This originally aired on the Catholic Faith Network’s show CFN Live: https://youtu.be/Uy9_EvlFiFo While most people…
** This article has been revised from its original version which was published on November 3, 2016.
If you are an estate trustee managing a trust or an executor of an estate that owns real property, you may need to sell the real property throughout the course of trust or estate administration.
Before moving forward with the sale of the property, consider a few things:
- Do you have the authority to sell the property?
- Will any repairs or renovations be necessary to sell the property?
- What should be the asking price of the property?
What is Your Authority to Sell the Property?
The first item regarding the authority to sell seems pretty obvious, but sometimes the obvious can escape us: Speak with your estate planning attorney and carefully review the terms of the trust agreement or last will and testament to confirm that the real property is not specifically left to a beneficiary or that the sale would be complicated by the terms of the trust or will. This could hinder or prevent the property sale altogether.
You and your estate planning attorney will also need to review the letters and decree issued by the court that grant you the authority to act as a fiduciary. Your role as an estate trustee or executor of the estate may be limited in some way. The letters and decree issued by the Surrogate’s Court may specifically state that you can’t sell, encumber, or dispose of real property without further court approval. Estate planning attorneys review trusts and estates to ensure you are aware of all limitations before moving forward with a sale.
Are Property Repairs or Renovations Necessary?
If the house is outdated, in serious disrepair, or does not have the relevant variances or certificates of occupancy, work may need to be done to make it marketable. Otherwise, you may not be able to sell the property because no one is willing to buy it.
As the trustee or executor, you will need to determine what, if any, repairs or 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 updates.
Have You Verified the Asking Price?
You have a fiduciary responsibility as an estate trustee or executor of an estate to make sure that you receive fair market value for the property.
Some trustees and executors want to sell a 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 being taken.
It is very important to have an independent determination of the property’s fair market value and make sure that the purchase price reflects it. You can do this by hiring a certified real estate appraiser to evaluate the property or have an experienced real estate broker provide a comparative market analysis to get an understanding of what the property would likely sell for given the current market.
Working with a Real Estate Professional
Seriously consider hiring a real estate broker to make sure 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 having a qualified professional assist you in the sale of the home.
Working with a Legal Professional
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 accountable to the beneficiaries of the trust or estate and should not act without taking their interest into consideration.
Please do not hesitate to contact Russo Law Group, P.C, with questions. Benefit from our experience regarding trusts and estates, as well as caring and compassionate staff. You may also take advantage of our free seminars and webinars to learn more about how Russo Law Group, P.C., helps trustees and executors during trust and estate administration.