When a property owner passes away, someone must take care of their real property. It needs to be managed until it can go to heirs or be sold. How that works depends on whether the property is in a trust or must go through probate.
Trust Administration: Immediate Authority
If real property is held in a living trust, the successor trustee takes over right away. There is no need for court approval. The trustee can manage the property based on the trust terms. That includes the power to:
- Pay the mortgage, property taxes, and insurance from trust funds
- Hire workers for repairs and upkeep
- List the property for sale if the trust calls for it
- Handle tenant matters if the property is a rental
- Pass the property to the people named in the trust
This quick access is one of the biggest perks of holding real estate in a trust. The property never sits in limbo waiting for a judge. The family controls the timeline, not the court.
Probate: Waiting for Court Approval
If real property is not in a trust and has no beneficiary deed, it enters probate. Probate is the legal process where the court oversees how assets are given out. The personal representative named in the will must wait for Letters Testamentary before they can act.
That wait can take weeks or months. During this time, the probate court controls what the personal representative can do. Big choices like selling the home or signing new leases may need court approval.
Under Arizona probate law, the personal representative has a fiduciary (a legal duty to act in the best interest of others) duty to the estate and its heirs. Failing to do so can create personal liability.
Ongoing Property Obligations
Whether real property is in a trust or probate, the bills keep coming. Here is what to expect:
- Mortgage payments: The lender expects payments to keep coming. Missing them can lead to foreclosure.
- Property taxes: Arizona counties keep charging taxes. Late fees and interest add up fast on unpaid bills.
- Insurance: The policy must stay current. Some policies need a notice if the home sits empty for more than 30 days.
- Upkeep: Arizona heat, monsoon storms, and dry weather demand regular care. Cooling systems, roofing, and watering systems need attention.
- HOA fees: Dues keep adding up. Unpaid fees can lead to liens on the property.
A bank account funded by the estate or trust usually covers these costs. If no funds are on hand, family members may need to pay until the property is sold or passed on.
Life Insurance and Property Costs
In some cases, life insurance money can help cover costs during trust handling or probate. If the person had a policy naming the estate or trust, those funds may be used to pay the mortgage, taxes, and insurance. This keeps family members from paying out of their own pockets.
When a Property Manager Makes Sense
For family members who live out of state or when the process takes months, a property manager can be a smart move. A manager can handle tenant calls, set up repairs, collect rent, and keep the property in good shape.
Real property is often the most valuable asset in an estate. Managing it well during this time protects the value for everyone who stands to inherit.