servicing Lender to help determine the Approval amount of a Short Sale. A Preliminary Hud in a Short Sale must include all expenses to be considered for an Approval amount.
• Primary Residence – The place someone lives most of the time.
• Principal – The amount borrowed or remaining unpaid balance on a mortgage. The part of the monthly payment that reduces the balance on the mortgage. The principal does not include payment for escrows such as taxes or insurance.
• Promissory Note – A written promise to repay a specified amount over a specified period of time. Often required of Sellers by a Lender when the 2nd mortgage is a HELOC in order to short sale instead of foreclose.
• Public Auction – A meeting in an announced public location to sell property to repay a mortgage that is in default.
• Release Price – The figure the Investor gives the Servicing Lender for the written Short Sale approval.
• Recording – The entry into the public records of the terms of a legal document affecting title to real property such as a Deed, a Mortgage, a Lien, a Satisfaction of Mortgage.
• Second Mortgage – A mortgage that has a lien position behind a first mortgage.
• Servicing Lender – A company commonly referred to as “the Lender” that collects principal and interest payments from borrowers and manages borrower’s tax and insurance escrow accounts if applicable. A ServicingLender is paid a fee to service mortgages that have been purchased by an Investor in the secondary mortgage market.
• Settlement Statement – A common term for HUD-1.
• Short Sale – A procedure in which a lender and the investor allows a mortgagor to avoid foreclosure by selling the property for less than the amount that is owed to the lender.
• Transfer Tax – State and local tax payable when title to a property passes from one owner to another.
• Truth In Lending – A federal law that require lenders to fully disclose, in writing, the terms and conditions of the cost of the mortgage, including the Annual Percentage Rate (APR) and other charges associated with a new loan. FORECLOSURE VS. SHORT SALE Home owner Consequences Issue Foreclosure.
• Successful Short Sale – Future Fannie Mae Loan.
• Primary Residence (effective May 21, 2008) A homeowner who loses a home to Foreclosure is ineligible for a Fannie Mae backed mortgage for a period of 5 years. A homeowner who successfully negotiates and closes a short sale will be eligible for a Fannie Mae backed mortgage after only 2 years. Future Fannie Mae Loan.
• Non-Primary Residence (effective May 21, 2008) An Investor who allows a property to go to Foreclosure is ineligible for a Fannie Mae backed investment mortgage for a period of 7 years.

What is a tax certificate and a tax certificate sale?

A tax certificate is a first lien against property and shall supersede governmental liens. The tax certificate sale is an online auction process in which bids are entered and awarded to the buyer with the lowest interest rate bid, beginning at 18% and bid down to 0 in 0.25% increments. The buyer who wins the bid will pay the taxes, interest and fees that are outstanding and begin earning the rate of interest awarded during the auction on this total amount. Simple interest accrues on a monthly basis. For example if the tax certificate earns an interest rate of 12%, then interest will accrue at the rate of 1% per month until the tax certificate is redeemed. If there are any delinquent properties that do not receive a bid, those tax certificates are issued to the county at 18%.
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What is a Tax Deed Sale?

Property owners are required to pay property taxes on an annual basis to the County Tax Collector. If the owner does not pay his/her taxes, in June of the following year a tax certificate will be sold by the Tax Collector. Generally, if the tax certificate has not been redeemed within two years, the holder of the certificate can apply to force a public auction of the property. This auction is referred to as a “Tax Deed Sale” and the monies collected from the sale are used to pay off the amount owed to the certificate holder.
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What is a Surplus Tax Deed Sale Surplus?

Can I make payment arrangements?

Delinquent taxes can be only paid in full with certified funds.
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Someone bought a certificate on my property, does that mean they now own it?

No. The certificate holder has no claim on the property. However, two years after taxes become delinquent, the certificate holder can place a Tax Deed Application on your property. (Example – 2015 unpaid taxes which had a certificate sold by June 1 of 2016, can have a Tax Deed Application made on it beginning on April 1, 2018). After a tax deed application is made, the property will be scheduled for auction and if the taxes are not paid, will be sold to the highest bidder. If that happens, you have lost any claim or ownership on it.
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What is a Tax Deed Application?

Tax Deed application is the action, initiated by a tax certificate holder, which begins the process of selling a property at public auction for the delinquent taxes.

