I pay you with my friendship, but it's conditional. Yeah. All right. Only dogs, than women and kids, are unconditional love. Right. Right. Right.

Today we're talking about mastering the probate process. So, this is a very foundational lesson. Um, it is going to form the new module one. So, if you're listening to this on demand later, it has already formed the new module one in our probate mastery program. So, I just wanted to kind of pull things back and make sure that, um, everyone that's in probate mastery, everyone that's part of our community, really understands what the probate process looks like.

Uh, we are not going to be heavily talking about, um, marketing, prospecting, strategy, or business building today. Um, I run into, far too often, our students do a great job with marketing. They do, uh, they prospect really well. They're doing a good job getting in front of the right people. And either a personal representative will ask them a question, or someone in the family, or, God forbid, an attorney that they're trying to impress, asks a question, and they just fall flat on their face by demonstrating that they have absolutely zero understanding of the probate process.

So, we want to cover enough of the probate process today to where you don't look silly when you get into marketing, when you get into prospecting, relationship building with, um, executors and heirs and attorneys and other vendors.

So, what are we going to cover? We're going to talk about the parties that are involved in the probate process. We're going to discuss the process of probate. There are 12 steps from filing through closing of probate. We're going to talk about the paperwork and the different forms that you guys should be looking out for and getting to know. We're going to go over the different assets that you're going to run into, um, as a part of, or separate, um, or ancillary to, uh, probate. Um, we'll talk about the timing of most probate cases. And then ultimately, um, we'll talk about, um, the files. So, how you can read the court records to identify some of your best opportunities.

Now, that filing part, I want to give a little caveat here because this tends to be the one thing that a lot of, um, a lot of, uh, our real estate pros get hung up on. Uh, I run into this very frequently where our, um, agents will look at their probate list and instead of just trying to establish communication, they spend an entire day per lead on their probate list trying to understand that person's situation. And while I think it's important to understand someone's situation, I don't think it's important to dig deep into their situation before the conversation starts. Once the conversation starts and they're a viable prospect, you've kind of moved them into your pipeline, I want you to understand how to look at their situation through, um, through the eyes of the court and understand what they really need at that moment and what they're going to need in the future.

So, we're going to start by going over the different parties that are involved in the probate process. Who can sign, um, who has an opinion, um, who you need to be communicating with and building relationships with. Right out of the gate, I want you guys to know, and I think everyone probably already knows this, but the personal representative is the, uh, main, uh, party that we're going to have a relationship with. Personal rep, it's kind of the blanket term. They're sometimes known by per executor, executive. And basically, the simple answer to this is that they are just the one person, and sometimes two if they're co-executives or co-representatives, but the person that has the signing authority, that has the decision-making authority. It's usually one person. I have seen it as, uh, two people. I've actually seen it as three people, which gets really messy and muddled. It's best for it to be one person.

Now, you guys are going to see, um, times when the personal representative is sometimes an attorney, sometimes a fiduciary, sometimes a third party that's been court-appointed, sometimes it's a friend of the family. It's not always a family member, but it is frequently a family member. So, you guys need to know that it's frequently a family member, most frequently, but it doesn't have to be a family member, and it doesn't have to be one person.

So, real quick rundown of who these folks are. Executor, um, executive is appointed by the will. So, um, the decedent passes away and their will says, "I'm going to have to do a lot of editing, folks. Help me, help me out. Mute your mute your microphone if you're off mute." Okay, this is going to make for a really bad post-edit if I lose my train of thought every time. Okay. So, executor is when there is a will and the will names the representative. If that representative that the will has named is a male, you're called an executor. If you're a female and the will names you as the representative, you're called an executrix. Um, if there is no will and you go apply for probate or petition for probate and you're appointed by the court as the representative, you're called an administrator. Okay. You may be a public administrator as well, and that's where the court has decided that a neutral third party is going to oversee the estate, is going to be their personal representative for the estate. And that's normally a public administrator. Neutral third party. Some of you guys have done this. Some of you might be able to do it. Um, you get yourself on a list as someone that can oversee the estate process and manage some of the process for people. I don't necessarily know why you'd do that. It's a pretty complex job. Uh, but you can do that. There are some folks here that have done that. They've represented estates where they were not, had didn't have any relation to the decedent. Um, sometimes you're a fiduciary. There's some of us that have estates where fiduciaries manage the process frequently, and these are licensed professionals who only manage estate administration and they oversee on a fiduciary capacity the estate administration process on behalf of an estate or on behalf of a family. And then sometimes the attorney is the one that's representing that.

So, why do we call it a personal representative? It's just the blanket umbrella term that covers all of those different, uh, different representatives of the estate.

Next, we have heirs and beneficiaries. So, heirs and beneficiaries, that's pretty simple. These are the folks that after the estate settles are going to get the stuff. They're going to get the money. They're going to get the houses. They're going to get the cars and the antiques and the collectibles and, uh, different things like that. So, they may have a say in how the estate is managed and run, but they don't have any legal authority. They don't have a legal say in how the estate is run. So, the personal representative is the one making the decisions. Um, and a lot of times they're listening to the input and the opinions of the heirs and beneficiaries, but the heirs and beneficiaries aren't the ones that, uh, that dictate how that estate is managed.

Then we have the attorneys. Depending on your location, um, some families, uh, some locations have almost every family represented by an attorney. If you're in a state like Texas, um, I don't know that any state goes through the probate process without an attorney. Texas tries to dictate that you have to have an attorney. Um, most states will allow a family to go through the process representing themselves. Um, so there are areas. I've talked to some folks in Georgia where maybe 30% of the probate cases have attorney representation. There are folks in California where it might be 96%. There are places in Texas where it's 100% because you're not allowed to do it without attorney representation. Uh, in my market, probably 70% of estates that go through probate have an attorney that's involved. And the attorney is normally presenting themselves as doing everything probate-related.

Um, then we have the clerk, the clerk of the court. These are the, uh, the elected representatives and some of the staff that they've hired. Uh, all considered the clerk. The clerk, just like a sheriff is elected and their deputies are also considered sheriffs, um, the clerk is elected and their staff are considered, um, the clerk, and they help, um, run the office. They help file the applications and move things through different, different stages of the process.

Okay. Um, then there's the judge, sometimes a magistrate. They're the ones that are kind of looking at everything, making sure that paperwork was done correctly, um, giving you instructions on your next step.

Oh, doing super good. How are you doing? Happy Friday. Everybody mute yourselves, please. Um, other fiduciaries. We talked about fiduciaries. Then we have the creditors. These are the folks that are owed money. Um, sometimes creditors could be the IRS, the state, uh, the your state if your state's owed money through taxes. How did I get muted, David? Did you mute me?

I did. I'm so sorry.

Okay. Trying to mute everybody.

Thanks. Appreciate it, but just not me. Okay.

Okay. So, creditors, um, are the folks that, uh, that are owed money. Could be the government, could be private, could be corporate. They're owed money from the decedent. And then ultimately, the decedent's the person that passed away, hopefully with a will. But if they didn't have a will, then the state has a process for that. All right? So, those are the parties that are involved.

Let's talk about executor versus administrator really quickly. And we already covered this, um, briefly, but an executor is the person, uh, is the person that is appointed by the will. So, the decedent writes a will when they're alive and they say, "Hey, when I die, I want this person to represent my estate." Um, and they're called an executor. So, specifically named by the will, there's a clearer path, and basically, you are going to follow the wishes of the decedent. You're going to follow the wishes of the will. The decedent might have written a complex will or a very simple will, and it says who gets what, how everything's going to be handled, and the will rules. It dictates the process that's followed by the courts and the executor.

If there was no will, um, you're technically an administrator. So, let me let you guys know, and we'll touch on this a little bit more later. When I go into my courthouse, if I were applying for probate, or in other words, um, another name for it is petitioning for the probate process, I would go into the clerk's office and I would say, "Hey, I need to apply for probate." And they'd ask me for a couple of things. They'd ask me for a copy of the death certificate. They'd ask me for a copy of the will. They'd ask me for a list of heirs. They'd ask me for several different things. If I don't have a will, they're going to hand me an application for administration. Now, this is North Carolina. You guys need to understand this for your state as well, and we'll go over how to do that later. North Carolina and a lot of other states do it this way. They give you an application for administration. Uh, why? Because you're going to follow the state's guidelines on how to handle the probate. Basically, if you give them a will, they're going to hand you an application for probate. So, it's two different applications and technically two different processes. We're all in probate mastery. I want you guys to know that if you're going through, uh, if you're going through this process without a will, technically, you're not going through probate. Technically, it still runs through the same clerk's office. It still runs through the same court. Uh, the steps are still pretty much the same. It's just a different name. Um, so you guys are still going to see people with an administration versus probate. You're still going to see them on your probate list. I just want you to know that they're technically under a different name and a different title for the process that they're going through.

All right. Do I have any questions on the parties or the process, uh, administration versus, uh, versus, um, executor? If anyone does have any questions, pop your hand up instead of unmuting yourself.

