A popular question we often receive is, "If I apply for Medicaid is my home…
Selling a piece of real estate can be an extremely stressful, expensive, and time-consuming process. Unless you are a professional house flipper, chances are you would not sell real estate unless it was absolutely necessary.
If you add the fact that you just recently lost a loved one, then this stressful task can easily turn into an overwhelming nightmare. This is why the sale of real property and the distribution of the proceeds of the sale are usually the last major events to occur in the administration of an estate.
When an estate owns real property then there are many things for the fiduciary to consider, but the first and foremost is to protect the asset. This means that the fiduciary should continue to pay the essential utility bills, like heat, electricity, water, and should ensure that the home is adequately insured.
Another important thing to consider is to find out how the real property is owned, and how it should be distributed. Real property can be held individually, in trust, jointly with rights of survivorship, as tenants by the entirety, as tenants in common, and/or as a life estate. It is important to determine how the real property is owned to make sure if it is part of the decedent’s estate.
If there is a Last Will and Testament that has been probated, then the Executor of the will must review the terms of the will to determine if the real property is specifically devised, or if it is part of the residuary estate. This will make a big difference in whether the executor can sell the property and have the sales proceeds added to the balance of the estate. If the real property is specifically devised to an individual or entity, then the Executor must transfer the title to the real property to that individual or entity and cannot sell it without court approval.
If there is no Last Will and Testament and the house was owned solely by the decedent, then the real property will pass by the laws of intestacy to the decedent’s heirs. If the real property is owned in a trust, then the trustee must follow the terms of the trust that relate to the real property.
If it is determined that the fiduciary has the ability to sell the real property and it is in the best interest of the estate and/or trust, then the fiduciary should try to see if he or she can locate any documentation related to the real property (e.g., mortgage documents, certificates of occupancy, property tax bills, surveys, etc.). These documents may help the fiduciary understand if there will be any issue when clearing the title to the property. The fiduciary may also want to hire a certified real estate appraiser to determine an accurate value of the real property, or sign a listing agreement with a real estate broker to assist with the sale of the property.
There are many considerations and stages involved in selling real property when a loved one passes away. It is important to speak with a qualified professional who can help you navigate through the many pitfalls.
By Eric J. Einhart, Esq. – Guest Blogger