Tenants Required to pay HOA Assessments: If a homeowner is delinquent to the association for monetary obligations due to the association, the association may demand that any tenant occupying the parcel pay to the association future monetary obligations relating to the parcel. If the tenant fails to pay, the HOA is authorized to file an eviction action. The law is unclear as to whether the tenant is required to pay only the unpaid assessments to the HOA or the entire rent due for the parcel. This will need to be clarified by the legislature.

Fines and Liens: If a member is delinquent for more than 90 days in paying a “monetary obligation” due the HOA, then the association may suspend the rights of a member to use the common areas and may also levy a fine of up to $100 per violation. A fine of less than $1,000 shall not become a lien against a parcel. The HOA, however, cannot eliminate the member’s right to use access easements or cut off utility services to the parcel. The new legislation added the 90 day delinquency requirement and also added a new notice provision required of associations in connection with the levying of fines or suspensions.

Reserve Accounts: The new law clarifies that reserve accounts for capital expenditures and deferred maintenance items can be terminated by approval of a majority of the voting interests in the HOA. Financial reports for the HOA must contain new statutory language when the budget provides for reserve funding and a separate disclosure if the budget does not provide for reserves.

Special Assessments prior to Turnover: Before turnover, the board of directors appointed by the developer may not levy a special assessment unless a majority of the owners (other than the developer) have approved of the special assessment at a special meeting of the members.

Directors: Voting for The new law clarifies procedures for allowing voting by secret ballot by members who are not in attendance at a meeting of the members for the election of directors.

Board Vacancies: The law allows the board of directors to fill a vacancy on the board before the expiration of a board member’s term. Alternatively, the board may hold a special election to fill the vacancy.

No Compensation for Officers and Directors of HOAs: The new law prohibits a director, officer or committee member from receiving compensation from the HOA for service to the association; however, reimbursement for out-of-pocket expenses is allowed. This provision, however, does not apply to a developer of the subdivision.

What does “Probating a Will” mean? It means taking all legal steps necessary to ensure a Will is valid and to admit the Will to probate.

What does “Estate” mean?

It relates to all property of a deceased person that is the subject of a probate action.

What does “Probating an Estate” mean?

This is a legal process provided for by Florida law which determines the value of a deceased person’s property and its distribution to heirs.

Where do probate proceedings take place?

Proceedings are held in the Circuit Court of the county where the deceased was domiciled or owned property.

Why is probate necessary?

To collect and determine the estate’s assets and to protect the assets of the estate. To provide a means of converting assets to cash to distribute to beneficiaries, or to pay creditors/taxes. To legally transfer ownership of real property. To determine who is entitled to share in the estate and to distribute the property to the proper parties.

What happens if a person dies, and has left no will?

The property will be distributed in accordance with Florida law. A person should make a will right now because no one knows what tomorrow holds. A person should review his estate plan occasionally, especially after certain events, such as marriage, divorce and winning the lottery.

Can I appoint a guardian for my children in my will?

Yes. This is another valuable benefit that a will can provide. However, a court is not bound by the naming of a guardian in a will. The court will certainly consider it, and it’s often the only way to make your wishes known after you’ve died.

What are probate assets?

Generally, probate assets are those assets in the decedent’s sole name at death or otherwise owned solely by the decedent and which contain no provision for automatic succession of ownership at death. For example:

1. a bank account in the sole name of a decedent is a probate asset, but a bank account held in-trust-for (ITF) another, or held jointly with rights of survivorship (JTWROS) with another, is not a probate asset;
2. a life insurance policy, annuity or individual retirement account that is payable to a specific beneficiary is not a probate asset, but a policy payable to the decedent’s estate is a probate asset;
3. real estate titled in the sole name of the decedent is a probate asset (unless it is homestead), but real estate held as joint tenants with rights of survivorship or as tenants by the entirety is not a probate asset;
4. property owned by husband and wife as tenants by the entirety is not a probate asset on the death of the first spouse to die, but goes automatically to the surviving spouse.

This list is not exclusive but is intended to be illustrative.

Who Is Involved In The Probate Process?

While there may be others, the following is a list of persons or entities often involved in the probate process:

1. Clerk of the Circuit Court
2. Circuit Court Judge
3. Personal Representative
4. Attorney for the Personal Representative
5. Claimants
6. Internal Revenue Service (IRS)
7. Florida Department of Revenue
8. Surviving Spouse and Children
9. Other Beneficiaries
10. Trustee of Revocable Trust

Who Can Be A Personal Representative?