All right, so let's go over the process here really quickly. So, there are 12 steps to the probate process. And we can get, uh, more broad or more granular and make it as many steps as we want. I could probably make turn this into a 100 steps or two steps, but I think there are 12 steps that need to be met to, um, move through probate. So, we want to break them down into opening the estate, administering the estate, liquidating the estate, and closing the estate.

So, first thing that needs to happen when a family goes through probate is they're going to go to the clerk's office and they're going to apply or petition to open the estate. All right? They're going to fill an application out that you guys need to see. Uh, every state has a different application. I might understand my state's application or my county's application and I could show it to you, but it's not going to mean anything to you because yours is going to look different. So, I want everyone here to go to the courthouse and put your eyes on a probate application, or if you can access, um, public records and look at other people's probate applications, do that. I also want you to be able to look at applications for administration. So, look at applications for probate, look at applications for administration. And if it's just one application in your state, don't come back and say, "Bruce told me it would be two separate applications." It might not be. It is in a lot of states. Have two completely separate applications depending on whether there's a will or not. So, you need to look that up in your specific state. That's going to be some homework. Um, I would prefer you go to the courthouse, to the clerk's office, talk to them, get an application, look at, look at a physical application. Why? Because you want to know what they're like. You want to, you want to, um, be able to use that as something that you have in common with the families that you're working with. Oh, did you talk to, uh, did you talk to Lois down there? Did you talk to Jason? Okay. So, use the, um, use the, uh, application and your ability to go into the courthouse to your advantage. Um, if you're super busy or out of the area, at least pull it up online, get to know what that looks like.

Um, once you have applied for probate as the family or petitioned for administration, either way, the next step in opening your estate is the notice or is the hearing. The hearing. So, this is where you're going to, um, you're going to go to the judge's office or into the courtroom and you're going to sit in front of a magistrate or a judge, and you're going to go through a hearing. They're basically just going to look at your application. They're going to look at your, uh, death certificate. They're going to look at your will. Um, they're going to, um, check to see that all the eyes are dotted and t's are crossed. And if they are, then they're going to issue you, uh, letters testamentary. Letters testamentary. And I'm just going to leave it here and say letters issued because every state has a little bit of a different term for it. And we'll show those in a second, but we'll call it letters issued. And the letters essentially say you are officially clear to open the estate and here's the person or people that have the authority to do so. These are really simple. Don't let the name, um, make you think that they're more complex than they are. It's usually just a one-page document with just a few, uh, a few directives on it. It'll, mine are maybe a paragraph that says, um, hey, uh, you're, this person is officially named as representative for the estate of Jane Doe. The estate was opened on this date and here's your authority. And that's the authority. That's the letters that you use to show that you have the authority to sign things, to move money, to move assets, to actually administer the rest of the estate when you're the representative. All right.

So, the second step in the probate process is to administer the estate. This is where you have all your authority. The court has appointed you or someone as the representative. Um, and now you're going to do a notice to creditors. So, this is where you go down to the court, uh, to a newspaper, and you, um, you typically set up a weekly ad. It doesn't have to be weekly. Every state's a little bit different. This is going to be some other homework for you. But you're going to run a series of ads in the newspaper that say, "Hey, this person died. If they owe you money, you let us know." And you put a contact, uh, some contact information on there. This is just a notice that goes out to the public that says we are officially in probate. Um, now, this notice sometimes picks up heirs as well. So, sometimes this notice goes out and someone that's a long-lost relative that wants a piece of the estate might see this and come with their hand out or come to get involved in the estate. That's not very common, but it can happen. The main purpose of this notice is to notify creditors that were owed money. All right.

Um, so you're going to run this notice in North Carolina. And I'll give you homework. In North Carolina, where I am, you have, um, 120 days to set up this notice. I'm not going to put this on YouTube because I don't want to misquote things, and I'll just go ahead and, just in case this video ever gets out there into the public, um, I will disclose that I'm not an attorney and if I get something wrong, it's because I'm not an attorney. All right? But generally, in my state, once you've applied for probate and been appointed, you normally have about 120 days to actually get your notice into the newspaper and start running your notice to creditors. And then you have to finish a round of at least three newspaper ads across a 90-day period. So, you have to run three notices to creditors in the paper, and you have 90 days from once you've started, you have 90 days to run all three. Most people do this really fast, but if they're really slow, it's just going to drag the probate process out. All right.

Now, you guys need to look up. Google is a wonderful thing. AI is a wonderful thing. You need to look up, um, how long the notice to creditors has to run in your state once probate started. Then you need to look up how long, how long you have after letters of administration or letters of authority are issued to begin running your notice to creditors in your state. Those are some things that you need to look up and understand yourself. Um, normally, if you're prospecting and marketing a probate list, you are normally going to catch that family after they've applied, after they've had their hearing, and after their letters of administration have been issued. That's normal. Um, sometimes you'll catch folks in this opening stage. They'll be halfway through it, but most of the time they're done with the opening and they are into this administration phase. So, they're normally somewhere in the beginning of the administration, uh, phase, maybe running a notice to creditors.

So, after they've run their notice to creditors or at least started, now they need to go get a tax ID number. So, an EIN. They're going to take their letters of administration, they're going to take their will, they're going to go on the IRS website and actually request an EIN number or a tax ID number. Now, they officially have, um, the estate open in the eyes of the federal government. Um, normally, they're going to start doing inventory and appraising their assets during this phase as well. They need to. A ton of people procrastinate on this. They procrastinate on a lot of this, and it's, um, so bad that the government, the local, the state government will normally say, "Here's when you have to give us, um, give us your inventory back." All right? You need to have your credit, your notice to creditors run by this date, and you need to have an inventory back to us by this date because otherwise people just sit for months and years without doing anything. So, once they've started probate, the government doesn't really want them just dragging things out. So, they're typically going to be given a couple of deadlines at the beginning of the probate process. So, when they have their hearing up here, the government will frequently, the court will normally say, "This is when your notice to creditors has to be finished. This is how long you have to start, and this is when we need your inventory, your list of assets back on an official inventory list."

So, homework for you guys, you want to look for the official inventory list, um, from your county. So, you want to see what form that is on, and you want to do a little bit of research on how to fill it out. It's important that you do research on how to fill it out because I catch families all the time that are filling it out wrong. As a matter of fact, my marketing is very heavy on stepping in and helping them with their inventory list. If they don't have an attorney, or they do have an attorney and they don't want to pay them $600, they can call and talk to me and I will present myself not as a legal authority, but as someone that's seen this a lot and tell them what attorneys normally tell me is to do it like this. That's the way I present this. Inventory lists can get really, um, messy, really, really messy. And the reason is because people put the wrong valuations on their inventory or they put their inventory in the wrong places. For the most part, that list of inventory doesn't have to include much of your personal property if there's no title to it. The personal property is kind of nitpicky. If you had a couch and some silverware and some dishes and a lamp in the bedroom, those things don't normally go on your inventory list because there's no title with them. They're not considered to have real significant value. If you put that stuff on your list of inventory, you could be taxed on it. So, most attorneys that I talk to will say, "Look, just put the titleable or financial assets on your inventory list." And you want to make sure that you're putting real estate where real estate needs to go and personal property where personal property needs to go. So, you guys need to look at your inventory list and determine how that gets filled out because families mess it up all the time. And if you can head that mess up off and you can get ahead of it and help them do it the right way, most of the time they're going to immediately start to trust you a lot more at that stage.

Valuation is another big thing that administrators get wrong. They put the tax value or they put the Zillow estimate on the property valuation all the time. They put Kelly Blue Book values on the cars. Um, they do guesses on what values are. They guess low, they guess high. Um, they're guessing wrong very frequently. And when those assets sell, uh, they get big tax bills or they get audited. And we don't want either one of those things. Um, so I got, I had a client of mine, uh, about a year, about a year ago, um, who looked at the Zillow estimate of their house and they saw that it was worth, um, like $400,000. They went, "No, it was the tax value, forgive me. They looked at the tax value of their house and they saw it was worth $400,000 and they filled their inventory out and put the house in the inventory in the wrong place, by the way, and they said it's worth $400,000 and then they went to sell it and they sold it for $600,000." Does anyone know what the government sees when they are doing your taxes and you've done it that way? Joanne, it muted you. Let me, let me ask you to unmute.

Here it is. It's a capital gains tax.

