Rental Property Frozen: The Realities of Probate!!
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Estates often have diverse assets, from checking accounts to houses to farms, from animals to automobiles to stocks. The bigger the estate, likely the greater the variety of assets that will have to be addressed by the Executor or Personal Representative as they sort through the estate of a person who died owning these things in their name. One common type of asset they will have to handle is rental property.
Income-Generating Rental Property
If the estate assets include income-generating properties, those properties likely have tenants in them and, hopefully, good lease agreements in place that outline the essential details like rent amounts, tenant’s duties and landlord duties, especially regarding upkeep. The Personal Representative will need to familiarize themselves with the details of the rental business previously owned and operated by the decedent. It will then become the responsibility of the Personal Representative to continue to run that business and collect rents for the benefit of the estate until such time as the properties are either sold or deeded to an heir. However, maintaining status quo is all that can happen with these properties until probate is well underway, and then depending on debts owed by the estate, depends on how these assets are handled through the probate process.
This estate administration job can become even more complicated when no formal rental agreements exist. While North Carolina has landlord tenant laws, which will cover some of the requirements, it may make sense for the Personal Representative to get a signed contract for the property. For an executor who is inexperienced with business, this is where an experienced estate attorney can add significant value. They will help review the assets in the estate and help the Personal Representative take steps to preserve the value along with the income-generating abilities of those assets throughout the probate process, ensuring the executor’s fiduciary duty to the heirs is upheld.
Rental Property Lived in by Family
Rental property that is currently being occupied by a family member can become even more complex. Of course, if there is a good contract in place and the rent is fair, it can continue to be treated as a business transaction by the estate, just like the income-generating property situation described above. More commonly, however, family members live in the rental property for low rent or completely rent free, making for a difficult situation faced by the executor.
In theory, all rental property should be income generating and, without a contract, the family members will need to pay rent to the estate at fair market value for the property. Just as in the situation above, any profits are then saved in the estate and, when the property is deeded, then the family living in the house may get some or all of their rental payments returned.
In practice, however, this can be a tricky situation as the family members living in the rental property may not be able to pay rent into the estate, especially not rent at fair market value rates. In these cases, the best path forward will likely depend on the debts of the estate and who the eventual owners of the property will be. A discussion with interested parties and your estate attorney can hopefully generate some feasible options for your specific situation without getting the court involved or forcing unnecessary hardship on family members. Indeed, if this situation can be anticipated, it can be handled as part of the original estate plan, making for a much smoother transition while keeping the peace in the family.
If you’re setting up an estate with rental properties in it and you want to be sure that the properties are managed appropriately while your estate is probated, reach out to the team at Thomas Walters Probate and Estate Planning Attorneys. Their practice focuses completely on the intelligent set-up and administration of estates, with the goal of making the transition of assets seamless and cost effective. They have experience handling a wide variety of diverse, valuable, income-generating assets. They will help you set-up the best estate plan and then, thanks to their lifetime lawyer program, they’ll help you revise your plan periodically to ensure that it still meets your needs as life changes or laws change. Finally, the TW team of lawyers will be there as your family administers for your estate, guiding them and making sure your hard work and assets are preserved in accordance with your wishes and desires.
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Celebrating Life with Shayla
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Managing Partner Stacey Walters was blessed with a beautiful angel for 10 years. Her daughter Shayla, who was born with a heart defect, unexpectedly suffered a cardiac arrest at 5 months old, leaving her severely disabled. In April 2018, Shayla unexpectedly gained her angel wings and left Stacey and her family on this earth. While Shayla forever changed their family’s life, she taught Stacey the meaning of selfless love and that we are never promised tomorrow.
Shayla’s story forms the pillar of our law practice: We are all going to leave this earth, but if we aren't prepared for the unexpected, the people we hurt the most are the ones we love the most! It is too important to have a plan in place, and everyone needs an estate plan for that unexpected time, but not just any plan- the perfect plan that easily ensures your final wishes are met while relieving the stress and burden on your family when you are gone!
