Estate Professionals Mastermind - Probate and Senior Real Estate Podcast

Seller carryback and sub2 deals in probate | PLUS Liens, step-up basis, and creditor process

September 21, 2022 Bill Gross and Certified Probate Experts Episode 88
Estate Professionals Mastermind - Probate and Senior Real Estate Podcast
Seller carryback and sub2 deals in probate | PLUS Liens, step-up basis, and creditor process
Show Notes Transcript Chapter Markers

This is episode 88 of the Estate Professionals Mastermind Podcast. The episode type is Weekly Certified Probate Expert Mastermind, an interactive Q&A featuring agents, investors, and attorneys specializing in probate.


Show Notes, Topic Summary Guide, Resources, & YouTube Streams: https://probatemastery.com/carrybacks-sub2-real-estate-liens

Episode Chapters:

0:00 The problem with having patience (Business Mindset)
5:01 Best skip-tracing services for probate leads (Probate Data)
7:45 Step-up in basis and date of death appraisal (Real Estate Tax)
15:18 Eva gets 4 probate listings from one lead (Probate Deals)
18:32 Sub2 and seller carryback financing in 2022 (Creative Finance)
23:05 California court confirmation and probate sales (California Probate)
29:11 Medicaid claw-backs and notice to creditors (Medicaid Liens)
36:41 What liens and claims have priority stakes? IRS vs. Deed of Trust
42:37 How Medicaid claims are treated in probate vs. trust (Medicaid and Probate)
44:47 How to learn sub2 real estate for creative financing (Sub2 Investing)





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Good afternoon. Welcome to the probate mastery alumni call I'm Bill Gross I host this most weeks. I will not be hosting it three of the next four weeks. I'm I'm Jewish I'm religious and I'll be offer Jewish holidays three of the next four Tuesdays, just FYI. But we'll have a suitable guest host or suitable replacement for the time. And if they're better than me, they might get the job. It's one of those things risk, but we get together every week on Tuesdays at noon, Pacific time, 3:00 PM Eastern. And then we also live stream this and posted. On Facebook is posted on the website, probate master do com and in YouTube as well. The reason I like to format doing it live on a zoom call is it's meant to be participative. The purpose of this call really is to help you with questions on the theory that if you're involved in Chad's coaching program, probate mastery, or one of the other follow-up programs that you're engaged in a process of building a business, creating income and or wealth for. And along the ways, anytime you're growing or building something, you're gonna have setbacks, you're gonna have failures and you can learn on your own or you can learn in a group. And so hopefully that can maybe be a, be a bit of a coach for you or guide, and or we as a group can help you with problems. And so I know last week we had somebody who. Took the homework and did it and reported back some great success and shared it with everybody. And so hopefully we do that on a regular basis. You wanna participate? Raise your hand in the zoom box zoom app. You can do that either on the desktop or in the phone. Or put a question in the chat chat box, start with the word with the letter cue and that way I'll make sure I catch it. Love to be participant. And the other option is you can go onto the probate mastery group in Facebook and post questions there either before or after, and hopefully we'll get to them. So before we get started, I just wanna share kind of one thought and, and, and just maybe back up and add one more piece. I'm not a professional coach. I'm a practitioner. I sell houses. I live in Los Angeles, California. I sell probate real estate, primarily throughout California. I sold houses in nine counties last year. I currently have listings in LA county as well as Tehama county, which I know where it is. North of Redding, California. And invest in property around the country. And I'm building a probate real estate team underneath me throughout the country. But I'm a practitioner I'm not selling you on the coaching. I paid for my probate mastery. I, I did the earn program as a participant. I took it as well. I've paid for marketing with CAD and some other features that Ted has to offer. I paid for him the first time, three years ago, I started. In my prob business and I do this because I need this as a practitioner. I need, when I get stuck to come to you guys, I post questions. I look for answers. And I believe we all do. And so, that's what this is meant to be. That's why we're here is to support each other. There's. A million real estate agents. There's 30 or 40 or 50 of us call any given week. And we're here to work together to get the business and the others aren't on here. That's their challenge. So I just wanna share with you, my motivation is it's really to help you. So I wanna share one idea before we get started on questions, which is a word that I hate when coach tells me this or a manager or a friend, or my wife tells me this word, I hate it. I hear the word and my whole body shakes. It's patience. I'm not a, well, I don't wanna say that cause I, cause I don't make a negative for affirmation, but I will admit I've not been as patient as I should be in anything in my life. I have not been in the past as patient, a husband as I should be. I've not been in the past as patient, as father, as I should be. I work at it. Try to get better every day, but I also have not been as patient in. As I need to be. And I do know that when I do exhibit patients, it gets rewarded just today. A project I've been working on for a couple years now to get referrals from a particular source I'm been working and working and working and reaching out and doing all the things that I tell you guys to do, and that I know I'm supposed to do and people tell me I'm supposed to do. And I've done all those things. And so gratifying yesterday, when this person called me to. He really wants to work with me. We set a time we're gonna strategize and go deep and work on some things in particular. And so this is what we do the business for is not just, I, you know, I do make a lot of money. I'm really happy about that. It gives me a lot of freedom, but I'm really happy to help other people in their business. And when they call me and say, Hey, can you help me with this? That's really what motivates me to do what I do. And I'm here to help you guys too, as well. Yes, I do some paid coaching. If you go online, you can hire me. I I'm one of the teachers of the I program, but to be honest, I do cause I love it. So we're here to help. We're here to work together and help each other. If you have a question, feel free, put the chat