Yeah, it shows up as a capital gains tax. It's called, kind of a, it is a capital gains tax. It's technically referred to as a step-up tax. It is the increase in value, um, that happened after the decedent passed away. And so, if you do this wrong and you put the wrong valuations on your assets, you're going to get taxed as a capital gain. Um, if you do it high and you get audited, the government, the IRS is going to ask you where you came up with your high estimates of values. So, you got to, you got to be careful, especially with real estate. The other things aren't quite as risky. But with real estate, you got to be really careful when you're valuing the property and you're filling these forms out because if you go too low, you're going to owe a lot of taxes. And if you go too high and you ever get audited, which may not happen, but if you did, then you've got to show proof of where that number came from. So, uh, I had a conversation with this family. Uh, they were about to get taxed on a $200,000 gain. I told them that they should have listed the valuation higher, so they had to go fill out an amendment on their, um, on their asset list. Um, and then they tried to put 700 on there. And I was like, "Don't do that because we have absolutely no proof that your house was ever worth 700. You can't try to flip it the other way. You need to be able to show where your number came from." Now, you can show that your number on assets came from tax records. You can show that it came from Kelly Blue Book if it was a car or vehicle. You can show that it came from Zillow. You can show that it came from an appraisal. You can show it came from a CMA. But if you get audited, you just need to show where that came from. And if I was a family, I would want to show that it came from the source that gave me the highest value. And normally that's going to be an appraiser or a real estate agent's broker price opinion. Those are normally the two that'll show you the higher value. Now, Zillow might show a higher value. And that is a source that you can use when you're showing the value of your real estate specifically. You can use that. It's just like a receipt. When we do taxes for our business or our personal and we try to write something off, it's best if we keep a receipt of it. So, it's best if they keep a receipt or at least an image showing where they got their number from. But, it's really important during this stage that they do an evaluation after they've gone through this administration phase, which makes up the majority of the probate process. Uh, at that point, they're normally going to begin liquidating and paying.

So, once everything is reported and shown, uh, normally in most of our states, um, the family or the personal representative can begin spreading money out even before the estate is closed. Okay? Even before the estate's closed, it's fine as long as that money was and those assets were properly reported in the administration stage. As long as they're properly reported, you can spread money around. Um, so at this point, they're going to pay the debts. They're going to pay past taxes. They're going to pay, uh, family members. They're going to sell, uh, vehicles and personal property and real estate. They're going to do their estate sales. Um, they're just going to begin to liquidate things and spread, um, spread the assets or money around. Okay.

Um, once you've done that, and some people wait on this, some people will leave all the assets in the estate until after they've closed. So, it's certainly not a problem to close the estate first and then liquidate and pay last, but normally you're allowed to liquidate and pay third and then close last. And this is the way that I would normally do it. Just because someone has an attorney doesn't mean the attorney is guiding them, right? A client of mine this year was told that they needed to close the estate and liquidate and pay last. So, we went through the process of selling his house. We get to the closing table and he said, "When can I get my check?" And the closing attorney said, "You can't get your check until you, uh, until you close the estate." Why? Because the title is in the name of the estate. Okay? And he said, "Why?" Because that's what your attorney did. They put title in the name of the estate. They should have put it in your name. So, uh, the closing, the estate attorney did wrong. I see that very frequently. It might be an inexperienced attorney that, uh, hasn't done many probates. Maybe they're an estate planning attorney. They don't do a lot of probates. Maybe they're a bankruptcy attorney that got hired to do a probate because they said, "I can do that." And they mess it up. Okay?

So, in a perfect world, the family is going to liquidate and pay up here. They're going to go ahead and spread the assets and money around up here. And then last, they're going to close the estate. And to close the estate, they do a final accounting for the decedent, final accounting for the estate. All the rest of the money is distributed, and then they finally close things out with the IRS and with the court. All right.

So, there's a fork in the road here that kind of guides the process in most of our states. We tend to get a lot of folks from California in these classes. Um, but this is not only a California thing. This can be a thing in any of our states. Um, you've got to decide, and you need to see, generally it's listed on the letters testamentary. You need to see, um, whether the personal representative has the authority to act unsupervised or whether they're required to have court supervision. So, in a state like California, this is called, um, full authority versus limited authority. Full authority says that the representative can make their own decisions. Limited authority says that they have to run all major decisions through the court. So, they've got to talk to the, they've got to book a meeting with the judge. They have to get everything approved by the court, and it can really hinder the process. So, those of you in California, you need to be careful, um, when, if you're helping someone set an estate up, and they need to be careful to apply for full authority. Um, if you're not in a state that has this as a common mistake, just, just look and make sure that your family has, um, kind of unsupervised authority. Times when you're not allowed to have unsupervised authority is when there's contention in the family. So, the family is fighting, and the judge gets involved and says, "Hey, nobody's making any decisions without bringing it to me first." Times where you don't have full authority are when, uh, an unrelated representative, uh, is managing the estate. Another time when you don't have full authority, or when the heirs are minors. When heirs are minors, you almost never have full authority. Um, or represent that, like, and basically, if the heirs are minors and there's not an adult that's the named representative, um, normally you have to go through the court for approval on certain things, or, um, all the heirs are, um, deemed incapacitated mentally or unfit mentally. All right? And we're talking about all the heirs. And I'm not saying if there's two adults and one minor, you have to do court, court approval on everything. If there's one person that's named as the representative and they, they are a family member and they were already named, they can normally do an unsupervised process and they make all their decisions.

So, when you are working with a family, whether you're helping them with the estate administration process, sell a car, sell some, sell, set up an estate sale, um, sell a house, buy a house, anything like that, um, you just need to look at the letters testamentary and see if it lists the type of authority that they have. Are they supervised or are they unsupervised? Sometimes when an attorney is involved, especially if they get billed, um, for their time, uh, a lot of attorneys, and in some states, will actually set the, uh, estate up as a limited authority or a supervised court process. And why do they do that? Because it slows the process down. It gives them more time in the estate to get more billable hours. So, that's just something to kind of watch out for in some of your locations with any shady attorneys. And I'm not saying attorneys are shady, but just like there's some shady investors and some shady real estate agents, there are some shady attorneys that don't have the best interest of their clients, and they set this up wrong. And I'm not going to say it's wrong. It's legal, but it's generally best if there's someone that has the bandwidth and the capacity to be able to be the representative unsupervised. That's generally best for the estate.

So, let's go over kind of the paperwork. Uh, James, let's, uh, let's not go over the paperwork. Let's go to James. Uh, you might actually be answering this in the paperwork part, but I was just curious, um, what is the administrator or executor responsible for doing, and then what is the attorney? Is there like a clear delineation where it's like, all right, you got to do this, you know, or, um, you know, and I got to do this in terms of like, paperwork and like gathering all the inventory and all that, or, um, is it just different?

There's not a clear delineation, and it really depends on, um, the attorney that's involved and how their agreement is. I can tell you what is generally, what generally happens. Um, normally the attorney is going to help them fill the forms out, going to help remind them and push them on dates. The attorney will normally run the notice to creditors. The attorney will normally go with them to the, the attorney will normally do their application with them, will normally go to their hearing with them. The attorney is normally the one that gets the letters issued. Now, it's still in the representative's name, but the attorney kind of sees that, runs the notice to creditors, applies for the EIN number, helps them with the inventory, and basically at that point, you don't see the attorney again until they're doing a final accounting and distribution. So, attorney may do step one, two, three, four, and five. Then all of a sudden, the family is doing their appraisals and listing their inventories with a little bit of attorney advice or involvement. Families are getting their valuations if they know that they need to do that. Families are managing and selling assets. Families are paying claims and taxes. Um, some, some law firms will do the final accounting if they are accountants. I run into a lot of, specifically probate attorneys are frequently also accountants or have an accountant on staff. Not all, but a lot do. Um, so if, so, the attorney will handle this with the family. If not, the family has to go get the, um, taxes done separately. Um, attorney normally helps with the distribution, but all this stuff in the middle is normally on the family. And we're not talking about preservation. So, managing assets, this is one line item on our class today. This is the biggest part of the probate process, and it happens to be the one part of the process that the attorney is almost never involved with. So, changing locks, making repairs, preserving the property, winterizing, cutting grass, bringing a dumpster in, cleaning things out, cleaning the house, doing an estate sale, selling the car, changing title to the car, cars, um, all this stuff kind of falls into managing and selling assets. And the attorneys are very absent, normally very absent from this process. And I'm, I'm saying normally. Now, there are some attorneys that step in and they go, "Let me be their personal representative and I'll do it all for you for a big fee." Rightly so. I don't mind that big fee as long as the family knows that they, they don't have a whole lot to worry about. Um, but most of the time the attorney steps out down here around stage six, and the family has to run through most of the middle stages by themselves. Okay. And the families don't know this because what's the attorney tell them? The family goes, "What do I need to do?" And the attorney says, "Don't worry about it. I'll handle everything." And then we talk to the family and they go, "Nah, I don't need your help. Attorney's doing it all." Little do they know that 70% of the process falls here and here. So, this stuff is like 70% of the process, even though it's just three, what looks like three simple steps. It's the real work. It's the real time. And the attorney is not pushing a lawnmower or changing locks. I can tell you that.

All right. Could I ask one quick follow-up? Yeah. Um, so I think you're kind of alluding to it earlier, but, um, if I'm understanding you correctly, there's there's a bit of, um, uh, you know, an opportunity here then because like the more people, the more, uh, PRs, administrators, executives I talk to, it's like they complain a lot about the lack of communication and then they're just not sure what to do during these, uh, during certain steps and like, you know, if I'm not educated, I can't really provide that above and beyond value that would kind of set me apart. But if I do and I can, you know, share this with them, of course, giving them the, um, you know, uh, letting them know that I'm not giving them legal advice. Um, were you basically alluding to, you know, understanding all of this and helping them through this would be a great way to kind of, you know, step in there and be like, look, I'm, I'm not just a realtor. Like, I can really, you know, help you through this process because your attorney obviously isn't really.

