OK, imagine this: Ancestor dies, and the estate consists of some small amount of money and a house. The house is technically assessed at $100,000, which is the value Ancestor was paying property tax based off of, but… hehe… you try selling it, bucko.
(If it makes it easier, imagine the locals believe the place is haunted. There’s no legal reason the place isn’t worth the assessed value.)
Is the executor on the hook for sticking around to sell the house to pay off the estate’s debt? I don’t imagine the executor will in any circumstance inherit the house, but it seems deeply unfair to keep the executor around trying to sell a property for some undetermined/unlimited amount of time.
So, to rephrase the question, is there any scenario where the creditor would end up with the title to real property?
IANAL, but pretty sure the executor is allowed to liquidate the property at market value (“as low a price as necessary to sell in a reasonable amount of time”) and probably has to do so if there are no other liquid assets available. I don’t believe the tax authority assessment is relevant at all, especially if there are other significant factors diminishing the value. The executor can probably just order an appraisal and price at a discount to ensure a timely sale or just ask a realtor to price it to sell.
The creditor only has a claim to the amount owed. If the property can be sold for more than that, the executor has a duty to liquidate it, pay the debt, and remit the remainder to the heirs. Maybe if the house was appraised at half the amount owed, the executor could deed the house and use cash to make up the difference, but I can’t imagine the any creditor wants a house when they can have cash (one-off exceptions excluded).
Also, all executor expenses are paid out of the estate. If you keep decent records you shouldn’t have any out-of-pocket expenses.
Absolutely. You don’t have to qualify as executor even if you are named in the will. On a small estate with no assets and nothing but work, why bother going through the headache.
In my state definitely, but I can’t imagine that any state would require the personal representative* to try to sell the house without an agent. At least in my state, you can pay attorneys out of the estate, and pay for tax preparation for the decedent as well.
*At least in my state, an executor is the person who was named under the will and qualifies. An administrator is who qualifies if there is no will. An administrator C.T.A. is someone who qualifies if there is a will but no named executor qualified.
They will simply price house to sell at X price with a real estate agent. Fees will be paid by the estate at settlement. There are plenty of people who could give a rat’s ass about ghost stories if the price is right. Hell some might pay extra.
You seem to be making this 10X more complicated than it actually is. Short of it being located in some Detroit like hellscape you can easily move a house priced to sell quickly.
It’s really as simple as: The executor is in charge of settling debts and distributing net assets for the benefit of the heirs, in accordance with law and the will. So there are lots of possible solutions.
Selling the property through an agent makes sense if nobody wants the house. The house might take years to sell and it won’t really bother the Executor.
If an heir wants the house, then there are options to get the heirs to exchange cash as needed to settle up the debts. For example, if the house is $100k and the debt is $40k, then each heir needs to end up with $30k net assets. Person A takes title to the house and refinances it to obtain $70,000 in cash. $40k is used to pay the debts, and $30k is used to pay Person B. B has $30k in cash, A has 100k house less $70k mortgage, net $30k. (You could also envision the solution as A buying B’s half of the house for $50k. Then A and B each pay $20k of the loan off. Same end result.)
As a general rule, all customary costs of estate administration are paid from the estate. If the executor breaches his fiduciary duty (say, hires his wife as a “consultant” who does not other than collect money from the estate) the beneficiaries can sue, of course.
My point is, an executor has a duty to the estate, correct? They have to make an attempt to get what things are worth, correct?
Well, some things are harder than others to sell for what they’re “worth”. Maybe it isn’t ghosts so much as a local economy that’s just gone south, but the house hasn’t been re-appraised. Maybe it’s a collection of rare books, which is worth $X if you find the right buyer… or if you’re insuring it… but once buyers know you’re motivated, for one reason or another, try to get a good amount.
So if something is sold for a pittance, don’t the creditors have recourse? And is there no way to tell the creditors “OK, you try it”?
