Selling a deceased estate can be an onerous task. Nicole Woodward has been helping families administer deceased estates and trusts for 19 years. She shares her expert knowledge.
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Selling the property of a deceased estate is a prospect many Australians are tasked with as executors – and it can be emotionally challenging.
Some may feel relief when the home is sold, others may feel a deep sense of losing their final connection to the deceased. Even the most savvy can experience emotional, financial and administrative difficulties.
These are the key considerations for executors selling a deceased estate.
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It’s very different from selling a family home or investment property
It’s worth noting there is no legal requirement for properties in a deceased estate to be automatically sold once the owner has passed. The instruction to sell may be outlined in the will, but if not, the executor should make this decision in consultation with beneficiaries.
Immediate property sale is the most common outcome, as it gives beneficiaries quicker access to capital, which is easily divided and comes with a lower risk of family conflict. The more beneficiaries there are in an estate, the better a property sale option becomes. In our trustees business at Australian Unity, more than 90 per cent of deceased estate properties are sold.
Preparing a property for sale
The executor’s responsibility starts as soon as the deceased has passed and the immediate priority should be to ensure the home is protected. As a precaution, it is best to have all locks changed, and conduct any maintenance works to remove dangerous hazards in the home.
Once probate has been granted, the executor has the legal right to administer the property. It is then time to prepare the property for sale.
It’s often the case that deceased estate homes are run down or damaged compared with other properties on the market. Australians in their final years are often unlikely to address any issues with the property, such as freshening up the painting, redecorating, renovating the bathroom or maintaining the garden as they once did.
Both executors and beneficiaries often ask whether they should renovate the home before selling to add more value to the property.
My response to this is to avoid major work, including renovations. As tempting as it may be, expensive modifications complicate the sale process and increase the risk of conflict among beneficiaries. I’ve seen cases of awful family disagreements over renovations.
The optimal approach in almost all cases is to stick to cleaning and maintenance only. Arranging a house cleaning service and undertaking minor repairs are fine, but now is not the time to paint the walls, overhaul the kitchen, remove a wall or add a pool.
There is also likely to be a long build-up of possessions – furniture, photographs, clothing and jewellery – that will need to be cleared from the home.
Any items (or chattels) in the will must be given to the named beneficiary. More often however, wills instruct personal possessions to be divided equally. Or there may be no will at all.
For unnamed possessions, it’s best for a valuer to assess items such as jewellery or motor vehicles. It’s not always as easy as selling the deceased’s furniture online or hiring an industrial waste bin.
Auctions vs private sales
Once the home has been adequately prepared, the sales process is much like a regular house sale. Executors have a choice of real estate agent and can provide input on whether they sell at auction or private sale.
While private sale is an option, selling a deceased estate at auction does have benefits, especially when a will has multiple beneficiaries and high risk of conflict. Auctions are clear, transparent processes and allow beneficiaries to witness the sale process together.
Further, the speed of selling a property at auction ensures funds can be distributed between beneficiaries more quickly, and the selling period does not go on for longer than necessary.
What happens if a loved one did not have a will?
When a loved one dies without a valid will, they are intestate. Sadly it’s common, with nearly half of all Australians dying without a will.
When someone dies intestate, no executor is named. Instead, laws of each state or territory govern how their estate will be administered.
Often, a next of kin can apply to their state’s Supreme Court for permission to administer the estate. Once granted, they will have legal right to administer the estate and distribute assets, including property, to the deceased’s close family members in accordance with statutory provisions.
Help to manage the sale process
Selling a deceased estate property can be complex, especially at a time when executors are processing grief and trying to take care of loved ones. But importantly, it’s a process you don’t have to go through alone.
If the responsibilities of an executor are too much, or there is a high risk of family conflict, there are professional services available to act as an executor in a deceased estate, and help beneficiaries sell a property.
Trustee companies are led by experienced team members and provide a range of services to help, including estate administration, trust management, financial attorney and estate planning.
Importantly, they can act as an executor or legal administrator for estates. In situations where family conflict exists, they are often favoured for their professionalism and independence.
Nicole Woodward is national manager, trustee services, at Australian Unity. She has been helping families administer deceased estates and trusts to support beneficiaries for 19 years.
Have you ever acted as an executor or have you agreed to be an executor? Did it involve selling a property? Why not share your experience in the comments section below?
Some more points to consider.
Keeping the insurance current on the deceased estate is very good idea, but it comes at a cost. The Policy that covers the property that I am involved with has a condition that if the property is unoccupied for a continuous period of 72 days (or greater), the coverage lapses. To keep it valid, there must be at least 2 nights of over night occupation within that time frame.
We have encountered a hiccup in the execution of the Will and as such the property is still in Trust. While it is in Trust, no-one may gain materially from the Estate or make any material changes to it’s value (eg, No furniture may be removed from the property nor renovations to the dwelling or fixed structures.)
Even if this situation continues for a period of time before the property inheritance is finalised, the essential valuation of the property remains the formal valuation as at the date of death regardless of the fluctuations in the local property market.
For some people there is a rush to finalise the realisation of the value of the Estate as Capital Gains Tax may become liable if the inheritance is not paid within 2 years of the date of death. This does vary, but overall, it is an inheritance that is money that you may not have been sure of receiving anyway, so be grateful that the Estate was not in debt at time of the passing of the deceased.
Could I please ask what is the process for selling a deceased property in a retirement village. I have my name down for a particular house, but the executor is dragging his heels. The occupant died over 6 months ago, and although being offered the full asking price decided to refuse it. I’m obviously not privy to the full story, and cannot say if probate has been granted, but would like to know if there’s a time limit in which to sell a property.