box, feel free to raise your hand. I'd love to have you or unmute yourself if you're able to. And just shout the question. I saw Nina. I don't think she needs she's on the call. She posted a question, which is. She needs a probate cocktail, any suggestions? I dunno I'm not sure Manhattan shaken served up with bullet rye and maraschino cherries. I don't know. Sounds good to me. And then Khalid asks a question a couple days ago, looking for recommendations for skip tracing services. So I think one of the things. About that is some companies do it at scale and offer the data already done. So they'll charge more. They'll cost you to do it. If you can learn how to do it efficiently, skip tracing the service, you take a database. And another way to think of it is append to your data. You have data with a name maybe, and an address and, or a phone number or an email address, and then you send the data to service and they'll find the missing data and add that in maybe you're missing phone numbers or you're missing emails or mailing addresses, or they correct them. So there's a lot of companies that do that. And I think that one of the dangers, I always say, when you ask for referrals is how deep is that person going? Are they tried several vendors because I find that, you know, if you use one, we're all happy to have one. And if they're good, great. And, and just share the, our experience with that. But just to name somebody, cuz we know who they are, just be careful that you don't mislead somebody down a rabbit hole that they might wa waste their time. So do you, prop stream is a service that does that sells you the data with it? Do they do skip tracing as well? Do you know? And trivia, trivia information was my grandmother's name. Are you have you used it yourself? Yeah. Okay. So again, so prop stream is a company. We can buy the data with the phone numbers in it already. They do the skip TRAC. I don't think they do skip all they do. And I think about it. We did a demo with them where you can upload the day and get phone numbers for some. So, yeah, that might be an, an option as well. And they have a 14 day free trial. Yeah. If you watch a prop stream introductory call, they often will give you a seven or 14 day free trial. And I think it was $99 a month. I did one and I had an affiliate code for them, but more just to learn the service they sell pre probates, they sell You know, other types of real estate. What I, what I like about Propstream is you can layer several types of data. Pre-probate outstate properties, vacant homes, tax lie, and then find all those that have save three or four combination. And I think the people who I know who use it layer two or three or four, those services, and as a result, get better results or honing in on a smaller number and hit that smaller number more aggress. Okay, so that's skip tracing. And then I know that I see this regularly. People ask to put a group together to do phone calls and such rod hooks, put it in the probate master group to get a group together for accountability and bouncing ideas off each other. And I will say, you're welcome to that here. If you wanna put out your quote, your your goals or commitment, I do ask people sometimes. When we talk about something. If I do a little coaching with them, I'll say we come back and report it. Cuz I want them to report the success they had and share with everybody. And more importantly to encourage all of us to do better as well. Winston, always a pleasure to have you on Winston Covington, orange county, California. What's up Winston. Hey bill. Good afternoon, everyone. About a month or bill, you were inquiring. Somebody asked of you whether or not probate deals as you're going through probate. Get settled. If they could enjoy the same step up basis as somebody who had some real estate in a trust. Yeah. And did some research on that? I don't know if that was ever discussed again, but wanted to check in with you. I I've got the answer. Well, I will say that I did get the answer for myself and I was negligent not bring it back to this call. So go ahead and share. No, I think we did. Yeah. I checked with my CPA and he, he knew the answer right off the top of us. And he's been a CPA a long time. He said, yes, probate properties do enjoy the same stepped up basis as if somebody had inherited property through a trust. Yeah. And so that's the same answer I got. So what that, what happens is, as soon as the seed passes, whoever gets the property. Whether it be through probate or it's passed through a trust. And in probate, what I, the answer I got was from the CPA, whether or not you buy the property. I mean, I'm sorry, sell the property in probate or keep the property through probate, meaning you could not sell the property probate if you're the error and keep it and use the title. Use probate to change the title from mom and dad to son. And now it's deeded in your name as a result of the probate. You own the property. Pretty clear. Or that's one option. We're gonna keep the property we're gonna sell. Through private, you sell the property and then your taxes are based on the step of value of the property that you sell it at. So either way you avoid the taxes from when the dece bought the property until the time you get it. And I think one of the questions was some based on some MIS misinformation that you shouldn't keep the property because you'd have to pay taxes on it. And Winston clarified. That's not the case, whether it be a trust or a probate, there is however, one difference, which is the There are city and county transfer taxes, taxes that are due, not on the family sale, but when you sell it eventually. So it, it doesn't, it's not any extra, it's a one time sale. And then oftentimes even in a probate, when you transfer title, the county will send you a bill because the paper has to be done properly. And, and the county has to read the property, the transfer property. So very, very good. Fantastic was thanks so much. Sure. What are you working on these days in the probate space? I know you had a kind of wild one we talked about about a month ago. It's, it's still a wild one, so I can't really lay any claim to it. But I was able to find a probate attorney, unbeknownst to me at the time was actually petitioning to be the executive of the court. He was being represented by another attorney. And so far we made a very good connection. We've got a little painful situation we're working on here, but out of the blue, I just kind of decided to just check this guy out on LinkedIn. You know, the executor and saw who he was. And then we started a conversation and had a good meeting and we're looking forward to working with each other. Fantastic. Well, that's