(Jim) The most common probate issue that we come across in real estate is the administration of a decedent’s estate. Title to real estate, as it comes to us from merry olde England, was considered so important that it could never be held in abeyance. Some one had to own it. They believed that upon moment of death the soul passed on to its eternal reward and the title to real estate passed to the heirs at law or the devisees in the will. Probate is required when a person dies owning an asset in their name without someone else being designated as the owner in the title to the property. It is the orderly process of taking one person’s name off of an asset and putting another person’s name on it. It’s more civilized than fighting over the assets, as they did in merry olde England with their Hundred Years War, Thirty Years War, War of the Roses, etc. These wars were about who would take title to the main asset – England.

(Kerrie) The process starts with the making of a last will and testament. This is a person’s written statement about what he or she wants to happen to the assets upon death. Because of the tremendous importance of this document, the law places a lot of requirements on it.

(Jim) Right, and we could do an entire article on all of the case law about the requirements of a valid will. Needless to say, having a will is very important for a person to have their wishes handled after their demise.

(Kerrie) Having a will is important, but there are not the disastrous consequences that many believe, if a person dies without one. The state will not take your property or your young children. The state’s law will, however, dictate what happens to your property and possibly your children if you have not done so in your will. There are times, however, when someone dies without any heirs at all, and in those cases, property may become the property of the state. So, let’s talk about real estate holdings.

(Jim) Okay, let’s assume a person dies owning probate assets, that is, assets that have not been designated in the title documents as to going to another person. An example, of a non-probate asset is survivorship. In that instance, the deed dictates that the entire title vests in the survivor or survivors upon death. In Ohio, the process is started by the filing of an application to administer the decedent’s estate and a form identifying the decedent’s heirs at law and their devisees under their will, if any. This form is important because it is a sworn statement that can be relied upon by the title examiners who must follow the title to the real estate.

(Kerrie) What you mean is that since the title passes upon death to the heirs at law or the devisees in the will, we must identify that list of people. The heirs at law are determined by the Statute of Descent and Distribution in Ohio. This statute is essentially a family tree setting forth blood relationships in the order of their priority. Title passes down through children, or back up the tree if there are no children. The statute also provides for one non-blood relation – the surviving spouse. The statute even takes into account the fact that the surviving spouse may not be the natural parent of the decedent’s children. If someone dies without a will, their assets will go the heirs in accordance with the statute. If someone dies with a will, their assets will go to the person or persons designated in the will. If the will does not dispose of all of the assets, then those assets pass in accordance with the Statute of Descent and Distribution.

(Jim) When someone applies to the Probate Court to administer an estate, they must identify whether or not the person died with a will, that is testate, or without a will, intestate. If a person dies with a will and that person or decedent identifies a person in that will that the decedent wanted to handle their estate, the court, upon that person’s application, will appoint that person as executor of the estate. If there is no will, or the person nominated is deceased or declines, the court appoints an administrator. Both the executor and the administrator are considered fiduciaries and must account to the court for their actions.

(Kerrie) If there is a will, then the court must make a determination if that document being submitted is in fact the deceased’s last will and testament. Not too long ago this required the actual testimony of the witnesses. Now a will that appears valid on its face is admitted to probate upon the rebuttable presumption that it is valid. The law also requires that notice of the application for administration and to probate a will is given to every person that may have an interest in the estate. That group is determined by the list that is required be filed. This is another check off item that the title examiners look at in reviewing an estate. If someone was not given proper notice then that person has not received due process as required by our constitution. The failure to give proper notice could result in the lack of jurisdiction of the court to do anything with the property.

(Jim) The fiduciary’s job is to identify the assets, pay off the debts and distribute what’s left to the proper parties. No, you can’t avoid your debts by dying. But then your heirs don’t inherit your debts except keep in mind that mortgages secured by real property are not extinguished upon the death of the borrower. The estate may be obligated to pay the debts to the extent that there are assets available, but the heirs are not. After being appointed the fiduciary must file an inventory with the court. This lists the assets and their value as of the date of death. Any person who has a claim against the decedent also must file that claim within the time period set by law. The court reviews all of these matters. After the assets have been inventoried and the claims have been paid, the fiduciary distributes the assets. With real estate, this is done by filing a certificate of transfer with the probate court and recording it with the recorder. This is not a deed, but a memorial of what happened upon the death of the decedent. If the will left the property to the surviving spouse, the certificate is official notice of that fact. If there was no will, the certificate is notice that the heirs at law are now the owners of the property.

(Kerrie) Even though title passes to the heirs or devisees subject to the power of the executor or the administrator to sell the property, or subject to the rights of the surviving spouse, the will may give the executor the power to sell the property, even if the property is specifically given to a particular heir. Of course, when that happens we will require a quitclaim deed from that heir to insure that there is no future claim to the property. The surviving spouse has all sorts of rights with respect to the property, especially the marital home. This could be good or it could be bad. Not too many years ago, if a person died leaving a spouse and minor children, the minor children inherited the property. The surviving spouse then had to set up a guardianship and bring a lawsuit against the children just to sell the house. Changes in the law have rectified this. But sometimes the surviving spouse rights may not be the wishes of the deceased. The Anna Nicole Smith case revolved around that issue.

(Jim) The ability of the fiduciary to sell the property depends first upon whether there is a power of sale in the will. If there is no power of sale or there is no will, the fiduciary can still sell the property, but only under certain circumstances. Sometimes the fiduciary may be required to sell the property in order to pay debts or to pay gifts given in the will. These sale cases again present problems for title examiners who must determine if the notices and procedures were done correctly.

(Kerrie) A probate estate is officially finished when the fiduciary files his or her account and the court accepts that account.

(Jim) It seems complicated, but it is really not as terrible as many believe. Probate is only a problem when the heirs are fighting over the assets. Absent family disputes, probate is a very smooth process. In some circumstances, an estate may be released from administration, doing away with most of the procedures.

(Kerrie) In any event, probate is one more thing that we real estate lawyers must take into account as we examine a title and like anything else; it has its little traps. But that’s just my opinion.

(Jim) And mine.

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Jim and Kerrie Matre are married partners in the law firm of Matre & Matre Co., LPA. The firm generally limits its representation and practice to all legal issues related to real estate, construction law and corporate representation.

This article is written to introduce the reader to common real estate legal concepts. It is not intended to be legal advice to any specific party. As always, consult your attorney regarding your specific situation.

Have questions? Email them at either kmatre@matrelaw.com or jmatre@matrelaw.com