Yeah. So, I, I often in my conversations will, um, find a way to say, "Hey, it's really good. They mention their attorney's got things covered." And then a step or two later, I never want to go, "You know what? Your attorney doesn't have everything covered." Because what's that do? Creates an argument. What do you mean? I just told you they had things covered. You're trying to tell me they don't. What do you know? Argument created. So, I'll get a few steps down the road and then I'll go, um, you know, I was just talking to someone earlier that asked what, uh, I did that was different from what their attorney did. Do you mind if I share that with you? And all of a sudden, now they're curious. And now I can say there's really 12 steps for probate. And your attorney is going to handle anywhere between five and sometimes as many as eight or nine of those steps. Uh, but there's normally three or four steps, sometimes more, that are strictly on your shoulders, uh, that have everything to do with the management of, um, of the stuff, of the belongings, of the assets, preservation, things like that. And, um, and I want you to know, and this is important, I want you to know that, um, I'm very familiar and have actually managed all 12 steps of the probate process. Um, some families have an attorney that's not doing anything, and they can call me for some help. Um, some family members have an attorney that's doing a lot, but they're really expensive, and you can call me for some help if you don't want an $800 bill every hour. Um, and then sometimes, um, sometimes you just don't know, and you just need a quick, uh, quick ear to talk to, and I can give you a little bit of advice, but I want to be really careful, even though I can give an opinion on some of your paperwork and your legal process. Even though I can give an opinion on your taxes and things like that and your finances, I'm not a financial advisor. I'm not an accountant. I'm not an attorney, but if you want an ear to talk to and you just want an outside opinion, I've done all this many times and I can give you that opinion. And people go, "Really?" And then I'll go, "For example, what have you guys already done this?" And they might say yes. And then I can start giving some little, I want to be careful in using the word advice and guidance. Advice is a bad, a dangerous word, especially if it goes back to their attorney. Okay? Uh, but I can just start, um, sort of connecting some dots for them. And a lot of times people go, "My attorney didn't tell me any of this." And then I start getting the calls. I'm the one that they call, and that they're building a relationship, and I'm, I'm good with it. I normally am carrying about 10 people. I try to carry about 10 people at any given time that aren't ready to sell a house yet, but they know they can shoot me a text or a call for, uh, for an opinion on different pieces of this. And, uh, and it's usually a quick answer that I can give, and it gives me an opportunity to kind of steer that conversation. Hey, last time we talked, you said this about the house. Are you doing that yet? Um, can I bring you an offer? Do you want to talk about that? And so it gives me a chance to start to steer those conversations into the real estate.

Feel like that's a really strong, like USP kind of identifier thing. Is that in any of like our, the material that we do in like?

Yeah. It's pretty advanced, and I do talk about that. So, you'll hear that in the roleplay sessions periodically. Um, and I call it advanced. Um, it's advanced only in that, um, you need to know how to bring it up in a way that doesn't create, um, create resistance. So, I could create resistance, and I hear people create resistance all the time where the prospect you're talking to and they go, "Oh, my attorney is doing everything for me." And the next thing out of the agent or investor's mouth is, "Did you know your attorney is only doing about 50% of the process and I do the rest?" And the person is like, I just told I just rejected you, and all of a sudden you're coming at me. You're trying to correct me. And what do we do when somebody tries to correct us is we put up even more resistance. So, um, using that is important, but finding a way to get there and actually ask, get the person curious about what you do is the real, is the real skill. And I call it advanced. Um, it's not advanced. It's just, uh, there's other things to learn first sometimes. Um,

Thank you. James. You can try. You can use it though.

All right, cool. Okay, guys. Any other questions on the, um, kind of the process side before we get into paperwork? Right, we're good. Let's jump into the paperwork. This is the fun part. By the way, this class is probably the least fun of all of them. I love talking about prospecting and marketing and creating content and, uh, and appointment strategies and offer strategies and different things like that. This one is pretty, uh, it's a grind getting through this, but if you understand these things, um, you're going to be able to help your families a lot better. You're going to be able to help them avoid mistakes. You're going to be able to help step in and build some credibility, um, before there's any, any, any, um, before they even knew that they needed you. Let's say that.

All right. So, letters, um, your letters of administration, letters of authority, your letters that you get from the judge after your court hearing, these are the permission slip. Family can't do anything without the permission slip. And I just threw a couple of examples up here, random examples of how different states have different names for your letters. So, in Michigan, um, it's almost always called letters of authority. And if I have anyone in Michigan that wants to correct me, please do so. But in Michigan, it's almost always called letters of authority. In North Carolina, it's called letters testamentary. In, uh, in Illinois, it's called letters of

office. In Pennsylvania and I think Delaware and maybe New Jersey, it's called short certificate. In Louisiana, it's just called successions. Most states are going to go with kind of your traditional terminology of letters testamentary or letters of administration. And I only point this out because when I tell you ask to see letters testamentary and you come back and say they've never heard of that before or I've never heard of that or the judge didn't know what I was talking about or the attorney didn't know what I was talking about. It's it's because your state just calls it something different. So homework and you guys can do this real quick right now. Um, does your state have uh letters testamentary or letters of administration? And uh, and if they do not, what do they call your letters? All right. And I I just need you guys understanding what your local state actually calls this. They're pretty much all the same as far as how they're structured and what they say and what they give authority for, but it's just a different name. So, I don't want you looking silly by calling it letters of administration when the state calls it something different.

Um, when you are dealing with a family, especially as you start getting into a good relationship with them, um, you are going to want to ask for a copy of the will, if there is one, and a copy of their letters of authority, especially if you're, uh, if you're doing anything substantial. If you're selling a house, anything like that, you'll need a copy of the deed. You'll need a copy of their letters testamentary, letters of administration. You'll need a copy of their will to make sure that you're not setting someone up for failure. I've done this. I've set people up for failure. I've not gotten these at times and I've gotten all the way through to the closing table where everybody's excited to get to closing and I found out we can't close. Why? We had restrictions on our process. Uh, I had one time where I got all the way through and the heirs were both kids, eight and 11 years old, and the representative was um, technically related, but she was not an heir, and we got right up into the closing, and the court shut us down, wouldn't let us close. I would have easily known this had I looked at the letters of uh, of administration. I would have known, but I didn't know.

So, um, if you guys see times when in your MLS a listing might go on and it goes under contract really quick and then it sits under contract for months and months and months. I think we've all seen that. A lot of times it's because there was some kind of an estate and they put a contract in, they set a closing date that couldn't actually happen. So, somebody listed a house or went under contract without being able to, without having the authority to do so. And this happens really frequently, especially with estates that have sat around for a while. Families go, "Hey, dad died two years ago. We're going to go sell the house." And they haven't even applied for probate. And then they get stuck in the mud for months. I've seen houses pending for a year before because they didn't open probate or they didn't do it properly. All right? So look at if you're going to sell a house, look at the um at the letters and make sure that they're not restricted. And if they are, just make sure you make your proper adjustments.

Uh, another thing is you need to look and see if there is a bond or if they need a bond. Uh, this is pretty important. I saw Phil jump in here, I think. Uh, Phil, are you still here? If you are, throw your hand up. I I have no idea. Oh, there there you are. Throw your hand up if you're listening. Um, I think that there would be one person that probably explains the bond process better than than me right now if he's available. Um, uh, Phil, I don't think you're available. Okay. So, a lot of times in an estate, the uh, representative is required to go get a bond on the property, especially if there's multiple heirs. And basically, this is just an insurance property that an insurance policy that says that uh if they mismanage the estate, the estate can be made whole through the insurance is is the simplest version of it. Uh, most wills will waive a bond, but you need to look and see if a bond is required on the estate that you're managing. So this is uh these things can kind of change what personal representatives can do and how they can do it. So, you need to look at your letters testamentary and see if a bond is required or if it's waived. And if it's required, make sure that they have it. Make sure that you understand the terms uh of that bond. And then the other one is look at your letters to see if there's any restrictions to what the representative can do and can't do.

Um, so there's a couple of forms that run the file. Um, and these are all forms that you probably need to be kind of familiar with what they do and what they look like. Um, there's opening the estate forms. Uh, opening the estate forms, the the biggest thing that I want you guys to to get used to looking at is the application for probate. So, please go look, and I've said this earlier, please go look and see, put your eyes on a physical copy of an application. And I would even fill a blank one out with fictional names. I want you knowing what that application is like for a family. Um, you'll catch people very frequently doing applications, especially if you have a good sphere of influence and past client list and you talk about this to your community. You'll catch people before they go make mistakes on their own application. If you're working a probate list, they've already applied. You're not going to head them off from making a making a mistake if you're prospecting and working an existing list. But if you're doing a great job, you will your audience, your sphere, your past clients list is going to know that this is what you do. They're going to know that you're the person to come to for help with this and they'll come to you. There's nothing worse than coming them coming to you and you saying, "I'm a certified probate expert." And you going, "Oh, I've never seen an application before." Don't let that be you. Go put your eyes on an application and fill one out for homework.

