If someone who trusts you names you as their executor, personal representative or trustee for their estate, you will have to manage their assets and legacy after they die. For many Americans, the home will be their biggest asset and something they want to share with the people they love.
Often, an executor faces the daunting responsibility of cooperating with probate courts to arrange the sale of someone’s home after their death. There are certain unique challenges involved when you handle real estate from someone’s estate, and learning about those risks can help you avoid some of the biggest pitfalls in the process.
It is crucial that you identify and contact all beneficiaries
Instructing an executor or trustee to sell a piece of real estate and split the proceeds among the beneficiaries is common. Unfortunately, it is also a wish that can cause title issues for the property in question. Failing to notify everyone with a potential interest in the property about a possible sale might mean that those people later bring a claim against the title that could affect the next owner of the property.
You need to move quickly so the home doesn’t lose value
When the property sits vacant, many things can go wrong. Squatters or teenagers might access the building and cause damage to the property. A pipe could burst with no one there to notice the issue, leading to such extensive damage that the property winds up condemned.
Even without damage, being unoccupied hurts the value of the home. The longer a property sits vacant, the greater the negative impact of that vacancy on the property sale price. Securing the property and prioritizing selling it quickly will maximize how much revenue the sale generates for the beneficiaries of the estate.
You cannot offer preferential treatment to someone from within the family
If the testator left instructions giving someone in the family the right of first refusal to the home, that means you have to give that person an opportunity to make an offer based on the property’s current fair market value.
While you may want to help keep the home in the family, you have to uphold your duty to the estate by selling it for an appropriate price. If you sell the home to someone in the family for less than you could receive on the open market, other beneficiaries might take legal action against you for diminishing their share of the inheritance.