great. It's always great when things connect up like that. Congratulations. Thanks for sharing. Thank you. And then one other question I saw in the chat box was what is step up basis. So really important concept. Now I'm not an accountant, but what it means is when mom and dad pass, when you inherit the property, as Winston said, whether by trust or by probate. So assuming mom and dad bought the property for $50,000, 20 years ago, and they passed in today's worth a million dollars. Well, it's nice to get a pro you know, a, a profit or an asset worth a million dollars, but if you'd pay taxes on it, you know, if it was ordinary income, you might pay, you know, California, 50% tax rates or federally, you know, 38% tax rates on the profit. Of course there's some other costs you can offset, but basically it's a big tax. So in federal tax law, though, that step up is free. Meaning when mom and dad bought the property, if their basis was $50,000 and when they pass it's worth a million. You your profit, your taxes due, or and their estate taxes are not due on that. Either the taxes due on the estate based of that sale is basically wiped out by the federal government. So I have a case right now where customer has a property inherits, I think half of a 2.3 million property. And in essence, he gets that half you know, the, the estate doesn't have to be taxes out of it, which means he has inheritance isn't, isn't reduced by that amount of money. And so it, it basically, when I say step up, it really is on the decedent estate that the money. Would be owed, but because of the unique tax law provision, when somebody passes, it gets passed to the errors and their base, the basis for the state is the basis. At the time of death. That's not true in California. Interestingly enough, and people are often shocked to find that out. I, my client was shocked to find a bill for in this case, $53,000 was like 12.5%, 12.4%. I think on the. Profit on his share of the sale. And seems like a lot. He was kinda, why am I paying taxes? Well, the federal government, it's really interesting, you know, just show of hands who thinks the federal government does not tax enough anybody think, or we put me in the chat box, who does not, who thinks the federal government I'm, I'm put on a full chat, full view here just to make sure I'm not, we'll give a fair chance or not to get too political who thinks the photo government needs to raise taxes more on the self property real quick, one. Oh, Larry Smith is down. Okay. So Larry, you don't think more, you think less? Okay. Just checking go. I wasn't sure. Not, not sure. Not clear. Okay. Let's see here. Just double checking, Larry, more or less taxes. No. So for those of you who are not in California, you should know that if you think you paid too much taxes to the federal government, the federal government does give you free pass. When. Your you know, ancestors pass when you're air people that you you're, that you're aired to parents, grandparents aunts, uncles, anybody, if you inherit property, the folk government says, no, we're not gonna charge taxes in the estate. You died. And we're gonna give you a free pass. The state of California. Doesn't. The state of California charges you at the full tax rate regardless. So if wonder, why people moving outta California moving to Florida, Texas, that's probably a good clue. So that's why I step up basis. Is does that answer that for you, Terry? Was there enough motion? I'm sorry, I didn't mean to go on a rant, but my S was pissed when he got the bill. That answer your question for you. I don't know. I hope it does. Okay. Explain step up that it will get connection. Very, very good. So Terry asked was the property owned by trust Terry? The question was. The step up in value from when somebody passes to their heirs, which means it wipes out tax liability for the sell of the property at the federal level, does the same benefit apply? Whether you're a trust and you inherit the answer was yes, according to CPA, whether you're a probate and you inherit the property through probate, meaning. You, you, somebody loses you the property and you keep it at the end of probate and change title. Or if you sell the property in all three cases, the value stepped up to the date of death. And so most probate courts have a date of death appraisal in case you don't sell the property to cover that. So the answer is regardless of your disposition of the property, whether you keep it, whether it's a trust or not, when somebody passes the, the tax liability kind of goes away as of the date death, though. As I found out, not in California. Okay. Emphasize she's running the second one. All tenants had with first choice to buy. Okay. Good for you. And Dave Quinn says, yes, it will. Thank you. All regular house is excellent. How exciting in the new basis, based on the date of death? Correct. In fact, I had a recent case where we did, we sold a property and the date of death. So the, the person died and three months later we sold the house. But the appraise value actually came in. Date of death was higher than when we sold it. Why? Because the property inside was a fixer thrash. It was a condo, but the appraiser was on the outside. So he looked the comps and he valued, I think at seven 60, we sold it for seven 10. We got, and we got top dollar for that condo building, but the state actually had a $50,000 tax li you know, a negative liability they could use in offsetting other. Okay, Terry great info in California. Step up. Yeah, it's great. Unless you live in California, that's not so great. And then Quin says same as 10 30 ones. I don't think that's true. Dan, are you sure about that? That 10 31 exchanges don't apply for California property? Maybe we didn't realize it. I don't. I don't think that's true. I think 10 31 defers taxes for federal and state. But maybe wrong. I'm not, I don't pretend to be an expert in the subject, so. Okay. Going back to Eva. " I got four probate listings now, one closed about a week ago." Eva, that's fantastic! Eva, Where did you get your list? Where do you do business? First of all. of. Lancaster, California. Okay. So people don't know that's the farthest north section of LA county Lancaster and Palmdale nearest the desert area. And how did you get the four listings? What'd you do to get them? Well, it's an hour and a half north of LA with no traffic ever, but let me tell you something I've been to Lancaster. There are times takes more, takes more an hour and a half to get to Tarzana sometimes. So, but how'd you get you mind sharing? Hey, I got the listings. What, what did you do? What was your activity? Got seller. She got it "through a mobile home I was