Um, when they fill an application out, uh, they're going to need to provide a copy of their will if they have it. Um, they're going to need to provide a certified death certificate. And you guys probably either don't have one or it's been a while since you've seen one. So, look up in your uh state what the death certificate looks like. Just just look at look at an example of one so that you know what it looks like. Uh, list of heirs. Look to see if your state has a different form for list of heirs. Sometimes the list of heirs is just simply on the probate application. Sometimes it's a completely separate form. So you need to look at that. Mine is on the application. We list the heirs. Um, uh, bond or bond waiver. This is sometimes required um either at the hearing or right after the hearing. So, look to see if you can find one of these in your courthouse and look to see what it says. Um, and then uh and and then that's that's about it. The the main thing that I want you to look at and get your eyes on is an application for probate or an application for administration. The rest of these are important. If you look at them and if you know how to fill them out, you could do content. You can get people coming to you for help on these things before they've even thought about the house. Uh, Courtney Rollins gets a lot of deals from people that are doing one of these during administration things. He did a video on notice to creditors. He did a video on um the inventory list and he named the form names on those. And those videos get calls to him, people going, "Hey, I don't know how to fill out this inventory list." Which is quite simple to fill out. I get a lot of those calls as well from my packages that go out. It's really rather simple. You look at it and you go, "How would they not know how to fill this out? How can they not figure that out?" But I'm happy to take the call because I can quickly give them a little bit of guidance. This is what you probably want to put on there. This is what you don't want to put on there. This is where you put these things. And then I always say, but I'm not a lawyer. You better go double check with your lawyer because technically if I'm getting into court forms, I'm getting into this area where I'm dabbling in law. So, make sure that if you do anything on court forms, you disclose and you tell them that any any uh opinion that you have needs to be double checked with uh with a lawyer or the courthouse. That people do this stuff for themselves all the time without lawyers' input. So, I don't personally see a problem giving an opinion.

Um, so here in the administration, this one, you guys need to see what this newspaper ad looks like. So, please go look at these. Um, check with your newspaper and find out what the um form looks like to actually get the ad started and how much the cost is. Okay? I want you guys knowing the cost and what the app what the newspaper intake looks like. Um, uh, need you to do uh look at your inventory list. Um, if the family has like a limited authority or restricted authority, I need you to see what the petition to sell real property looks like. So if you're in a state that this is common, please look for what the petition to sell real property looks like. And then that's it. Uh, the rest of these are important. Um, it's just not vital. You don't have to rush out and look up every single one of these. Um, I'm just hitting some of the important ones. Um, closing the estate. Uh, they're going to do a final accounting. They're going to do a petition for a final distribution. This is something that you need to put your eyes on. Petition for final distribution. Um, petition to for discharge of the PR. This one's pretty interesting. This one's pretty interesting. Um, this one will be if there's disputes. So, we run into issues where there's a dispute. A family member comes in and goes, "Hey, I was supposed to be the representative or they're not doing their job." And you want to be able to um point them in the right direction and tell them what that form looks like. All right? And so those ones that I kind of highlighted for you are are the important ones to go to your courthouse and actually look at or at least go into your court system online and look at and print them out and get familiar with how to use those because if you are, you can really present yourself as an authority to families and build a lot of trust and credibility that leads to real estate needs.

Um, so um, four, there's four things that are going to dictate whether we have a deal or not. So, uh, your letters testamentary prove who can sign and actually sell a house. So that's why you need to see your letters testamentary. Um, your inventory. And by the way, this is important because sometimes this will help you know whether you're going to pursue uh a relationship with someone. The inventory, you can actually look at this in most cases through a court portal online and see your list of inventory that someone has filled out. And if they don't have real estate on the list of inventory, then you can decide maybe not to pursue that relationship. Uh, I want you to be careful though because there's a lot of times people don't put real estate on the inventory and if they're filling their application out, they almost never list their assets in the beginning. Sometimes they do, sometimes they don't. But I'll look at applications or petitions for uh, probate. And I'll see frequently people apply for probate and then they don't list their assets. Okay? But there comes a point normally in the first couple of months where they have to give their full list of inventory and they have to put real estate on it if it's in the estate. Just because it's not on their list of inventory does not mean that there's no real estate. Really important. Just because it's not on their list doesn't mean there's no real estate. Uh, that real estate might be passing outside of probate. And if it is, they might still need to sell. But this is an easy way to kind of see the slam dunk. They already listed real estate. They already said what was going on with it. So, if you look at each um each application and each inventory list through your your court portal, you'll be able to see the people that are kind of almost definitely needing to sell. You'll be able to see that because they'll put real estate right on the application or right on the list of inventory and they'll list out the heirs and the heirs' locations and you can kind of deduce where there's the hottest opportunities. Um, petition or order authorizing the sale. Okay. And this is when there's limited or restricted authority. And then the personal representative's deed. So please do look at the deed. These are just some some forms that you want to look at if you're prospecting the uh a petitioner or if you've already formed a relationship with that representative. You want to look at all all four of these forms if applicable. This third form is not always applicable. Only when there's restricted or limited authority. But these other three are very important. So, if you're prospecting and you're kind of building your prospecting list and you want to go like super hyper targeted, you can find the letters online. You can find the list of inventory online, and you can find the deed online that shows you how everything's done. These three things give you a really highly targeted list. Now, personally, I prospect and market everyone in probate. I don't really get into the weeds like this, but if you want to get into the leads, you into the weeds, you can get a real picture of someone's situation so that you know what your marketing or prospecting approach is going to be. Um, if you are already have a relationship and they say they're selling a house, you absolutely need to look at these because if you're not looking at these, you might make a mistake with getting it on the market or under contract.

So, assets in the estate. So what are the common assets in the estate? We have um real property, real estate, land. Okay. Uh, we have personal property. These are your contents, your collectibles, your antiques, your gun collections, your jewelry, things like that. Uh, financial accounts, vehicles, uh, business interests. Um, I don't know if you guys know Alexa Rossio. um she is really heavy in the probate space. She's building a CRM in probate for probate deals and attorney relationships. She's doing this and has gotten involved because uh her father passed away and he had a big business that was not running on systems and through the probate process which took a couple of years because there was a business involved. Um, they ended up closing the business. It was just too complex to run it through probate. But I am going to tell you guys that business interests are one of the hidden things in a lot of probates. There's businesses that get passed or sold through probate all the time. All the time. So business interests go into probate. And then what are the debts against those assets? So these are the six different categories of assets that you're going to see inside of an estate. Uh, personal property is one of those things and I'm not talking about vehicles, personal property. This is more your your furniture and tools and things like that. Uh, these are one of those things that uh categories that often don't get listed inside of the estate. They can get listed in the estate, but they're frequently not listed. I've talked to attorneys that usually just say, "Hey, personal property and stuff like that, don't even put it on your inventory." But families still do, especially if there's title on those assets or those assets have real value and you absolutely if you've got art that is worth tens of thousands, there's no choice. You have to put it into the estate. If you have um jewelry that might be uh real collectible, you need to put it in the estate. If there's some kind of kind of title associated with it, it needs to go in the estate. Normally, the small stuff doesn't go in. And I'm not telling you that you should go out and advise your clients never to put the small stuff in. I'm just telling you what normally happens. And this is the exact way that I'd tell it to my clients and prospects is I'd just say, "Hey, I'm not a lawyer, but normally we don't put the small stuff like furniture and and household belongings into the estate because you could you could list out a a form that's 10 pages long before you get everything in there. If it has real value or a title to it, we we definitely want to put it on the inventory." And that's how I describe that to clients.

Um, so all these things are frequently listed in the estate, but they're not uh they're not always in every estate. Um, so if you have these belongings, these assets, you need to know the value of these and you're going to need to submit them to the court and submit them on your final taxes for the estate. So, uh, we need a date of death value. All right, this is going to set the basis. So, if there's a value gain before you sell property, any assets, uh, that value gain gets taxed by the government, by the feds as a capital gain tax. So, you inherit a car that's worth $10,000. And let's just pretend, and I know this isn't the way vehicle valuations work, but if five years from now you sell that car for $15,000, that's a $5,000 gain. But the government's going to base it on what you said the value was back in the beginning. If you get a house for $500,000 and you list it on your inventory as a $500,000 house and you close the estate out and it you say that the time of death it was $500,000 and then you sell it in 10 years for a million, there's a capital gain. There's a step-up basis is what they call it tax. But they're, as of today, they're not going to tax you on the value at the date of the of the person's death. They're going to tax you on the increase from what you showed the value was when they died and what you sell for.

Um, so it's really a good idea to go ahead for a family to go ahead, especially on real estate, to either get an appraiser or a broker's price opinion. Really good idea. They could go off tax records, but how many of you guys have tax values that show lower than actual values? It's typically pretty high. Big risk. They're going to end up paying a lot of taxes if they throw tax value on in most cases. So, my advice to them is to get an appraisal or a broker's price opinion. Um, contents get valued, too. Okay. Um, and again, for me, my normal opinion that I give someone is if there's significant thousands of dollars of value on a on on a personal belonging, put it on the put it on the the form, go ahead and claim it. If if it's if it's furniture, if it's per household belongings, if if it's not something that either has a title or has thousands of value, then personally, I really wouldn't worry a lot about it. And the government doesn't really care if you worry about it for the most part. For the most part. Got to be careful when we're advising here.