If the executors sell real estate at less than the assessed market value, and apart from ghosts there might be any number of reasons - bad neighbours, a crack den down the street, a possible development nearby… then they should make really sure that no one can claim that something underhand was going on. It’s not unheard of for the executor to buy a property themselves, via a proxy, at a knock-down price, thus cheating the other inheritors.
The best way to avoid accusations of this sort is to sell the estate at open auction. No dispute then.
Fair market value is what a willing seller and buyer agree is the value, not what a county appraiser says it is. So it’s “worth” is what it is valued at today, not last year and not 2 years in the future when market conditions might be better. And if the fair market value is less than the amount of debt is owed on the asset, then the lenders or creditors can come bid on it themselves if they want it.
The duty to the estate/beneficiaries/credits doesn’t require that you get the absolute maximum value out of every item. It’s impossible to guarantee that and impossible to know whether an offer is the maximum.
The usual standard falls back on what is considered reasonable. Listing a house with a professional agent for six months and then accepting the highest offer made during that time? Hard to argue that’s not a reasonable attempt to fulfill the executor’s duties.
As for creditors… they’re never going to get more money out of the estate than what is owed. If the estate has negative net worth, then the most the creditors can take is everything. State laws are going to say a lot about what the creditors can seize and what they can be forced to accept. So will the structure of the debt - a secured creditor generally has more rights than an unsecured one.
As the executor of my fathers estate my obligations are to settle his debts and see that my siblings get their fair share.
If I can’t do those things I need to be able to make a compelling case to the court why not.
As it stands if I don’t pay myself, I sell his property for it’s estimated value, and I pay all his debts, there will be about 10K to divide between me and my 4 siblings.
None of my siblings expect anything so if I wanted to sell it off for less than it’s value I could so long as the debts get paid.
2K per kid isn’t really worth the amount of time it’s taken/will take but one of the creditors is my ‘step mother’(never married), who had loaned him some money. Taking on the sale of the property ensures she gets paid back and doesn’t have to fight in probate court to get her share.
Rather than open auction it’s much easier to do a traditional sale and usually more profitable. So long as the property is assessed by an independent party and put on the market for the assessed value there is a rather strong case against accusations of impropriety.
The recourse for not meeting obligations comes about if the court finds I acted in bad faith in meeting the estates obligations. They can sue me for the damages. No reason that should come up as they should all be paid, but if for some reason they do end up suing me I have an insurance policy for just that purpose.
I was executor of my mom’s estate. The will did not direct that I be paid, but the estate was large enough that I had no complaints. I had a checking account drawing from the estate, with which I settled outstanding debts.
Wisconsin follows the Uniform Probate Code, which allows the probate court to set the executor’s fee. You can’t just write yourself a check; that may have been what he meant.
OK. He asked me if I wanted to be paid, I said doesn’t matter. My siblings were in on the meeting, so of course I had to mask my usually naked greed. :rolleyes:
I did get reimused for travel expenses.
Derleth, when you say “creditor” are you asking about the people to whom the ancestor owed money, or the people named in the will who will inherit?
The people who are owed money will expect to be paid within some time period. The executor may be able to negotiate a longer period, but in the end, the creditors can foreclose, go to court, get an order to auction everything off to the highest bidder, and take their share of the proceeds. If the proceeds aren’t enough to pay all the bills, it’s just like a bankruptcy – you take what you can get and write off the rest as a loss.
If the heirs are squabbling over how much they’re supposed to get from the sale of the house, there are several options: one heir can buy the others out at whatever price can be agreed on, the executor can sell the house and invite the heirs to sue if they don’t like it, or the heirs can ask the court to order a sale, knowing that they’ll have to settle for whatever the sale brings in.
When my grandparents died, my mother was the executor. Her siblings had some crazy idea that the property should be worth much more than it was. My mother cheerfully invited them to take over being executor. No one did, so she sold everything and told everyone to take their share and shut up.
On the other hand, when my father died and I was the executor, my sisters were happy to have me take the first reasonable offer on his place, so we could wrap everything up and move on.