gonna list; the deceased owned four properties." Bingo. So what I try to tell people sometimes probate is not just buying data from a source and cold calling it. When you are familiar with the topic, when you're familiar with the situation, it creates more opportunity for success. And so here's a case where Eva, she's not, I don't think cold calling people and grinding out on the phones to get leads, but because I imagine at some level she was familiar with the dialogue related to probate real estate, somebody says, oh, so and so passed. They own for the properties, who are they gonna list it with? And their lot of realtors would be too scared or maybe rightfully need somebody to help them with it, cuz they don't know what to do properly. And they're, they're gonna mess it up if you don't know what you're doing. I work for a big company it's easy for us to find people at eXp realty. I'm one of the designated experts in probate. People call me all the time with leads in business. But if you're a small company or it's just you, what are you gonna do? In Eva's case, she was able to list the property. So I do think it's important to learn probate real estate, even if you're just a real estate agent in the business and not gonna prospect on that. So good work, Eva! And Donna lives in Montana. Great out of state. Now they have you to help. Okay. Larry Smith, hand up Larry unmute and welcome to our call. What's going on? yeah. Hey bill. So in California, not that I anticipate, I will ever be doing any probate business there, but wouldn't it be a good estate plan? Because of the step up basis issue in California, wouldn't it be best that they have the discussion about selling their property on an owner finance deal so they don't get hit with the taxes? And then after they pass, you've already established the step up basis. And now you don't even have that to deal with going forward for the. Yeah. I mean, there are a lot of things you do ahead of time. And, and certainly installment plans. I think, you know, as a real estate agent, one thing I'm really looking into, I've not gotten business out of it, but one thing I'm really researching intensely is subject tos in owner financing. Mm-hmm because while it's true that the real estate market might be more challenging. I, I do think there's less sales and there's. More people in love. We're gonna get outta the business as, as that tightens up. There's a great, there's great opportunities on two things. One is subject tos where owner buys a property, say two years ago, they're gonna sell it. But they have a great loan at 2.7, five or 3%. Mm-hmm now buyer buying that same property today. We have to get, I think, six and a quarter as of today, 6.42. And so if you have that property, you can offer it, say he is a seller. Carry back the money and wrap the loan around subject two. And there's, there's a lot to be talked about subject two. I understand it. It's very complicated and detailed, but there are some great tools to make it work where you can wrap that loan and either make a profit the 3% or get a higher sales price. You're just trying to get out of the property and you otherwise might. So that's one, another one being owner carryback and because of a lot of people with a lot of equity, particularly in probate cases, And so what Larry's alluding to is when you sell property and the owner carries back in essence, the owner's the lender. So you have a property, that's say worth $500,000 and they wanna sell it. And a buyer may come to them and say, you know, they don't qualify or they're one to pay, you know, premium. Okay. I'll search you for 500,000. Give me 20% down, maybe 80,000. And then I'll, I'll lend you the $420,000 as the seller instead of cash. Instead of you paying me off. I'll take a note, I'll write your first mortgage of four 20 at whatever terms we agree on and you can pay me. And as the seller, you only pay taxes on the profits. If there's profits, as you receive them. So you sell the house. In that case, if let's say $500,000, you get $80,000, maybe you bought it for 80,000. You still haven't taken any profits out. And then oftentimes they'll do interest only loans. Way they're not collecting any profits until they get paid off. And then when they get paid off, they can roll that into a, maybe 10 30 of exchange or some other tax legal tax, avoid strategies. So, yeah, I think that, that if I was a real estate agent today, starting out, I'm pretty deep into probate right now. And I'm working a couple of things related to probate, but if I starting out, I would put a real, a lot of time and research into being an expert in the subject twos. And into owner carrybacks cause I think those are historic opportunities that are way underserved right now. And I think there'll be opportunities for us to make a lot of money in those areas going forward. Okay. So thank you. Thanks Olivia. Thanks much. I do so, so, Dave says he thinks you wanna collect taxes in Def and the deferred taxes when their placement property is sold. Okay. I, you know, it's not a train of CP in either line, so rather than get discussion, we'll have to table the we'll look for CPA tells on 10 31 exchanges that get out of California taxes or not. And so Terry says on the sub2, I'm sorry. No Terry says on subject two, is that nobody worries about the loan acceleration. And so as far as acceleration, there are a couple options. There is insurance for loan acceleration that you can. So if there's enough profit on the table, you can take some of that, put it in that insurance policy. And also another thing that's changed since I start been the business is there's service companies that will collect the payment, give both the buyer and seller access to information and make the payments onto the lender automatically. And so those are two different tools that might make the loan acceleration risk on a loan less for a subject to seller that said there are risks. You should check it out, but those are two amazing tools that didn't exist when I started this industry and we did Excel. We did subject twos, Winston double dipping with Winston Covington today. What's going on? Hey, just clarification question. This came up in. Discuss it about a week ago here, bill. I know when, when someone's appointed by the probate judge to be either the executor or the administrator, it's gonna be limited authority. We have to deal with the probate referee and we're gonna sell real. Estate's gotta be within roughly 90% of its drive by appraisal. Now switching hats, let's say we had that question of somebody with full authority. The question was, do we always have to stay within that 90% rule with somebody selling real estate under full