Probate Advantages for Sale of MN Real Estate

houseIf several children are in line to inherit Minnesota real estate that is destined to be sold, probate may be faster, less complicated and less expensive than some of the maneuvers used to avoid probate.

Why?

Probate reduces the number of people that must be involved in the sale if the property is sold while the probate is open. With probate, only the personal representative of the estate needs to be involved in marketing the property, negotiating the sale, signing the closing documents, and handling any title-related matters.

In contrast, when a Minnesota Transfer on Death Deed (TODD) has been used to transfer title to several children after the death of the parents, the result may be “too many cooks in the kitchen” regarding the subsequent sale of the property.

The purpose of a TODD is to avoid probate related to the real estate. A TODD works well under certain circumstances, such as when there is only one child that will inherit the property. But when there are several beneficiaries, and the property is likely to be sold, probate may be the better path.

For example, assume that four children inherit Minnesota property via the TODD. In Minnesota, all four children plus their spouses will need to agree on the timing of the sale and the sale price. All four children plus their spouses will need to agree to the marketing of the property, will be involved in the negotiation of any offers and will need to sign documents closing the sale.

If the four children and their spouses can’t reach agreement, a partition action in court may be required. Partition actions are expensive, time-consuming and are best avoided.

Moreover, if any of the four children is also in the process of getting a divorce, filing bankruptcy, or has tax issues, the sale of the real estate may be caught up at least temporarily in those proceedings.

Therefore, it’s important to consider individual circumstances rather than automatically deciding that probate is a process to be avoided.

(Note that a Revocable Living Trust also may be used to avoid the complications illustrated. When real estate is owned by a Revocable Living Trust, the trustee has similar powers as does the personal representative of an estate.)

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Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305         952-649-9771     bonnie@bwittenburglaw.com   www.bwittenburglaw.com