Um, so let's talk about what skips probate. So, we just talked about all the categories of assets that are in probate. What's going to skip? Living trusts. Living trusts and the assets that live inside of that trust get to skip probate. No probate needed. And believe me, if you can avoid probate, you want to avoid probate. I've told this story many times. An agent of mine, Mike, was driving back and forth to Virginia DC area for a year plus back and forth every single weekend from Raleigh to Washington DC, Northern Virginia, minimum five-hour drive depending on traffic, sometimes more. And every week he went up and it was all managing his aunt's estate through probate. He had letters of administration because there was no will. And he said, "If you ever have a family member that you secretly hate, write them into your will and make them the executor for your estate." He was like, "It was just ridiculously complex. I didn't enjoy any of it. She must have hated me." Okay, so um families would be very well off to avoid probate. And the easiest way to avoid it is to set up a living trust and make sure that you title your assets into the trust, which is called properly funding the trust. Um, so if a family has a trust and the asset is titled in the trust, no probate gets to pass outside of probate. Really easy uh easy way of passing. Now, there's no public record on those assets. So, they don't list those assets on their application. They don't even go to the courthouse if they don't need probate. They don't uh we don't get to see those. So, we're basing our business and our prospecting on people in probate. Okay? Why? Public record. So, trusts not so good for us because we don't know who to have conversations with. Trusts really good for the family that's having to settle the estate. Okay? So, if we're doing a good job serving our clients, we need to advise them to set up a living trust, right? I have um my in-laws um set up a living trust and then they went and talked to an attorney that I know, unfortunately, who does a little bit of everything. And he advised them to take everything out of their trust. He said, "Trusts are overkill. That $5,000 you spent was a waste. Let me just write you guys a will." And we had words, terrible, terrible legal advice. Families need trusts if there especially if there's assets and they need to avoid probate for their family in the future.

Um, so if they set up a trust and the assets are in the trust, it won't show up in probate. Now, I see people in probate all the time who also have a trust. Why? Somebody tell me why they have a trust and they're in probate. They didn't have items in the trust. >> Yeah. So, the items are are going through probate. Uh, the trust doesn't, but the items that they didn't put into the trust uh still have to go through probate. All right. So, um, this is called properly funding your trust. So, you could set up a shell. A trust is basically just a shell and but you have to put title of your assets into that shell to be protected. All right. So, >> hey, Bruce. >> Yeah. >> Sorry to cut you off, but in California, a popular problem is when they have a trust, they take it out of the trust to refi, and they never put it back in. >> I've seen that. Yeah, that's a really common problem. I have a client right now that uh interestingly set up a trust went through all the the fine the the payment and everything of the trust and never put a single asset into it. So it's a trust, there's nothing in there. So everything that they own has to go through probate. So they spent that money unnecessarily or like Winston said, they take it out to refinance and then they never put it back in. Uh, that is that is a problem. So, just because a family has a trust doesn't mean that they um that they don't need probate. Um, just because you don't see real estate on a probate application doesn't mean that there's not real estate. One of the things, one of the mistakes I see our community make frequently is they go look at a probate application and they go, "Oh, no real estate here." And little do they know, there's real estate in a trust that didn't have to go into probate. And is that real estate going to sell? Really likely that it's going to end up selling over the next couple of years. Emily, >> um I had the same situation that Winston just described and the attorney just filed the motion in the probate court and it was moved to uh out of probate. So it's not a difficult but it is uh it does happen but it's not a difficult situation. It's not something that in a an agent should be deterred from. >> Yeah. It's not irreversible. Um, but that family still has to go onto public record. So they still have to go apply for probate and then go through the court to put the asset pull the asset out of probate or back into the trust. So it can be >> it's usually the attorney because they have the trust. So they just file the paperwork. The only problem I had is they had a reverse mortgage. It wasn't a refi. So the heirs didn't know and neither did the attorney that they needed to notify the um the reverse mortgage company and they have I guess a database that tells them you know when people die. So that created an issue because now they were going into foreclosure. So that's the only recommendation I make for anybody with a reverse mortgage is that you notify well not you the agent but that the heirs notify the reverse mortgage company right away so that you can get an extension to sell it versus you know a fire sale. >> Yep. Totally agree. Good recommendation.

All right. Um, so good guys. All right. This is this is good back and forth. I want you guys to kind of understand what a living trust does for a family. Uh, the two biggest benefits of a family having a living trust are they get to avoid probate and they don't become public record. I mean, just avoiding probate is the biggest benefit to some to someone. Um, because probate is just a pain. Um, you get to skip all that and the assets just immediately get spread out according to the trust documents um instead of having to go through the court. The fact that you are not public record, again, bad for us, good for the family. How many of you would love for your death and all your belongings and all your debts to become a matter of public record when you pass away? I'd love it. Yeah, let me put my family through that. No. So again, we are building our business on the people that didn't prepare and need help and to help them through probate, but it's really best for people that we know to set up trusts. And you guys really should really should uh maybe create content or processes to be able to communicate with your with your clients or your sphere, your your your audience to help them recognize this and help them um move their assets into trust if they need it. If they need it and they not everybody needs it.

Um, so another uh asset that skips trust is tenancy by the entirety. Um, transfer on death accounts. So, transfer on death accounts. When my granddad passed away, I was on his bank account as um as one of the co-owners. All the proceeds of that bank account transferred on death. Um, and no, I did not go buy a house with it. It was like $5,000, which made a big difference for me when I was 20-something years old. Um, but that was a transfer on death account and didn't have to go through probate. Um, community property with survivorship. So, there's very frequently that there's um survivorship on real estate, vehicles, bank accounts, certain assets where it's either set up where there's two owners or one owner and then in the title work or the deed it says this transfers to this person if I die. Assets like that don't have to go through probate. Okay? They get to skip probate altogether. Again, just because you look at a probate application and you don't see real estate in the deal in the on the probate record doesn't mean that there's not real estate. Real estate could be in a trust. It could be a survivable asset. In other words, being transferred to a family member without going through probate. So, I don't want anyone making the mistake of going, "Bruce, only 20% or 30% of my list has real estate." Not true. There's real estate hidden all the time. We use probate as sort of our our our first point of reference to recognize that they're going through a process. They have assets. Even if it's not even if real estate's not on there, there may still be a real estate need and frequently is still a real estate need. Uh, joint tenancy with right of survivorship is one of the biggest things that we see all the time. Spouses frequently will do this. Um, and it basically just says, "Hey, we co-own this property. If one of us dies, the other one gets our share of the property." Uh, life insurance almost never goes through probate unless somebody has died. Same with retirement accounts. If the beneficiary has died, it becomes a little bit more murky. Uh, but if if the beneficiary that's named on the retirement account or life insurance policy is still living, then these pass without without having to get um named on the probate process. Uh, transfer on death or ladybird deeds. Texas and Florida are really big big on these. These are deeds that say, "Hey, this maybe this person owns this property in the entirety, but if they die, the deed will actually say in the deed uh the ownership goes to this person or these people." And then payable on death vehicle uh vehicles and account titles. So, happens a lot. These are just assets that right in the title says that they go to an heir if I die. If you don't have these or you have a living trust and assets are not in it, then they have to go through probate. And even if you have just one asset that has to go through probate, you've got to go become a matter of you have to go into public record. You have to go petition for probate. All right? And that's what we see all the time on our probate lists is people that have some of their items that get to transfer out of probate and other items that have to go into probate.

Um, so what drags um these assets >> back in? What? David, you got to go. >> Yeah. >> Okay. What's going to drag these assets back in? So, if the trust was never funded, in other words, you set a trust up, you didn't put the assets in. Uh, the deed says tenants in common. That happens frequently. So, there might be two people, they're tenants in common. It's another reason why I don't know that I would really buy a house tenants in common unless it was maybe a business partner. Uh, tenants in common means that the survivor keeps their let's call it half and then the decedent's half goes to heirs. That can get kind of messy go through probate. Half of the house goes through probate. That gets really messy because the person that's surviving almost never wants to sell and the heirs almost always want to sell. Um, if there's a creditor claim that is really big, so you've got a trust or you have assets that uh that don't cover huge creditor claims. There are rare exceptions and rare times when the court can order you to put some of your protected assets into probate. Very, very rare. It's not It doesn't happen very often, but it can happen. I've seen it. Uh, if the beneficiary died first. So you name a beneficiary in your trust or you name a beneficiary in your uh on your house or your car or a bank account and they pass away first. Uh, basically your transfer on death clause is is null and void. If a minor is a beneficiary, the assets get pulled back into probate. Um, if documents are missing or unrecorded and this happens a lot, gets pulled back into probate. All right.