authority? I, I had kind a 50 50 recession that, so I wanted to check in with you. Sure. So what we is referring to is a process in California and it's somewhat similar in some other. But in California, there's two different types of authority. As in most states one. We call full authority, which is a little misleading, but it's full authority. It's full authority told it's not, this is how you should think about it. Or it may, it may may be full authority versus limited. So limit authority means the court supervisors, certain actions such as selling the property to sell a property with court approval. You have to publish that you're selling the property in California, in Los Angeles, in certain publications. There's a legal in the legal newspapers, little fine print newspapers. The back. Sometimes you wanna winner all these printings about bankruptcies and foreclosures and probates. That's where it's printed. That type of newspaper. It's a legal publication that services the county. Then you accept an offer. And then they file a petition to the court, confirm the property, confirm the sale. And at that time, anybody can come into court and offer that price, plus 5% and $500. So if you have a property under limit authority, you sell it for $500,000. You accept the offer. You file the petition. Three days, lady walk into court. If somebody else walks in and says, says, I'll buy. For 500,000 plus 5% plus $500 or 5 25, 500. And if they have a cashiers check for 10% of that amount, then they can bid on that property. And then there's a bidding war between anybody who shows up and the buyer to overbid on that property. But you're buying it with no contingencies that day as is. You're signing on it, 10% down cash and need to close within 10 days of the court signing the court order. So the question the, the price has to, in order for the court to confirm it, the, the court does what's called a probate referees and appraisal report in inventory and appraisal. Appropriate inventory, appraisal support. We think it was a drive-by appraisal. Basically. They don't go in the property. They drive by. They don't provide any information other than the legal address and the value they came up with and the invoice they give you no comps. They give you no pictures. Nothing. Did you charge your pictures? I've never gotten them, never been able to get 'em they're not attached to the reports. You're the weirdest thing. So, so I would say it's below a drive by, and so the question Winston say asking is on a, on a limited authority case where the court confirms the case they'll require the sales price, be at least 90% of their appraisal. So use the case I gave you. If the appraisal came into 500,000, They'd say fine. If the praise came in at 600,090, percent's five 40, the court would say, well, even though you sold it 500 and this guy's wanted to by bid 5 25, 5, I won't prove yourself unless we get to five 40. Now there's two possibilities. One, somebody will bid up to five 40. The other occasion is if it's too high, I've gone back to probate, appraisers, probate, referees, technically, and been able to get them to agree to lower their appraisal. I'll tell. By law, they have up to 60 days to do this drive by appraisal. It is oppressive how long they take, they charge a ridiculous fee compared to a normal appraiser. Some are very good and professional and some are just, it's like working with a us postal service, but worse or the DMV, but worse. So. Question is that's limit app approval. How about on a full approval full authority? Do you need the same restriction? The answer because there is an inventory appearance report done. The answer is no. However full authority is full authority until it's not. If all the nod parties, the heir, heirs, beneficiaries, creditors all agree with the sale, there's a 15, there's a notice of proposed action that gets filed. And as long as nobody complains before 15 days, then you can close your transaction. In many cases, a attorney will have the parties approve it. They'll sign proof. They were served. So you can close before 15 days, but if one person objects to. Then the court usually will set a hearing 30 days later to hear what the objection is and to give him a chance to complain. And one very compelling argument is, Hey, the prob referee was for 600,000 and you're selling it for 500,000 and you undersold the property. So while technically you don't have to look at the number, you should be aware of it and be aware as a real estate agent. What's the landscape who else is getting noticed on this case? Is it, is there other errors? Are these siblings that are fighting amongst each other? This is just throwing gasoline on that fire or. Sometimes it's just one air and he knows the property sold for less because the drive by appraisal prompted to normal properties. And the inside of this property is Thra is not habitable. So the answer, your question, the, the, that was a long answer. The short answer Winston is it's not a problem until it's a problem. And if it is a problem, then it's a problem. I was not. All right. Thanks. All appreciate it. Is that did answer your question. Is that too much information? You know, it was good for everybody. It was good for me. So thank you. Thanks. Yeah, if I go a little along, so I, cause I assume some of you've never heard this before and second of all, I love, I don't know if you guys can tell, but I love this topic. And so, that's just kind of how I thanks so much. What's always okay. Now we have Lynette has her hand up. Let's bring her in, get her unmuted. What's up Lynette. Hi. I have a, I have a, can you hear me? Okay. Yeah. Perfect. Thank you. I have a question about Medicaid. So I, I don't know. This is a generic comment, you know, how you listen to all this and you're, you're sure you're clear of how things go and then you're in it. And I'm like, suddenly don't have any business acumen around this at all. That is a little bit frustrating, but so, this specific questions, Medicaid, Medicare How does anyone know how Medicaid the entity behaves when there's potential clawback and what they provide the errors to the estate in, in terms of like what's owed or so, so what I saw was this pile of forms to make sure that, you know, there wasn't anybody in the property that qualified for you. To, to eliminate their ability to collect against the estate. You know, if, if the, so the estate, the majority, all of the money is in the house. So there's, that's that's number one, number two, there there's, you know, no minor children, nobody with the disability, no spouses or anything that prohibits them from doing that. And they just send the forum and say, what's the value of