Selling property left behind by a loved one can make a difficult time more stressful, but understanding how deceased estate sales work can ease the burden.
LJ Hooker Head of Real Estate Christopher Mourd and Greg Jemmeson, from Sydney’s Jemmeson and Fisher Solicitors and Accountants, explain what can be a complex process.
Mourd says deceased estate property is handled in the “exact same way” as any other real estate transaction, with a few exceptions.
“While there are legal issues to consider, the executor of the Will essentially becomes the vendor if they sell the property. They normally get a formal valuation and then engage a real estate agent to manage the sale, like any other seller would,” he says.
The laws and processes for selling an inherited property can change depending on the state the property is located.
Before you attempt to sell the property, make sure you’ve looked into the legal requirements:
QLD: For further information visit Queensland Government
NT: For further information visit Northern Territory Government
NSW: For further information visit Supreme Court of New Wales
ACT: For Further information visit Public Trustee & Guardian for the Australian Capital Territory
VIC: For further information visit Supreme Court of Victoria
SA: For further information visit Public Trustee South Australia
WA: For further information visit Western Australia Government
TAS: For further information visit Supreme Court of Tasmania
As part of the process, an executor – or personal representative – can help you with protecting (or selling) a deceased person’s property.
They should make sure that all taxes and debts have been paid off, and that all entitlements have been transferred to the right people owed.
You – and your executor – will need to keep in mind that:
You also need to make sure that your executor gets multiple appraisals of the property from real estate agents
If the property has multiple beneficiaries, it could be wise to sell the property quickly and confirm the payment of the will.
Unless the title has been transferred from the deceased to the joint tenant, executor, or personal representative, the property can’t be sold – or transferred to the purchased.
In Australia, you need a grant of probate – or grant of letters of administration – before a house can be sold.
A grant of probate is a legal document that gives an executor authority to deal with the estate of the deceased according to their will.
The exception to needing a grant of probate is you hold a property as joint tenants (for example, when you’re part of a couple with assets in both names).
An executor might still enter into a sale contract before a grant of probate is issued, but a Will can’t be administered – and settlement can’t happen – until after a probate has been received.
Jemmeson says the transfer of property requires a “grant of probate”, which an executor applies for from the Supreme Court.
It usually takes at least four weeks to get. Using a lawyer isn’t mandatory, but the process is “easier and quicker if done by an experienced practitioner”, he says.
“[To get a grant of probate] there is a mandatory advertising period, during which the lawyer will get all the needed documents ready and then after 14 days, they are filed. If all are in order, it takes about two weeks to come through. It can be longer, but two weeks is common.”
The executor is “empowered under the effect of the Will and must sell in accordance with any specific instructions in the Will”, Jemmeson says.
With multiple beneficiaries often named in a Will, Mourd says an auction is a popular sale method for deceased estates.
“An auction is an open and transparent process, where all parties involved can witness the negotiation, which is why it’s often used for deceased estates,” he says.
Jemmeson says a property can be sold “subject to a grant of probate’’, which is noted on the contract.
Executors are normally allowed up to a year to wind up and distribute an estate, he says. There can be capital gains tax implications if settlement happens more than two years after death.
It’s best that an executor applies for probate as soon as possible. It can take “longer than six to 12 months to deal with the estate”, Jemmeson says.
“Depending on the size of the estate, and the age of the executor, there will need to be a final tax return for the deceased from the beginning of the financial year to the date of death, and then possibly an estate return covering from the date of death to the end of the financial year.
“There may be more returns, depending on the size of the estate and the terms of the Will. Complicated Wills can require more than one return if there are ongoing testamentary trusts.
“The executors must proceed in the same manner as any other vendor, giving the same level of disclosure to purchasers as a normal vendor,” Jemmeson says.
Mourd says selecting an experienced and empathetic real estate agent is key.
“Often, as an agent and auctioneer, sale at auction is a source of great joy, but a deceased estate is very different,” he says.
“The executor and any beneficiaries need to steel themselves for when the property is actually sold, as it’s often the final disconnect for those people from the person who has died. It can be highly emotional, so you need an agent and auctioneer with strong levels of empathy, who can get the right outcome, but also understand it can be a very difficult time.”
It’s also wise to look out for other factors that may complicate the process, such as:
Do assets need to be sold within the estate or transferred to beneficiaries in-specie (that is, transferred without selling any primary investments)? Selling assets during the estate’s administration could take care of any capital gains or tax losses if you decide not to transfer to the beneficiaries.
In a situation where family members might be treated differently in the Will, or inheritance and provision claims are made, an executor will have to become involved in all litigation among family members.
An executor is responsible for maximising the overall value of the estate. This means an application has to be made to the superfund that any accounts – which are not subject to a binding death benefit nomination – are paid into the estate.
The executor may need to take on the role of a deceased trustee of a family trust, the role of the appointer of the family trust, or be appointed as a director of the private family company. This leads to different obligations when they took on the role as an executor.
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