Um, then we have tax returns and these are the tax returns that every family needs to do. U one of the relationships that you all need in your vendor list in your uh directory is a really good accountant that understands estate taxes. And again, a lot of probate attorneys or law firms that have a probate department, a lot of them are either accountants or will employ an accountant, um, but not exclusively. You've got some of these small smaller attorneys that might be a a one-man show with an assistant, and they may not have an accountant. They might not do the taxes. So, I think it's very important that you guys go find an accountant that understands these forms and specializes in estates and probate. Okay? So, 1040 is the decedent's final return. Decedent dies on January 1st at midnight 2026. Uh, there has to be a final accounting for the year 2026 because they were alive for one day in 2026 and they need to that needs to have taxes filed for that. Um, it's rather simple, but the year that the decedent died has to be a tax filing has to be done for the year that they were alive, or the partial year they were alive. Um, then there's an estate's income taxes. If the estate uh increased its value by $600 during the year that uh that you were in probate, you have to do an income tax on the estate for the gain, for the increase. And I see this a lot especially in appreciating markets or where there's a business involved. Uh, the house goes up in value after the decedent dies. Um, you do an income tax or there's uh there's there's growth in a stock account or something like that. You have to do an income tax for the estate. And then lastly is the federal estate tax. So when you close the when you close the estate, you have to do a tax return for the estate and the estate only. All right. And we'll talk about timing next. Do I have any questions on any of our kind of um uh any of uh any of what we just covered on the assets, guys? Clear as mud?

All right. So let's talk about the timing. Uh, when can families sell? Well, I I was having a conversation um several years ago with someone who will remain nameless, who I really trust on the majority of real estate matters. This is a coach, a top producer, someone that does thousands of deals, um not named Matthew, even though Matthew matches all those things. Uh, someone that does thousands of deals a year that uh most of us would uh would know their name. And uh we were talking about probate. And uh this guy tried to tell me that when you have real estate part of probate, you're not allowed nationwide, you're not allowed to sell that real estate until you close probate and you do your final uh final accounting. And that was a real estate professional that probably should know better. If a real estate professional that should probably know better thinks that, what do you think your client that's never been in probate before and didn't even know that the word probate existed before they had to apply for it? What do you think they think? Do you think they might make that same mistake thinking we're not allowed to sell anything until we finish probate in a year? >> You lose a lot of credit. What's that, Matt? >> You lose a lot of of uh credit as being a probate expert. >> Yep. Tons. There's tons of our clients that think this though. T there's a there's a lot of our prospects and clients that think that they're not allowed to do anything. Um, I saw a stat out of Florida recently. This is not a nationwide stat, but it said that 25% of approximately 25% of people that apply for probate sell real estate within one year. Okay? Within two years, that number jumps to 45%. So, in other words, 25% of those that apply for probate are going to sell a house this this upcoming 12 months. Another 20 an added 20% are going to sell between 12 and 24 months. The opportunity is there. And if you guys are sleeping on your old probate lists, you're you're missing a big big opportunity. Over the next two years, there's another 20%. So approximately 10% of people that go into probate sell a house in year three and approximately approximately 10% sell in year four. So, this is a really these these lists age and a lot of the people that apply for probate that don't sell for one, two, three, or four years. A lot of times it's because they didn't know that they were allowed to. Sometimes they just didn't have the motivation. They didn't have the need. They didn't have the pain point. A lot of times they have the motivation, the need, and the pain point. They just don't know that they're allowed to because they're operating under the misconception that a real estate professional I know was operating under.

So let's talk about timing. So when can they sell? Question number one, do they have the authority? Have they had their letters of of uh uh testamentary or letters of administration issued? No letters, no sale. You have to get your authority from the court. Um, what kind of authority do they have? Is it supervised or is it unsupervised? If you're in California, is it full authority or is it limited authority? Um, and then does the judge uh uh need to sign off on it? Does the court need to sign off on it? Uh, and normally that's just because it's supervised type of authority or maybe there's minors or maybe they applied for a limited restricted authority. So, you need to be able to look again at those letters testamentary and determine are they allowed not only do they have the authority to sign on a sale, are they allowed to according to the to the court? Um, or do they need to go to the court for approval? Okay. And then the other question is, are we still in the creditor window? Okay. If if you're still in the creditor window, you really can't close. I mean, you can if the house is free and clear and worth a lot of money, there's some exceptions to this, but for the most part, if they haven't finished running their notice to creditors and then they normally can't close. So remember I told you guys depending on your state all the way up front that the uh the family normally once they get their letters of testamentary letters testamentary, they normally have a certain window of time to start running a notice to creditors in a local newspaper and once they run that first notice to creditors, they normally have to do either three or four more notices. It's usually or two or three more notices, let's say that. So, it's usually three to four notices total depending on your state rules, laws, and that has to be done in a certain amount of time. So, if somebody puts off running that ad and they try to sell the house before that notice to creditors is ever run, they might have a hard time getting it to close. Getting it to close. They can list, they can sign a contract, but that notice to creditors needs to have run. Um, and there are some exceptions to this. If somebody is really clearly has a whole bunch of money in the account, uh, if their house is free and clear, they can probably get around this, but they really before they close on a house, not list, they can list as soon as you have letters testamentary or sign a contract as soon as letters testamentary is issued and it says you can. Um, but normally you can't close unless you have gone through the creditor window. And that creditor window is normally somewhere between three and four months from the date that you run your first ad. That's normally the case. You guys need to go look that up in your state.

Um, so authority isn't one setting. I don't know what I meant by this. Okay, I put this together and I don't remember exactly what I meant on this. So, uh, no letters, you can't sign anything. Um, so if you have your letters, um, and they allow you to do unsupervised or unrestricted, you can, the personal representative can do almost everything. Again, if there are restrictions, you usually have to get a court order or go in front of the judge before you're allowed to sell assets. All right, we already talked about the creditor window, but if anyone wants to get a photo of this or see this, um, the creditor window, uh, basically says that if you're in it, you can list properties, you can sign contracts on properties. You're not normally able to close on properties until there's um until you're through the creditor window. Uh, and then the last thing that we are going to go through is the actual um file. All right. So, everybody everybody goes after the exact same list of leads. Very few of us know what our probate leads actually look like. Uh, okay. So, generally speaking, in today's age, we can normally get our probate records online. Uh, we may not have skip-traced phone numbers and it might be cumbersome. But if you're dealing with someone or if you want to do a little research to know if how much effort to put into them, how much time to put in, you probably want to figure out what your portal looks like from your county or or your state. Um, there are some of us that are in smaller areas where maybe our counties or our courthouses haven't moved over into an online portal and you have to go to the courthouse in which case this might not be as viable. But I'm going to encourage you guys to find the online login portal to be able to see the probate records and see the probate applications.

Um, so you're going to look at the filing date. You're going to look at the type of administration. So, is it supervised or or not? Um, you're going to look at the letters and figure out who the executives are. I I do this very frequently where I'll look at the letters and I'm trying to reach Bob, but the letters give me two executive two administrator names. Okay? Or I look at the petition and Bob has applied for probate and then after the letters come out, somebody else's name on is on there. So, the person that goes and applies for probate is considered the petitioner. They're not always the person that represents the estate. So, it's worth looking at both the petition or application and the letters testamentary. Um, you should get a personal representative's address. This is obviously your when they're out of area, this is obviously your highest value. Um, I worked with Claude a couple of months ago and built a tool where I could load my lead list into that tool and Claude would that tool would resort all my leads and it would give me my leads where the personal representative and the decedent lived more than 50 miles apart. It would give those at the top of my list. And where the personal representative and decedent lived separately but within 50 miles, it would put those at the middle of the list. And where the personal representative and decedent live together, it puts them at the bottom of the list. Why? I want to prioritize when the representative is uh an inconvenient distance away. And 50 miles for me is the number. If you're 50 miles away in my area, it's a hassle getting to and from your loved one's house to manage it. And if it's a hassle, that pain point is probably going to be dealt with sooner. I have one client, Matthew, will appreciate this. He lives in Lillington and the house is in North Raleigh and he comes up to take care of the house every weekend. Is that a convenient drive for him? No. No. >> I was going to say not if he has to go through Fuquay. >> Yeah, he does. So, um that's what that's why the 50-mile rule, that's why I put it into my list. So most of us aren't going to get lists like that. You can quickly and easily go into like Claude or ChatGPT or CodeX or something like that and ask for a tool and it basically just gave me an HTML file and I open it up and I throw my list. Every time I get a list I throw it into that tool and it reorders everyone so that I can prioritize the people at the top of the list and kind of work down. Um, so where does the PR live?

Um, is there an attorney on record? And if there is, you guys should try to build relationships with the attorneys. Um, has inventory been filed? Is there an inventory? I like seeing the inventory because that tells me a lot. Okay. And then how many errors are on the on the on the application? Okay. How many errors? The more errors, the usually the slower the process goes. All right.

So, I'm going to give you guys a couple of assignments this week. Uh, number one, go to the courthouse in person, meet with the clerk, introduce yourself. Um, here's the way that I do not introduce myself. I've done this before. Big mistake. So, um, first, one of the first times I went to the courthouse and I met the clerk, I said, "Hey, I'm a real estate agent and I'm trying to specialize in probate and help families sell real estate." And I was just wondering where I could see a public list of everyone that's applied for probate so that I can call them. Okay. Can the clerk legally turn you away? No. Does the clerk legally turn you away when she thinks that you're go or he she or he thinks that you're going to be um pestering their customers? Absolutely. I got You can't do that. Okay. Just because the law says that you can doesn't mean that they know the law says you can. And how you present yourself makes a lot of difference in how cooperative they're going to be.