the estate? So it's kind of like, like, you know, I need you to paint my house and somebody says, well, how much money do you have you, you know, like that's kind of how it occurs to me. Is there a statutory, statutory responsibility for Medicaid to come in and say what the bill is before they start soliciting? How much it's worth or is? Yeah. So. Just to clarify a little bit. So again, I I'm in California, you're in Colorado state. Law's a little different, but there's federal laws. So in general, you know, quick summary Medicaid is a means tested medical product for people with lower income, you to qualify for it. Medicare is like social security, theoretical. We all pay into it. And if we pay into it, we're entitled to the benefits of it. Medicaid is most commonly low income. And then there's, there's you know, hospital expenses and then there's hard to get into here in California, but I don't know, he called them, but places where he'll go before they pass and there's expenses for that, that get charged to Medicaid. And so what happens is theoretically, because it's mean tested, you don't have income, you don't have liquid assets, you can't pay the bill, but you have this property. Oftentimes people will. Not state, they own the property or they'll state. They have it, but they can't access it. So they, they don't hold them up. But what happens is they'll get notified. So when somebody passes on death certificates nowadays is a social security number. It didn't used to be because those numbers were used for fraud. It used to be people get social security numbers, somebody who died, and they would use that number to establish new account in open new credit. But now what happens is that number gets notified to certain parties, banks, and the government. To shut those accounts down. So that's why when somebody passes within days, their bank accounts are closed down and also along the way, social security gets notified so that they don't pay benefits to somebody who's passed as well as they can collect. If there's Medicaid, that's been paid out the government, not social security, but the government. Can notify the, we will look for that bill. So what happens is in California, there's a credit and in almost Allstate. So there's a time period. Where's a posting of the probate that notifies creditors, and there's a service creditors. Get to notice that there's somebody who has a probate and they then can submit bill. So that's how visa finds out. If somebody passed or car loan, people find out if somebody passed and that's how Medicaid finds and they submit an. To the probate case and the executor is responsible to pay that. Now I I'm not attorney, but I do I'm I'm affiliate member of the LA bar and they have what they call Lister. You can see discussions amongst attorneys, and there's literally a discussion yesterday on is somebody liable for not paying taxes or clawback Medicaid, clawback and maybe distribute the money out to the errors. And the answer is that technically. The executor or administrator could be held personally liable for that shortage. That's why sometimes they'll get insurance. If you're, if you're an executor or a administrator, or if an attorney they'll have insurance, that's why there's a bond. The court will use require a bond. So, let, let, let me, let me, let me interrupt you there. What's the criteria for a PR to put insurance in place against like where, what, what do you call like I'm the PR you know, probate PR insurance. Yeah. Yeah. There's there's insurance. Yeah. There's executors or administrators of, of states and trust. There's, there's an insurance product for these. Okay. So if any, okay. I guess call a fidelity bond is the term that normally used, but it basically there's two bonds. Okay. There's a bond. So I'm gonna, I'm gonna keep going cuz I wanna get back. Okay. So I, I I'm clear there there's a, a Medicaid li Medicaid liability. They've got Medicare advantage. There's advantage. And then the other one, the one that actually does something, I think it's supplemental. So the Medicaid was used from what I'm told, right. To supplement the copays on, on the medications. Correct. But that's from it's beans tested, meaning somebody applied for it because they don't make enough income to pay for it on their own. So they, they didn't make enough income. They equity in the house. I was under the impression. If you had any equity in the house, you didn't qualify for any me Medicaid whatsoever. But I don't, it may. So certainly I don't know that it, it may be, and it may be somebody falsely claims that's part of it. So I, I, I know, I know there's a, a Medicaid liability. There's I, I pulled a TBD title. We there's, there's nothing on title. The title's clean, we're moving it along. I wanna know. How do we ask how much that liability is? Well, I mean, they're, they, they seem to be able to ask you what you're worth. I, I understand they're looking for whether they have the ability to claim or not. I really do understand that, but I, I'm also curious as to how you tell how much it is without, you know, can I tell you, so I don't know, but what I can tell you, what happens is the public gets filed. There's a notice this filed publicly, it's called notice to Crowders. And bills come in and I mean, Medicaid and bank America and Wells Fargo and chase have people who, all they do is look for those notices and send the bill and it comes in right away. Okay. So you does anybody know if you can figure out what's owed to Medicaid specifically with, without poking a bees nest, you know? Yeah. That I don't know. Anybody knows that. Good question. So then the other thing is I was told by the PR that his attorney. Said there was no need to file. Notice to creditors. It might be Colorado thing in California. We filed a notice. So I don't know. I, I can't imagine here's what I know. In California you run the risk of being held liable for that shortage. Theoretically, the, the beneficiaries, we distribute the money out to other people and you say, well, I don't have any money left. I gave it all to my brothers and sisters, theoretically. They could be Claw back or not likely, but guess if it was enough money, anything could happen. So I, I wouldn't play with that, but it's possible. But again, what I wanna remind you is in most cases at least in California, there's even a MI, most kids have even a minimal bond, $20,000 bond to cover these kinds of expenses. So, Okay. So then the, the last thing is I, I can't come up with, with the, the language, but the hierarchy of, of liens being paid against against the equity in the house, from the title company, what do you call that? The I think hierarchy priority the