• The personal representative could be an individual, bank, or trust company, subject to certain restrictions.
• An individual who is either a resident of Florida, or is a spouse, sibling, parent, child, or certain other close relative, can serve as personal representative.
• A trust company incorporated under the laws of Florida, or a bank or savings and loan authorized and qualified to exercise fiduciary powers in Florida, can serve as personal representative

How the probate system works:

Sometimes it becomes necessary for courts to oversee the distribution of your assets upon your death. That’s where probate comes in. Probate is the legal process by which a person’s final debts are settled and legal title to property is formally passed from the deceased to his or her beneficiaries and heirs. There are many arguments for and against probate and its value in an estate plan. Probate provides a court-supervised distribution of an estate’s assets. However, the process subjects an estate to public scrutiny and additional costs of probate. So before making a final decision, learn the role of probate in estate settlement to determine whether it would work in your own estate plan.

How probate begins

The probate process is initiated in the county of the decedent’s legal residence at death. Somebody acting on behalf of the decedent must come forward with the decedent’s original will. Usually, this person is named in the will as the executor, chosen by the decedent as the one in charge of “wrapping up” his or her affairs. If there is no will, somebody must ask the court to be appointed as administrator to perform the same function. Most often, this is the surviving spouse or an adult child. If there is a dispute over who should serve as administrator, the court will appoint a neutral public administrator who can be counted on to be fair. This person is paid an hourly fee from estate funds. The executor and administrator have practically identical legal rights and responsibilities, and both may be referred to as the decedent’s personal representative. Note that the personal representative’s authority only extends to the “probate estate”—defined as property subject to the jurisdiction of the probate court. Assets disposed of outside the probate process are part of the “non-probate estate,” and the executor or administrator has no control over these. If a decedent has probate property outside the court’s jurisdiction, then that property must be subjected to ancillary probate in the other jurisdiction. The executor-to-be should file (with or without the help of a lawyer) a Petition for Probate of Will and Appointment of Executor. This is done at the probate court clerk’s office. Probate court is a division of the state court system, but it might be referred to by another name. (A certified copy of the death certificate must also be shown to the court. One will need a death certificate for other purposes, so it is a good idea to order about ten copies initially. The coroner or mortuary can assist with this.) A date is usually set for the person named as executor (or administrator) to appear before a judge, present the will, if any, and ask to be formally appointed. After a will’s genuineness and validity are established—by simple inspection of the document—the court issues an order “admitting the will to probate,” which the county clerk then records. In some states, expedited procedures may be available. Once probated, a will is a public record, and so are the subsequent filings with the court. These papers are open to inspection by anyone. The laws in many states require public notice of the probate proceeding by the publication of newspaper ads. The probate judge officially appoints the executor (or administrator). This appointment confers on the personal representative full authority to deal with the decedent’s probate property and accounts. The personal representative is given a certified court document that must be honored by financial institutions and others. In some places, this is called the “letters of administration” or “letters testamentary. ”

The three basic steps of probate

The steps of probate are tasks that have to be completed on behalf of any person who dies, whether he or she has a will, trust, or neither. These chores can be easy or very difficult, depending on the nature of the decedent’s property and the reasonableness of the people involved. But much of this business really cannot be avoided, even if probate itself is avoided. Most states have streamlined probate procedures for handling the settlement of small estates and uncomplicated larger ones. In a few states, the procedure for small estates may not even require a trip to probate court. But even where court is necessary, if nobody is protesting or fighting over anything, the process need not be as bad as many people fear. If the decedent left a will, there should be an executor named in it to manage the estate and wrap up the decedent’s affairs. If there is no will, the court will appoint an administrator to fill this role. The generic term “personal representative” is often used to refer to an administrator or executor. With or without a will, the probate process can be divided into three steps:

Step 1. Collection, inventory, and appraisal of all assets that are subject to probate

One of the executor’s or administrator’s first and most important duties after appointment is to take an inventory of estate assets. These assets include money that is owed to the decedent or the estate, e.g., loans, final paycheck, life insurance, or retirement account(s) made payable to the estate. This inventory must be filed with the court. If the decedent’s property consists entirely of bank and stock brokerage accounts, for example, the account numbers and latest balances will be listed. Valuing real estate or an antique car collection, by contrast, would probably require a professional appraisal. The detail and accuracy necessary is dictated by the circumstances and degree of scrutiny being shown by other interested parties. An estate checking account is usually a good practical idea for paying the decedent’s household final bills and estate expenses (e.g., attorney, appraiser). This checking account is useful for combining all the decedent’s financial accounts into a single pot. Thought should be given, however, before stocks or bonds are sold. It may be unwise, for example, to convert a good investment into cash in a checking account merely for convenience’s sake.

