Often, when a person dies and owned real estate, that real estate needs to be sold; sometimes it is sold to pay debts of the estate but most often it is sold because the heirs do not want to deal with the real estate and prefer money instead. If you are going to be responsible for dealing with the real estate, first you want to make sure the insurance stays covering the property either when: it is unoccupied; relatives are living in it; or there is a renter in the property, while decisions are being made whether to sell or transfer the property to heirs or beneficiaries. Homeowner’s insurance based upon an owner occupied property is at a different premium than an unoccupied or rented property and you do not want there to be a lapse in insurance coverage because you did not inform the insurance company of the change in status of the use of the property.
Selling real estate that is held by a revocable trust after the grantor has died, or selling real estate from an estate that is in probate, are not all that different than selling real estate from an individual person, but there are a few key differences and traps to look out for. If real estate is being sold from a revocable trust after the grantor has died, the successor trustee is responsible for signing all of the required closing documents, including the broker listing agreement, a purchase and sale agreement and ultimately a Fiduciary Deed, and not a Warranty Deed. When selling real estate from an estate that is in probate, the executor or administrator of the estate is responsible for those tasks and you must first get appointed as executor or administrator before signing these documents. Make sure you sign all of these documents in your representative capacity such as John Smith, Executor of the Estate of Jane Smith or John Smith, Trustee of the Jane Smith Revocable Trust.
It is also always imperative to review any additional stipulations put into a purchase and sale agreement to make sure you can abide by them and they are in the best interest of the trust or estate. For example, if the sale of the property is subject to court approval, that should be spelled out in the additional provisions section of the standard purchase and sale agreement. As always, it is prudent to get an attorney involved to review your purchase and sale agreement to make sure it protects your interests.
Andrea Van Iten is an attorney at Hamblett & Kerrigan who focuses her practice in the area of estate planning, including wills, trusts, health and financial powers of attorney as well as trust and estate administration. Attorney Van Iten can be reached at [email protected].