Typically, the executor of a will selling property to themselves will raise a few eyebrows.
An executor, appointed by the testator (deceased person) or a court of law, is responsible for carrying out the final wishes of someone who has passed away. This individual must manage and distribute any assets left in an estate as outlined in the will.
An executor of an estate is responsible for a variety of tasks, ranging from:
- Taxes
- Bills
- Inheritances
- Appraised value of estate assets
- Management and distribution of property
Of all their duties, asset management and real estate property maintenance are the most important. When settling their estate, an executor has been selected to ensure that the deceased’s most significant asset—their home—is appropriately managed.
But can an executor of a will sell the property to themselves? It depends. To answer that question fully, you need to understand the role of an executor and the responsibility to the beneficiary of the estate. Keep reading to learn more about the role and executor and how that person is legally required to manage a decedent’s estate.
What is An Executor of a Will?
An estate executor is responsible for honoring the last wishes and instructions of a deceased individual outlined in their will. The primary responsibility of an executor is to administer the assets and wishes set out by the deceased as part of their estate planning.
Appointed either by the testator of a will or, in cases where no appointment was made previously, by a court – this is who we call an executor.
The executor is responsible for taking stock of all assets in the will and ensuring they are delivered to their rightful owners. Assets encompass a broad range of items, including the following:
- Stocks and bonds
- Real estate and real property investments
- Collectibles such as artwork
Is it Possible for an Executor to Sell the Property to Himself?
Yes, an executor of the estate can sell the property to himself. There are some caveats and disclaimers, though.
Executors do not possess any legal rights to property or ownership within an estate. This prevents self-dealing. While they cannot decide what happens to any property within an estate, individuals are granted the authority to control and supervise it, including putting it up for sale.
Nevertheless, suppose an executor carries out such activities and harms or violates their fiduciary duties. In that case, they may have breached the duty of care that is expected from them.
A fiduciary duty is a relationship of trust between a fiduciary and the person they act on behalf of – their principal or beneficiary family members. This obligation requires them to always act in that party’s best interests, honor promises, secure confidential information, and avoid conflicts of interest.
However, an executor can sell the property to himself if they:
- Communicate with the beneficiaries and interested parties
- Be aware of a decedent’s will and state law
- Get signed consent from beneficiaries
- Present an offer that accurately reflects the current market value
- In some states, get court approval
While it may be difficult, an executor can sell the property themselves.
Can an Executor Sell the Property without all Beneficiaries’ Approval?
An executor may sell a house or other assets of the estate even without permission from all beneficiaries. Unless a will explicitly forbids property sale, executors are legally allowed to sell it.
It can be confusing when a home that has been willed to its beneficiary is sold. Sometimes, the executor must liquidate that property to pay off any outstanding debts from the testator’s estate.
Here lies the potential for conflict, as the beneficiary may believe they have control over the property to themselves. If the will does not have a clause prohibiting sales, then an executor can sell the property to pay for other estate obligations.
Even though there may be valid reasons why an executor would want to purchase property from the estate during probate, they are not allowed to do so as compensation. As a beneficiary, an executor may acquire the estate’s home. However, they must secure approval from other beneficiaries before purchasing it at fair market value.
An executor will need to figure in the cost of real estate commissions if using a real estate agent, or other fees and closing costs if they decide to sell a house without a realtor.
What An Executor of a Will Can and Can’t Do
Executors bear various obligations, depending on the decedent’s financial and familial matters.
What an executor of a will can do
Find assets: Uncover the deceased’s resources and manage them until they are appropriately dispersed to their inheritors. This could mean deciding whether or not to sell real estate, investments – or any other asset – owned by the decedent.
Determine the need for probate: Carefully consider if you must go through a probate court proceeding. Usually, jointly owned assets will be transferred to the surviving owner without requiring additional paperwork. Furthermore, depending on your state’s laws, smaller estates may qualify for simplified probate proceedings which can save time and money.
Find beneficiaries: If the deceased individual wrote a will, their executor should read it to determine who receives what. If the person passes away without signing a will (intestate), an administrator must consider state law to determine which individuals are regarded as heirs of the deceased.
Pay bills, debts, and taxes: With estate funds, the executor is often responsible for paying ongoing expenses such as electricity bills, mortgage payments, and homeowner’s insurance premiums.
In the event of a probate process, it is legally required for an executor to alert creditors by the regulations established by their state.
All individuals must file a final income tax return which covers the entire duration of the taxation year up until their date of death. However, those with large estates may be required to submit both state and federal estate tax returns.
Distribute property: Ensure that the deceased’s belongings are distributed according to those specified in their will or state law.
What the executor of a will can’t do
As the executor, there is a requirement to act in good faith and with due care to benefit all estate beneficiaries. As the executor, you must manage the estate to help its beneficiaries, not just yourself. This includes taking care of all assets related to the estate.
Consequently, an executor must never act in ways that will detrimentally affect the beneficiaries. An executor cannot do the following:
- Execute the will before the creator of the will dies
- Sign an unsigned will for the deceased
- Sell assets for below-market value
- Change the will
- Prevent beneficiaries from contesting the will
How does an Executor Sell a House Without Approval?
The executor can independently authorize the sale of the property without needing permission from any beneficiaries. Nevertheless, all heirs will be notified of the deal, allowing them to remain informed without having to grant their authorization.
Once appointed, the executor or their appointed appraiser will evaluate and assess the value of any assets held within an estate. Of the assets to be included, real estate will need to be appraised by either the executor or their appointed evaluator.
Should the executor be able to offer the property for more than 90% of its estimated value, they will not require consent from beneficiaries or the court.
Conclusion
The responsibility of overseeing the assets and belongings of a deceased individual is emotionally taxing and can be an arduous experience. Being the executor of an estate is a lot of work, heightened by the fact that you are often short on time to complete the wishes laid out in the will through the probate process.
In some cases, it may be justifiable for an executor to buy an estate’s property for various reasons.
An executor must not use estate property as their compensation. Even though there are valid reasons why they may wish to acquire assets from the probate process, this is strictly prohibited.
If an executor is also a beneficiary, they might have the incentive to purchase the home in question. Nevertheless, this must be done with approval from all other beneficiaries and should adhere to fair market value for the transaction.
Related Resources