Step 2. Paying the bills, taxes, estate expenses, and creditors of the decedent

The personal representative is never personally responsible for paying these expenses out-of-pocket if estate funds are not available. The surviving spouse and children are generally given an allowance under the law, which varies greatly from state to state, whether or not there is a will. Generally, an allowance comes “off the top” and is set aside first. Thereafter, the order of payment of claims against the estate is usually:

1. Costs/expenses of administration
2. Funeral expenses
3. Debts and taxes
4. All other claims

The personal representative reviews the decedent’s final bills, debts, and any claims against him or her as well as the supporting proof. The personal representative then pays or settles those that are valid and rejects the rest. He or she may hire an attorney, with estate funds, for advice or to defend or negotiate any legal claims. (An example of such a claim may be a motorist demanding compensation for injuries suffered in a car accident caused by the decedent a few months previously.) There are procedures under state law dictating what a rejected claimant or creditor can and must do next to keep the claim alive. This may even involve filing a lawsuit against the estate. Anyone who feels that the estate owes him or her money is likely to have only a limited time to begin further action. After that period expires, the claim may be barred forever. The certainty of that cut-off is an often-overlooked argument in favor of going through probate. Some states allow creditors to wait until after probate proceedings to approach (or sue) those to whom the estate has been distributed. If they have been given notice, however, most creditors will not wait until later, even if it is allowed.

Step 3. Formal transfer of estate property according to the will or by the state laws of intestacy succession (if there is no will)

When all rightful claims, debts, and expenses have been paid, the remainder of the property is distributed by the executor as the will directs. (At this point, if there is no will, the administrator distributes property according to state law.) The executor generally has the discretion to distribute the estate in cash or in kind (i.e., give away the property itself), but the will can specify otherwise. The executor may sell or transfer real estate if the will permits it (most do), but only after a legally specified waiting period. The executor usually may sell or transfer the testator’s (decedent’s) personal property any time but may not begin final distribution of property or sale proceeds until after a waiting period provided by state law (e.g., six months). When the waiting periods have expired and all legitimate bills, debts, and taxes have been paid, what remains of the estate is available for distribution to heirs or beneficiaries. Only then may the executor make disbursements of cash, send copies of documents such as deeds and investment statements showing new ownership, or transfer physical property to the respective beneficiaries. The waiting period before property may be distributed, even were it not required by law, is a very practical idea. The personal representative cannot immediately rule out the existence of a forgotten lawful obligation the decedent might have left behind. In fairness, the law requires that all creditors of the decedent have notice and a chance to present their claims. That is also why the executor or administrator publishes a legal notice in the newspaper that the estate is in probate. A final settlement or accounting is generally required of all the personal representative’s dealings on behalf of the estate. Any party who intends to object to any aspect of the probate proceeding should come forward and be heard at this point if not sooner. Once the judge approves the final settlement, the personal representative usually has no further duties, and the estate no longer exists. Wills and other legal documents often refer to “real” and “personal” property. Real property refers to buildings and land; most people are familiar with that term. But many are unaware that personal property is a specific legal term referring to anything that is not real estate (e.g., cash, a computer, shares of stock, an individual retirement account). The probate process is often portrayed as a nightmarish ordeal. If there is no conflict or controversy, however, much of it is simply wrapping up the decedent’s affairs and performing tasks that must be done even when probate is avoided.

