Prolonged real estate probate has inheritor worried

DEAR BOB: I inherited a house and a two-family duplex frommy uncle who died in 2004. The properties are located out of state. I have beenin contact with the estate attorney who, I think, is “milking” thissimple probate to get as much in fees as he can. It has now been more than twoyears since my uncle died. He left some stocks and bonds, plus a few bank accounts,and the two properties. But that’s about it. The stocks and bonds, as well asthe bank accounts, went to other heirs. There are no complications as far as Iknow. Do probates usually take two years? –Mavis R.

DEAR MAVIS: If your late uncle left a written will, unlessthere are contested debts to be paid or other complications, a two-year probateis far too long to distribute the assets to the heirs. Because you live out ofstate, the probate attorney probably figures you are in no hurry so there is nourgency to close the probate proceeding.

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I suggest you write a polite letter to the probate attorneyasking when you will receive title to the two properties (I presume somebody ismanaging them so they don’t deteriorate and the rent is being collected). Ifyou aren’t satisfied with the reply, a few phone calls might be necessary.

This unnecessary probate delay could have been avoided ifyour late uncle held title to his real estate and other major assets such asthose bank accounts and the stocks and bonds in a revocable living trust. Then,after his demise, the assets could have been distributed promptly according tothe terms of his living trust without probate costs and delays, usually in lessthan six months.

MORTGAGE DEFAULT WILL RUIN YOUR CREDIT

DEAR BOB: In 2004 my mother bought a condo as her firsthome. In early 2005 she listed it for sale at $350,000 and received a $360,000purchase offer. But the bank appraisal came in at only $325,000. Rather thangive it away, she decided to rent the condo and take out a home equity line ofcredit (HELOC). A year later, the tenant moved out and now we have a hard timefinding and keeping tenants. If we can’t sell the condo or find a new tenant,foreclosure will likely occur. There is roughly about $40,000 left on the HELOC.If she gives up the condo with a deed in lieu of foreclosure to the lender, isshe required to pay off the HELOC? –Jill U.

DEAR JILL: Defaulting on either the condo mortgage and/orthe HELOC will ruin your mother’s credit. Don’t even think of that.

Because there is a HELOC on the condo (which is really asecond mortgage), I doubt the first mortgage lender will accept a deed in lieuof foreclosure. If your mother stops paying on the condo’s first mortgage andthe condo is foreclosed, that will wipe out the HELOC. However, the HELOClender will probably sue your mother for its loss.

Your mother should do everything possible to either rent thecondo or sell it for at least enough to pay off its first mortgage plus theHELOC.

NO MINIMUM HOLDING TIME FOR PROPERTY ACQUIRED IN A TRADE

DEAR BOB: What is the minimum holding time for a rentalproperty acquired in an Internal Revenue Code 1031 tax-deferred trade? In Julyof 2006 I acquired a six-unit rental property in such an exchange. Now I havean opportunity to trade it for a commercial property that would be lessmanagement intense. But my tax adviser says I must hold title to my rentalproperty at least 12 months before trading again. I can’t find this anyplace inthe tax code that says that. What is the minimum holding time? –Julia L.

DEAR JULIA: There is no minimum holding time for a propertyacquired in an IRC 1031 tax-deferred exchange. I suggest you consult anothertax adviser for a second opinion.

The new Robert Bruss special report, “The 10 Key QuestionsSmart Home Buyers Ask to Avoid Getting Ripped Off,” is now available for$5 from Robert Bruss, 251 Park Road, Burlingame, CA 94010 or by credit card at1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this columnare welcome at either address.

(For more information on Bob Bruss publications, visit his
Real Estate Center
).

Copyright 2007 Inman News

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