At Thomas Walters Probate and Estate Planning Attorneys, we build lifetime relationships with our family of clients. We not only help ensure our clients have a current and perfect plan in place, but we give them peace of mind knowing both they and their family can always call on us a trusted advisor when the unexpected happens.
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Upcoming Estate Planning Events
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Register today! 800-769-1561
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Apex
January 9, Wednesday – Peak City Grill @ 6:30 PM
126 N Salem Street
Apex, NC 27502
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Burlington
January 10, Thursday – Cutting Board @ 6:00 PM
2699 Ramada Rd
Burlington, NC 27215
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Cary
January 7, Monday – Lugano @ 5:30 PM
1060 Darrington Drive
Cary, NC 27513
January 8, Tuesday – Egg & I @ 11:00 AM
1104 Ledsome Lane #101
Cary, NC 27511
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Chapel Hill
January 14, Monday – Hickory Tavern @ 6:00 PM
370-110 E. Main Street
Carrboro, NC 27510
January 15, Tuesday – Egg & I @ 11:00 AM
1101 Environ Way
Chapel Hill, NC 27517
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Charlotte
January 8, Tuesday – Vine American Kitchen @ 11:30 AM
13735 Conlan Circle
Charlotte, NC 28277
January 8, Tuesday – Red Rocks @ 6:00 PM
4223 Providence Rd #8
Charlotte, NC 28211
January 17, Thursday – Red Rocks @ 11:30 AM
4223 Providence Rd #8
Charlotte, NC 28211
January 17, Thursday – Vine American Kitchen @ 6:00 PM
13735 Conlan Circle
Charlotte, NC 28277
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Cornelius
January 23, Wednesday – Alton's Kitchen @ 11:30 AM
19918 N Cove Rd
Cornelius, NC 28031
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Durham
January 16, Wednesday – Maggiano's Little Italy @ 11:00 AM
8030 Renaissance Parkway #890
Durham, NC 27713
January 16, Wednesday
– Bleu Olive @ 6:00 PM
1821 Hillandale Road
Durham, NC 27705
January 24, Thursday - Page Rd Grill @ 6:00 PM
5416 Page Road
Durham, NC 27703
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Greensboro
January 9, Wednesday – Bravo! Cucina Italiana @ 11:30 AM
3324 W Friendly Avenue
Greensboro, NC 27410
January 9, Wednesday
– Undercurrent @ 6:00 PM
327 Battleground Avenue
Greensboro, NC 28401
January 23, Wednesday
– Southern Lights Bistro @ 6:00 PM
2415 Lawndale Drive
Greensboro, NC 27408
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Pinehurst
January 10, Thursday – Hickory Tavern @ 11 AM
9735 US 15/501 Highway
Pinehurst, NC 28374
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Raleigh
January 8, Tuesday – Nantucket Grill @ 6:30 PM
1145 Falls River Avenue
Raleigh, NC 27614
January 9, Wednesday - Coquette Brasserie @ 11 AM
4351 The Circle at North Hills Street
Raleigh, NC 27609
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Wake Forest
January 7, Monday – La Foresta Italian Cafe & Pizzeria @ 11:30 AM
203 Brooks Street
Wake Forest, NC 27587
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"Your attorneys are very professional and knowledgeable people who have been very helpful."
-Mr. Pascucci, Cornelius, NC
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Chapel Hill
1777 Fordham Blvd.
Suite 101
Chapel Hill, NC 27514
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Charlotte- North
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ExecuBusiness Center
10130 Mallard Creek Rd.
Ste. 300
Charlotte, NC 28262
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Charlotte- South
Ballantyne Business Center
13850 Ballantyne Corporate Pl. Suite 500
Charlotte, NC 28277
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Greensboro
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Byron Offices Suites
7-B Corporate Center Dr.
Greensboro, NC 27408
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Raleigh- Main
Access Office Business Center
8801 Fast Park Dr.
Ste. 301
Raleigh, NC 27617
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S. Raleigh Cary
4904 Waters Edge Dr.
Ste. 260
Raleigh, NC 27606
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The Pinehurst/West End
5228 NC-211 D
West End, NC 27376
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