Did your finances change? So did your estate plan, whether or not you knew it.…
Before you move forward with a sale of the property, you should consider a few things:
- Do you have the authority to sell the property?
- Will there be any repairs or renovations necessary in order to sell the property?
- What should be the asking price of the property?
The first item regarding the authority to sell seems pretty obvious, but sometimes the obvious can escape us: You should speak with your attorney and carefully review the terms of the trust agreement and/or Last Will and Testament to confirm that the real property is not specifically devised to a beneficiary, or not encumbered by the terms of the trust or will. This could hinder or prevent you from selling the property all together.
You and your attorney will also need to review the letters and decree issued by the court that grant you the authority to act as a fiduciary to confirm that your authority to act is not limited in any way. The letters and decree issued by the Surrogate’s Court may specifically state that you cannot sell, encumber, or dispose of real property without further court approval. You should be aware of all such limitations before moving forward with a sale.
If the house is outdated, in serious disrepair, or does not have the relevant variances or certificates of occupancy, there may need to be some work done so that it will be marketable. Otherwise you may not be able to sell the property, because no one is willing to pay for it.
You as the trustee or executor will need to determine what, if any, repairs/renovations will need to be done and whether or not it is financially in the best interest of the trust or estate to pay for these repairs/renovations.
You have a fiduciary responsibility as a trustee or executor to make sure that you receive fair market value for the property.
Some trustees and executors will want to sell the property as quickly as possible and may be willing to take pennies on the dollar. However, the beneficiaries of the trust or estate could bring an accounting proceeding and object to the action taken by the trustee or executor in this case.
It is very important to have an independent determination of what the fair market value of the property is and to make sure that the purchase price reflects the fair market value. You can do this by hiring a certified real estate appraiser to appraise the property or have an experienced real estate broker provide you with a comparative market analysis to get an understanding of what the property would likely sell for given the current market.
You should seriously consider having a real estate broker represent you in order to make sure that you get the best price for the property. This could also help you in the event there is an objection in an accounting proceeding as you can make an argument that you satisfied your fiduciary responsibility by hiring a qualified professional to assist you in the sale of the home.
Selling real property from a trust or estate is very different from selling your own home. As a trustee or executor you are constrained by your authority and ultimately beholden to the beneficiaries of the trust or estate and should not act without taking their interest into consideration.
Eric J. Einhart
Russo Law Group, P.C.
100 Quentin Roosevelt Blvd., Suite 102
Garden City, NY 11530