So rather than doing it that way, here's how I normally go into the clerk. I'll normally go to the clerk and hey, I'm a a real estate agent and over the last couple of years, I've had a few of my clients that needed to go through probate and questions come up that I just haven't known how to answer. and I'm trying to get more familiar with the process so that I can help families that I know in the future. Okay. Big difference from I'm gonna pester the heck out of this person that you just met with yesterday and the way that I did it. I'm trying to understand the process because I've had some of my clients that have needed probate and I didn't know how to guide them. Okay. Is there a way I can see an application? Kind of get start start with the basics and see what the application looks like and then they'll show me the application or they'll point to a file in the back and say go grab one over there or do it online here. They'll just tell me what their process is and I talk to them for a couple of minutes and then I say um hey once you've applied um what happens next? Now, I know what happens next, but I wanna I want to lean on them once I've applied. What happens next? And they're going to say, "Uh, at that point, you're going to have a court hearing. Um, are are the court hearings open? Are you usually going to be in a room privately with the with the judge, or are they kind of open to the public?" And they'll normally say open to the public. And if they say open to the public, you're going to say, "Is there any chance maybe I could sit in one and kind of get to learn what that process looks like?" And of course, the answer has to be yes. If it's open to the public, they can't turn you away. I'm not saying that no clerk is going to try. I'm not saying that. I'm saying if it's open, it's open. Um, if you present yourself the wrong way, you will encounter some resistance with some clerks, even if they're not supposed to give you resistance. you'll you'll encounter it. You can elicit resistance is what I'm saying.

Um so I want you guys to go to the courthouse, ask for applications, talk to them about uh where these things are and then uh is there like a portal where if I put an application in, we go through it. Is there a portal that that I can look at to see the paperwork and uh the the forms that have been submitted? And then they'll give you the portal or they'll say, "No, there's not an online portal. you have to come come here and here's the book that they're in or here's the computer system in um in internal system that we have. Okay, so they might bring you back there. If there's an online portal, you want them to tell you how to access those records. Okay, it's very helpful to look at those records and be able to see what's happening. If I have a really great conversation or a long conversation, and I've had this before. or I've had long conversations and I've thought, man, this guy talks a lot a lot. Do I want to have a 30-minute conversation every time he wants to call, I'll go look at the portal and make my decision based on uh assets in there. I hate to admit that, but I do.

So, and then sit in a court hearing. Uh, you'll learn a lot by sitting in a court hearing. That's absolutely one of the homework things that I want you to do. Uh Bill Gross is on here. That's how Bill started. put a suit on. Every week he'd go down to the courthouse and he'd go to the hearings. The way hearings normally run is it's kind of like traffic court. If if many of you have been in traffic court or in some cases evictions court, hopefully not, unless you're doing the evicting and even then hopefully not. Um, you go into a room and there will be a number of people scheduled for the same time slot. So probate's the same same thing. You'll go into the courtroom, there will be a number of people scheduled for the same time slot. normally four or five. Everybody goes in at the same slot and they sit on their benches and one by one the judge calls them up to review their application, review their will, talk to them about their process. You will hear people say, "When am I allowed to sell the house?" You'll hear that. I've heard that many times. Hey, when can I do this? When can I do that? I'm going to do this. What do I do if the family's fighting me? you'll hear their stories and then um a lot of times just by being in the hall, you'll strike up conversations. I've heard of people getting business right in the hallway by going to the court hearings. So, that's a a really good thing to do. Even if you're not going to prospect and get business, it's great to do at least one time so that you can see what that process looks like.

So, that's some homework for you guys this week. So, if you're only going to remember three things, remember your letter's testament is your permission slip. Um, look at the letter's testament and determine is that probate process supervised or is it unsupervised? If it is not supervised, it means that the petitioner, the um the uh personal representative can make the decisions without going to the court. Okay? If it's if it's supervised, then almost every decision, especially selling decisions, are going to have to go to the court. And that's fine. It's not a big deal, but it slows the process down a little bit. And then um your creditor window is a little bit of a timing constraint. So, if they're still inside of that creditor window, they haven't run their ads, then you've got a timing constraint on closing the property, on closing on assets. It doesn't mean that you can't close. It just means that it's less likely. Um, so, uh, you can list properties during the creditor window. You can sign contracts on properties if you're buying during the creditor window. Most of the time, you're just not allowed to close during the creditor window. And again, the creditor window is often somewhere around 90 days, but it starts the day that they run their first ad in the newspaper. That's when it starts. It doesn't start when they get their letters testimentary. It starts the day they run their first ad and then they have that creditor window to get two or three more ads run depending on the state. So you guys need to understand that.

All right. What um what questions do you guys have for me? Relatively clear. Now that we've gotten this one behind, we can probably go to the fun stuff in our next workshops and start talking more about um appointment strategies and influence and sales and marketing and prospecting and all those good things. Um let me see. I think I saw a chat question in chat. Um oh man, why did I not hit small estate limits? Really important small estate limits. Um, so if your assets total all all combined, your assets that need probate. So remember, not every asset needs probate. An asset might be a house with rights of survivorship, no probate needed. Might be a car or a bank account with a transfer on death clause, no probate needed. Um, but if your assets need probate, then the combined value of all those assets um need to exceed a certain dollar amount for them to have to go through probate. So, I'm going to name North Carolina really quickly. And and the um the truth in North Carolina is a tiny bit more nuanced than this. I'm going to give you a general rule of thumb. In North Carolina, small estate limits are $50,000. 50,000. So if I have a house that transfers to my spouse and a car worth 20,000 that was mine alone and a bank account worth 31,000 that was mine alone, that's $51,000 and assets that cannot go through probate. And because it's $51,000, then those assets need probate. If the combined value of the car and the bank account were $49,000, they don't need probate.

So, you all will see um estates on probate applications uh that have assets that are less than the small estate limit. They still have to apply for probate. very important. They still have to apply. You've got a car that doesn't have a a survivor. Um, you need to go apply for probate, but at the same time, you're going to fill out a small estate exemption form. Okay? So, that person becomes one of your probate records if you're getting probate leads and records. They become one of the probate records, but they're going to get to pull the assets out of probate without going through the whole process because their assets didn't total 50,000. I run into this a lot. A lot. Um, house goes to a family member, gets to pass outside of probate. There's a bank account, a car, and maybe some stocks. And those things don't total more than 50,000. So, they'll apply for probate and then they're out of probate within a month or two. They just kind of skip the line. They skip ahead of a lot of the stuff um and they're out. It doesn't mean that they're not on my lead list. And it doesn't mean that they don't need help with the house because remember house passed outside of probate. Does it does that automatically mean they're not selling? No. It just means that the house doesn't go through probate and the other assets are small um apply for or qualify for a small estate exemption. So they go into probate and then they come right back out after a hearing. All right. So that's kind of the way that small estate limits work. You guys need to look up your own state small estate exemption limit. So go to California, look up California small estate exemption limit. California is really big, by the way. Huge. Uh if you're in Maryland, look up Maryland small estate exemption limit. If you're in Florida, Florida small estate exemption limit and figure out what the smallest state limits are. Really, really important that you guys understand this. And I can't believe I didn't put it on the slides, but that's one of the more important um things that that you need to understand.

All right, any other questions? Um so JC, how many days do they have for notice to creditors? It depends on your state. So, the timeline to start running your ads and have your ads finished uh is dictated by the state and that timeline starts the day that you get your uh letters testimentary. So, the letter's testimentary or your state might say some the letters testimentry honestly doesn't normally say this. Uh, but the judge has a very specific time frame. The court has a specific time frame and they might say the day that you get your letters testimentary you have three months to have your notice notice all your notices run. They might say you have three months to start and another three months to run. Every state's different and you need to look up your your states um notice to creditors rules. Uh yes, that's correct. Depending on uh um Oh, Matthew. depending on the state. Um, the depending on the state, real estate would not qualify. Uh, say what you say what you just said, Matthew, because you and I happen to be in one of those weird states.

>> Yeah, I was saying depending on the state, if it it would not qualify as a small estate if the real estate is required in order to pay off debts to be a small estate.

>> Correct. Yep. Yep. That happens. um a lot. So the in North Carolina, real estate generally passes directly to heirs without going through probate generally. But if the debts total $200,000 and you have a $5,000 bank account, sometimes you can be forced to put real estate back into the estate.

>> All right. Right.

>> And there's also a trick where if the will does not mention any kind of real estate, that passes like it's in test state because there's no mention of it.

>> Yep.

>> Another reason to talk to your living audience about avoiding probate. Great uh excuse. Um it forms a lot of credibility. It gets you leads. It gets you deals. It gets you conversations with people that you can help avoid some of this stuff. All right, if that's it, I'm going to let you guys go. U, if anyone does have any last minute questions, go ahead and bring them up now. Otherwise, I'll let you go for the day. We are uh two hours. Forgive me for going so long. I I really hoped for an hour and a

Get Our Mobile App

Probate Process for Real Estate Agents & Investors: 12 Steps From Filing to Sale

Transcription