The duties of personal representatives, executors, and administrators

Most wills give the executor very wide discretion in handling property and the affairs of the estate, and the law permits this. But the intention of the testator as expressed in the will should always be considered, as well as the desires of the estate beneficiaries when practical. For the sake of family harmony, it is ideal to choose an executor who is both fair and respected by all parties concerned. (When there is no will, the court chooses an administrator to fulfill the same kind of duties an executor would have.) The executor should generally not act until the will is probated, because he or she has not been officially given authority until then. The executor should, however, pay for the funeral and take care of estate property before appointment if necessary (e.g., maintain real estate or continue to operate a business). The executor may hire, with estate funds, laborers, lawyers, accountants, and other professionals for assistance. It is a good idea for the personal representative to demonstrate openness by sending notice of what is going on to all heirs and beneficiaries. This may even be required by state law. An heir is any of a decedent’s relatives who would be in line under state law to take a part of the decedent’s estate if the decedent died without a will—e.g., a child. A beneficiary is a person, related or not, whom the decedent has specifically named in a will, insurance policy, etc., to be a taker of his or her property. Often, of course, a decedent has specifically named his heirs as the beneficiaries under his will, policy, or retirement accounts. The personal representative’s notice should state what action is about to be taken (e.g., when an auction is planned), indicate the court where estate papers are on file, and be accompanied by a copy of the will, if any. This small courtesy can prevent suspicion and bickering and is good legal strategy, too. If a party who has received this notice has an objection but fails to come forward, it now may find it very difficult to be heard by a judge later. For this reason, a personal representative should also give individual written notice to known creditors of the decedent even though notice is published in the newspaper. If the personal representative is also a beneficiary under the will, or an heir according to law if there is no will (e.g., an adult child), he or she is absolutely forbidden to “self-deal” or give anyone preferential treatment. This is a frequent issue. Unfortunately, however, the executor is in such a privileged position that it is difficult for the law to provide a quick-enough remedy when this rule is violated. That is why it is so important to avoid this problem to begin with by writing a will and choosing an executor wisely rather than allowing the court to appoint an administrator who may not be the best person for the job. This is an argument for the use of an institutional executor such as a bank. Note that, absent his or her own negligence or wrongdoing, the individual serving as executor or administrator is never personally responsible for satisfying claims or lawsuits against the decedent or the estate itself. But the personal representative does have a duty to gather whatever estate assets exist and to pay the decedent’s lawful obligations as far as possible. Meanwhile, the creditors, if any, have a prescribed period of time to come forward. So, the personal representative may indeed be personally liable for the debt if he or she has given away to the heirs or beneficiaries what should have gone to a creditor. The personal representative must also act immediately to prudently invest estate assets. The law imposes a fiduciary duty on personal representatives to act cautiously and always to have the best interests of the beneficiaries in mind. If this duty is violated and a loss or waste of assets results, the personal representative may be ordered to pay compensation personally (or as an institution) to the beneficiaries in this situation, too. The personal representative is not held responsible for a poor return on estate investments as long as any investments chosen by him or her are appropriate. For example, if a general market downturn decreased the value of the estate portfolio of bonds and blue chip stocks, the law would not hold the personal representative responsible. By contrast, if the personal representative lost money through risky speculative investments or failed to get a reasonable return by leaving substantial assets in a checking account, these would probably be considered inappropriate, and he or she might be individually liable. The personal representative’s fiduciary duty also requires him or her to protect and preserve estate assets. For example, if estate funds were available but the personal representative neglected to pay an insurance bill and a fire loss to the decedent’s home resulted, the personal representative might well be held liable to the beneficiaries. A personal representative is entitled to reasonable compensation often limited to a certain percentage (e.g., 5%) of the property in the probate estate. (Extra compensation related to handling some special matter may be allowed by the court.) That does not mean the executor automatically gets that much. The fee taken is usually listed on the final report and is, therefore, subject to approval by the court. Some states have an official “reasonable” fee scale for personal representatives and probate attorneys. These may actually be higher than fees in comparable cases in states that do not have official fee scales. An objection can be raised if the fee appears excessive, considering the time and effort actually expended. Professional fees (lawyers, accountants, appraisers) will also be allowed. These fees must be reasonable, too, but are not subject to a set limit. The personal representative has a great responsibility. A trustworthy person or institution should be named in one’s will to avoid the family strife that often follows when this choice has to be made by the court.

Summary of overview of the probate process

The probate process is not necessarily as difficult as people are led to believe. Much of the effort expended to wrap up a person’s affairs is necessary, even if probate court is avoided entirely. The process often goes smoothly, and when it does not, it is often because of difficulties—legal, financial, or personal—that are attributable to the decedent’s situation, not the court. These same issues would adversely affect the “peaceful” transition even if probate were avoided, and in some cases are better dealt with under court supervision. Consider the pros and cons of probate as they apply to your own estate before making a decision one way or another about avoiding probate. Sometimes the best solution is to transfer some assets outside probate and others under its umbrella. Neither New York Life Insurance Company nor its agents provide tax or legal advice for your personal circumstances. Please consult your tax and legal advisers to find out whether the general concepts in this material apply to your personal circumstances.