priority or whatever. So, so I know like the IRS is before the de of trust, right. Is Medicaid before the de of. I don't know. I would doubt I would doubt it. I would doubt I would doubt that the, I don't think the IRS is for the address. I I'm, I'm being told that. So it goes the administrator. I think they're getting bad advice. That's why I'm asking. So, the, the cost of administration then taxes. Which kind of folds into Medicaid. Cause it's a federally. Then, then the mortgage company, then the errors. I don't don't think the taxes come before the mortgage company, not on a normal foreclosure. I didn't think so either. Unless is the lie filed and there's a mortgage afterwards. That's different, but to close it, you have to come to the table if you owe. But I, I just didn't know what the, what the stack was. Yeah. That doesn't sound right. And I will say. The admin, the, the errors and the attorney's fees. And in California, the administrator executive fees don't get paid till the final distribution after everybody else gets paid, but expenses can get paid along the way. So if you have actual expenses, you're paying to parties. Yeah. That's different. And, and, and that's part of it. I'm, I'm trying to make sure. I don't, I don't want them under contract cuz sellers bound in Colorado, you know, that's their first specific performance versus liquidated damages. If they're going under contract, I need to have an understanding of what this is. So they're not upside down. They just need to like call it, you know, or do a short sale on a reverse or something like that. So I just, well, I will say in California that if you read again, I know we're in different states, but, and I do believe we're as real estate agents, we're blessed. with a lot of bad things about our organization, but one of the great things that association realtors does is the forms we use. I think my personal belief in California particular, I think our forms are amazing. And in, in the probate addendums and contracts, I think you read them. It protects you and your seller from these possibilities that if you discover the course of the probate, that's why, as I said to Winston is not a problem. That it's a problem because it could be full authority and then maybe, maybe Medicare jumps in and says, Hey, we're not getting paid and we're objecting to the sale. You know, that, that that's all spelled out in the contract and that the protection. Liability for your seller and as the agent is in there, so you might wanna check, I'd be interested what the Colorado forms look like. If you get, pull them and send me a copy. I'd love just to read 'em the, the Colorado real estate commission set of forms. We we're we have the limited ability to practice law and it's a very robust set. It's one of the most tedious sets in the country as well as elegant. They do not specifically address probate. Really, we have all kinds of probate, specific contracts with forms of tenants and such. If anything, you check personal representatives de oh, wow. Okay. Well, again I, I, a lot of things you can argue about C R California association realtors, but one I'm proud of is so, so thes the one, one of the bigger takeaways from this is their elder law attorney. Is from my perspective, probably not giving them good advice. And it's an awkward, it's an awkward position, you know? So I'm gonna say this, knowing that their attorneys were on the call and, and watch this coin flip as to whether the right or wrong is amazing to me, the bad advice I mean, I'd be careful what I say here, cuz because of I think he's the cat Meow and I'm like, yeah, until, until you lose your house, , you know, tri one unique, common trait of attorneys in my experience is. They're great at sounding like they know what they're talking about, even when they know nothing about what they're talking. And, and I had an amazing experience where I have a team underneath me with 35 agents total. So I have one of my team leaders had a private case. I was walking her through it and I have another team leader who has a probate listing is walking her through it. But when she sent me the file and I researched it, it was the same attorneys on this other. I said, well, good news and bad news. Good news is it's the same attorney as this person. The bad news is they don't know what they're doing. So this is if you can get them to understand, they don't know what we're doing. And you do, you have a relationship. If you can't, you have a tough relationship because they're gonna, cause he kept insisting on doing things we don't need to do. Wednesday I think would agree on a, on a limit, a 30 case in orange county in this case, but state law. We don't need to get court approval to list a property on a probate we do on a conservatorship or guardianship when you're selling in the conservative or guardians or the guardian person their property, right in orange county. We don't need to, to do it for listing. So the attorneys will insist on things that are wrong and how do we sell them on that? That's that's the relationship. I don't have an answer for you on how to work with attorneys who think they know what to tell and give people bad advice. That's one of the perils of this area. That's why I work so hard at this establish my relat. I got it. Thank you. I uh, well, thank you so much. I would love to see if you, if, if any other state has probate forms I'm not looking to steal the forms that to use them. I just wanna educate myself. I'd love to see what other states do have, or don't have feel free to send them to me. And I'd love just to review them. I would actually like to see what California has in place, because it might afford some language and additional provisions that I wouldn't muster by myself, you know? Okay. If you're interested in them, send me an email and just put. To bill at the LA probate expert.com bill at the LA probate expert.com and just put this up C R forms for California, social realtor forums. And my assistant will reply back with the basic form samples of business forms, not usable, but for, for education purposes, Winston, Hey bill, I've got a little bit of a nugget that isn't gonna help Lynette, but it's gonna help people in California. And I, I it's actually taught this by Paul Horn. Because I went through his probate certification course, and I did talk about Medi-Cal. Okay. And this is more gonna be, it's a great conversation in favor of a trust, but what he had talked about is that somebody did own real estate. I really didn't have much economically financially ended up with this big medical bill. Okay. For, for their medical expenses. If the property was in trust, the state of medical couldn't go