Selling deceased estate property
When a person passes away, their estate will need to be settled and their final affairs completed. This often includes selling assets included in the estate, like the property that is in the ownership of the deceased.
If you are wondering how to go about selling deceased estate property, this article should enlighten you about what exactly the process entails.
Know whether or not the courts need to get involved
If the person that has passed away has left a will, they are likely to have appointed someone as the executor of their estate. This person can be someone they know, like a friend or family member, or it can be a legal personal representative of the deceased. The executor of the estate is tasked with a great many things related to settling the estate of the deceased, according to stipulations set out in their will. First off, they will have to obtain a death certificate (usually with the help of the funeral director, who will submit the forms needed to get the death certificate) and will likely also have a hand in organising the funeral of the deceased.
Next, the executor of the deceased estate will have to acquire a grant of probate from the appropriate legal body in their state. Legal requirements differ from state to state, and it is advisable that the executor of an estate makes sure what laws are in effect where they live. Find online guidelines about deceased estates in Queensland, New South Wales, the Northern Territory, the Australian Capital Territory, Victoria, South Australia, Western Australia and Tasmania.
The grant of probate is a legal document confirming that the will is indeed valid, and also confirming the appointed executor, among other things. Insofar as it relates to residential property that forms a part of a deceased estate, the executor of the estate will become the legal seller of the property once the grant of probate is received.
If a person dies without a valid will in place, a legal personal representative or next of kin will have to apply for a grant of letters of administration, which serves the same purpose as the grant of probate.
You’ll need to settle debts
Being the executor of an estate means that this person is responsible for all the deceased’s assets and liabilities, and for distributing these among the beneficiaries of the will as stated by the deceased. Some assets may be held exclusively in the deceased’s name, while other may be held jointly with, for example, a spouse. Assets include any and all shares, bank accounts, superannuation, real estate or life insurance policies.
Similarly, many people also have debt when they pass away. It is the executor or legal personal representative’s responsibility to ensure that all monies owed are paid back from the estate before it is distributed to beneficiaries. This includes concluding the deceased’s lifetime tax affairs – this means that all outstanding tax returns up to the person’s death have to be submitted, and outstanding income tax paid to the Australian Taxation Office.
The estate itself may also need to pay tax, depending on the assets included within it. To do this, the executor or legal personal representative will need to lodge an estate tax return, and settle any outstanding tax in this regard.
Determine whether it’s possible for you to sell the estate
An executor’s decision to sell property that is a part of the deceased estate will depend on the wishes of the person who has passed away. If wishes surrounding their property are not specifically mentioned in the will (for example, the deceased stipulates that the property is to be passed on to someone, like their children), the executor or legal personal representative are free to sell the property.
Once the grant of probate or grant of letters of administration has been acquired, the executor of the deceased estate becomes the legal owner of the home. If they decide to sell the house, the executor will, for all intents and purposes, be the seller in the situation.
From here on forward, they will deal with everything related to the sale of the home, including valuing the property (in this regard, the executor will need to garner multiple valuations to ensure that the property is priced correctly), improving or renovating the property if need be (here, a real estate agent can be of great help with recommendations for contractors), marketing the home to potential buyers, and seeing the sale through til the end.
Once the home has been sold, the executor will distribute the funds acquired through the sale of the home to the beneficiaries mentioned in the deceased’s will.
It is vital that the executor is open, honest and transparent throughout the process of settling the estate, as any complications may result in legal ramifications down the line. Because being an executor is such a huge responsibility, it is advised that the matter is discussed with a person before they are appointed in the will. Changing an executor requires legal intervention, which may delay the process of settling the estate of the deceased. This is why it is far better to enlist the services of a solicitor instead of appointing an executor among one’s friends and family. Impartiality is key, especially during an emotional time like the grieving period after someone has passed away.
You’ll need to pay state taxes on the transfer of property
Distributing the assets included in a deceased estate will need to be done in accordance with the state and territory laws, but in general, a special rule relating to the capital gains or loss made on a capital gains asset tax asset applies: capital gains tax will be disregarded if the asset is passed to an executor, to a beneficiary, or from the executor to a beneficiary.
If such an asset is sold, and the proceeds thereof are then distributed to the beneficiaries, the sale of the asset is still subject to the normal rules, and capital gains tax applies if the home is not sold within two years of the deceased passing away. This means that capital gains tax will need to be paid when a deceased property is sold, and the funds garnered from the sale of the home are then distributed to the beneficiaries stipulated in the will.
Finding the right real estate agent
The right real estate agent is always an advantage when selling a property, and the sale of a deceased property is no different. A real estate agent is an objective bystander – something that is even more beneficial when the family of the deceased are grieving and don’t feel up to the task of managing the sale of a family home. The executor or legal personal representative of a deceased person will greatly benefit from having an agent that can handle all the paperwork associated with the sale of a property while they’re busy attending to other administration of the estate.
As the executor will be the seller of the home for these purposes, they will be the one getting valuations of the property from real estate agents. They will communicate with the real estate agent assisting in the sale throughout the marketing process of the home, and will also confer with the agent regarding renovations and repairs that can add value to the home. The real estate agent will handle all financial negotiations about the property on behalf of the seller, and will assist in setting up the contract of sale and other documentation.
The right real estate agent is a person that is also empathetic and sensitive to the needs of the next of kin of the deceased. Considering that these people will be saying their final goodbye to an era when the home is sold, it is essential that the real estate agent helping them to sell has empathy. While the agent will still have to have the same goal as with every sale – getting the best possible price for the home in the shortest possible time – they will still need to be empathetic and understanding of the rollercoaster of emotions that the family is probably going through.
Selling a property that forms a part of the estate of someone who has recently passed away can be a trying exercise, especially considering that this is often also the family home. Disconnecting from a property can be hard for the relatives of the person that has passed away, which is why an executor is usually appointed to handle all matters associated with their estate. This person may also be a legal personal representative or solicitor.
While selling a deceased property is very similar to selling any other residential property, there is some additional admin, such as applying for the grant of probate, settling any outstanding debt, and paying capital gains tax when the funds from the sale are distributed to the beneficiaries of the estate.
Finding a real estate agent to assist you in the sale of a deceased property is easy when you use an online agent finder like Perfect Agent. Perfect Agent recommends real estate agents that understand the varied needs of clients, while also bringing experience and expertise to the table. Contact Perfect Agent for a recommended list of agents today!