The closing of an estate can be a complicated process, and it is important for executors, beneficiaries and other interested parties to educate themselves about how it works. The more you know about how the estate process works, the easier it will be to avoid common mistakes.
Even a small mistake in the estate process could be costly, especially if you are dealing with a large estate or a complicated closing process. There are a lot of misunderstandings about the estate process and how it works, and that is why it is so important to work with an experienced estate attorney – someone who has your best interests at heart.
One of the most important things to understand is what the executor can, and cannot, do with the assets the deceased has left behind. Specifically – can the executor sell assets without the permission of all the beneficiaries?
As with so many things in the world of estates, the answer to that question is somewhat complicated. The good news is that the executor named in the will does not have the power to sell any real estate, or any other property, belonging to the estate before being officially appointed by the Surrogate’s Court.
Has An Executor Been Appointed?
That means the first thing you should do is find out if the named executor has been officially named by the court. You can check with the Surrogate Court to determine if letters of testamentary (if there was a will) or letters of administration (if there was no will) have been issued.
Once the executor has been officially appointed, their power of representation will depend on the terms laid out in the will the deceased left behind. If the deceased individual died without a will, an administrator will need to be appointed. That administrator is different than the executor, but their powers and responsibility are quite similar.
While both administrators and executors have a fiduciary duty to manage and distribute the assets in the estate, the executor is required to follow the wishes of the decedent as laid out in the will. The administrator, on the other hand, is only required to distribute the assets in the estate to the appropriate heirs.
This process generally involves turning any illiquid assets, such as real estate holdings, into cash. The fiduciary in charge will typically start this process by liquidating things like stocks, mutual funds, bonds, bank accounts and so forth. The fiduciary will also sell items of value, including any real estate that was owned by the decedent.
All of the cash realized from these asset sales is then deposited into a special estate bank account. Any outstanding creditor claims, legal fees and other authorized expenses will be paid out of that estate account, with the remaining balance distributed to the heirs.
Does this mean that the administrator has the authority to sell real estate without the consent of all the heirs? The simple answer is yes, although there are some cases in which the sale will be disallowed. If there is a compelling reason why the real estate cannot be sold and the proceeds distributed, the administrator may not be allowed to go forward with the sale.
The difficulty of handling real estate is one more reason why a will is so important. Without a will in place, the administrator has a great deal of power over the sale of real estate, financial holdings and other assets. Even if the deceased had intended for his home to pass to his elderly mother, without a will in place, the home will most likely be sold and the cash distributed to the authorized heirs. The elderly mother may get her share of the cash, but she will most likely have to move out of the home.
There are ways to stop the impending sale of real estate, but the process can be quite challenging. If you plan to challenge the sale of real estate for a loved one who has passed away, it is important to engage the services of an experienced estate attorney.
The estate attorney will first try to find a will, and it is entirely possible that a valid will exists. If there is a will, stopping a pending sale may be as simple as enforcing the terms of the document.
If There’s No Will, Can an Executor Sell Property to Himself?
If a will cannot be found, it may be possible for one party to buy out the interests of the remaining heirs. If the proceeds of the estate are to be divided between three adult children, for instance, one individual may be able to buy out the other two. That individual would then be able to remain in the home, but their share of any remaining cash will be reduced accordingly.
In many cases, the remaining heirs will be amenable to such a buyout, since this can reduce the expenses associated with closing out the estate. Instead of selling the family home and incurring real estate transfer taxes, brokerage fees and other expenses, the other heirs can simply sell their shares in the property and walk away.
In some other cases, the other heirs may be able to agree on a way forward. They could, for instance, agree not to sell the real estate until a later date. This is a more difficult proposition, however, since most heirs will prefer to receive their inheritance now instead of waiting until years down the road.
It is important to keep in mind that the sale of the property should reflect current fair market value. If the administrator attempts to sell the property for significantly less than fair market value, there is a good chance the sale will be halted. Attempting to sell assets from the estate at significantly less than market value could constitute a breach of fiduciary duty, and the court will likely get involved.
JacksonWhite Can Help
Dealing with an estate and an inheritance can be difficult and emotionally draining. The death of a loved one is always hard, and handling the estate just adds to the strain. Understanding what the executor or administrator of the estate can and cannot do can ease the burden and help you protect your rights during what is bound to be a very difficult time.
For long-term peace of mind, contact us to set up a consultation today. We look forward to helping with your will and other estate planning needs.
Call Arizona Estate Attorney Dave Weed at (480)467-4325 to discuss your case today.
Schedule Your Consultation
Fill out the form below to get your consultation and discuss your best legal options.