Selling a Home as Part of an Estate
When a family member passes, their next of kin must gather together to determine the dictates of the will and make sure all details are followed properly. This often includes selling the person's home and dividing up the proceeds among their creditors and beneficiaries. This guide walks you through the basic steps of selling an estate and how to minimize complications during the process.
Every legal situation is unique; make sure to consult with a legal professional to better understand the best course of action in managing your circumstances.
Verify the Will and All Debts
Before anyone starts following the instructions given in the will, they should confirm that the will is the latest version and that all proper protocol was followed in the creation of the current document. If there is any contest that the will is not accurate, any disposition of assets must wait until the final will is legally determined. If the person who passed had any debts, it is important to factor them into any plan for the sale of the home or division of the proceeds of the estate. Consider the homestead exemption laws in your state, which can protect part or all of the home’s value from creditors or property taxes.
Get Consensus from All Relevant Parties
The executor does have a fair amount of power in determining how the dictates of the will are carried out. However, for the sake of family harmony and the avoidance of troublesome legal battles, it is best to attempt to gain a general consensus from all family members and other parties with a stake in the estate. This may include creditors, especially if the property still has some sort of mortgage on it. Do not make any preparations to sell the home or any other property until family members have agreed and the probate court has given approval.
Maintain Home and Prepare for Probate Court Order
The ability to settle an estate and divide the proceeds depends largely on the family’s agreement, but it also takes time to process. If the home needs significant repairs or contains extensive collections that require cataloging and appraisal, the home should be preserved in its current shape. The executor is charged with the task of keeping up payments for mortgage, property taxes, insurance and basic services to protect the house. In some states, the executor may not use estate assets to make these payments, due to the homestead exemption. The primary goal is to keep the home from losing value. Improvements made to sell the home must not be performed until the probate court order is made.
Inspect the Home’s Condition
Whether the home will be sold or not, it is important to inspect the home and arrange for a formal appraisal. The sale will probably be completed through the probate court, to ensure that the property is sold for fair market value and that all arrangements have been made above-board. This is true even for properties that are purchased by a family member who has a stake in the estate. With a thorough home inspection, the executor can make plans for repairs or improvements as necessary, so that the home is in a good condition for sale.
Prepare the Home and Possessions for Sale
Family members may wish to divide possessions within the home that have intrinsic or sentimental value, prior to an estate sale. Everything that is left should be sold appropriately and the proceeds kept until the sale of the home is complete. Executors are often advised to make as few repairs as possible, to maintain the home’s value and sale condition without spending excess money on improvements. This way, creditors and others with an interest in the property do not have cause to argue that their share was diminished through faulty management.
Divide Proceeds Appropriately
Typically, the first group to get paid from the proceeds of the home is any creditors with a lien on the property. This includes the owners of any mortgages, as well as reverse mortgages. Once these creditors have been satisfied, other creditors of the person who passed may be paid part or all of what they are owed. At the end, anyone listed as a beneficiary will receive whatever was designated to them in the will. If everyone accepts the way the execution of the will was handled, that is the conclusion of the process.
Dividing up a loved one’s assets among their creditors and beneficiaries requires a great deal of care and months of your time. By investing the effort to follow all laws and to preserve family harmony throughout the process, you can minimize the likelihood of hassles and ensure that the conclusion satisfies all parties involved.