after it and probate. Yes. But in a trust, no, that's just a little ti not related to that, but just a little something to know that Paul Horn taught us. That's a great, you know, tidbit. I thought about it in midstream. I appreciate bringing it up. Two things. One is Medi-Cal is California's administration of Medicaid. So Medicaid is money that's given to the states. The states create their own program and service their, their citizens with in this case means tested low income healthcare. So Mecal and California California's Medicaid basically. But he is a hundred percent correct and great pointed out. One of the values of a trust is that people face tremendous expenses and liability. For medical care and healthcare and, and so on. And so, they can avoid using all that money by putting themselves into a trust, putting their assets to a trust. And that way they don't own anything personally, but the trust does, and then they can distribute money as they want to, to pay for the services. It's it's, it's interesting how people are wealthy can afford the wealthier estate planning to avoid having to pay outta their largest estate. The Medicaid that the average person or low income person has to use to pay for it. But that's one of the realities, particularly here in California. One of the reasons why you should have a estate plan is to avoid that liability. If through record, why everybody owns a house should have an estate plan because that way they will and keep more money. So once again, thank you. That's a great tidbit important for anybody in California in particular. I think anywhere in the country. Okay. Another question from Khalid, one of my favorites is work. We learn more about subject twos and owner carryback. So again, pace Morby. And he teaches he is the number one guy, I think on subject two. He has plenty on YouTube for free. You can learn about to get the idea and hopefully they'll help you with it. And yes, Lisa, thank you. Okay. And number two is about the price rather equity. So what happens with a, with a subject to is you have somebody who otherwise can't hit the price they want. but they can, but if they use a substitute. So for example, we all, as realtors have sellers who wanna sell their house for $500,000, but it's only worth four 60 and nobody will pay them 500,000. Well, if they have a, a loan on the property for $400,000 or four 20 or four 50, at 3%, there are buyers who might pay 500,000 because they're gonna have a lower payment than they might otherwise in another house. Or their payments overall would be the same as if they. Four 60 for the property because of the little registry payment. So again, it's a different approach. It's a tool to have in your toolbox. When you talk to sellers who want a particular price, but may or may not qualify it. Okay. So, and every top of how she used the, the seller carrying on chat box, I don't wanna go the whole thing, but yeah, definitely. It's a case where you have somebody can't get the price they want. And as a result, it's gonna work So as soon as insurance changes, new owners, the lender is notified. That could be the case. There are, you know, I have to say there are many lenders who even with a change of ownership, don't call the loan due. But I'll say this, if your loan's 3% today, banks are probably ramping up their efforts to call loans that are due on subject two. So we'll see how that works going forward. I suspect that business will be taking a. Steve Carney reminds us that Chad talks to Chris prefund as smart real estate coach to learn about creative financing. Yes. He interviewed him. He's great. There's a lot of different people in that space. I only know if Chris threw that interview seems like a great option as well. And then Lynette Larry makes a good point: maybe you should talk to an elder law attorney and I think Lynette, sometimes these problems we have are great excuses to call attorneys and use that to establish a relationship. So I would definitely definitely use that. I always try to find things to call attorneys about and ask. And I think, you know, I find they're glad to educate people. They, you know, Everybody likes to help people. I think if they think it's genuine. So just an idea Glen to ask, are there probate, specific contracts for Texas? I don't know. We have any Texas realtors here. Are there specific California for, or Texas forums for probate? I'd love to see them send me a copy if you'd be so kind. I'd love to see them. Boy, we got, we got and Larry says he's never seen any. I've never heard of. But okay. And I, we've got a note from Dave Hampton know there's no different forms in Texas. So again, if you have different states forms, I'd love to see them. If you went the state forms for California samples, not usable, I'm glad to send you a copy of those. Again, just send my email and put CA R forms in the subject line. I'll send that to you. Okay. No more hands up. We're kind of at the end of the hour. So I. Wrap things up. I'm bill gross. We do this every week. It's probate mastery alumni call Tuesday is 12 noon, 3:00 PM. Tomorrow. If you haven't. I run a program called pro get probate.cash where I take the idea of probate advances and go really deep with them. I'm really look into train agents, OUS, wholesalers attorneys. NPRs on how to use. Probate cash is a business tool. The full disclosure it's really my, it is introduction to a mastermind form. That's paid the call tomorrow though 8:30 AM. Pacific time is free. If you're interested, feel free to jump on that call or go to my YouTube channel. You can see what that's about. I'm looking for some partners to work with me in a mastermind to build out that platform. So I'd love to have you join there. If not we're here, you're gonna go to probate mastery.com on the website to see. Episodes and other questions. And Lisa, thank you very much. She wishes me a sh Tova, which in Hebrew is a good new year. I'll be off next week for the Jewish holiday of Rosh Hashanah so I won't see you guys next week, but in the meantime, call me, text me, email me if I can help and make it a great week. Everybody. Thank you so much. Thank you.

Carrybacks and sub2 creative financing in probate | PLUS Liens, step-up basis, and creditor process | Episode 88
The problem with having patience
Best skip-tracing services
Step-up in basis and date of death appraisal
4 probate listings from 1 lead!
Sub2 and seller carryback financing in 2022 (Creative Finance)
California 90% rule and probate authority
Medicaid clawbacks and notice to creditors
What liens and claims have priority stakes? IRS vs. Deed of Trust
How Mediaid claims are treated in probate vs. trust
How to learn sub2 creative financing