What is the process for selling a property in a deceased estate?
When losing a loved one it is already a stressful and emotionally challenging time, and if you’ve been named the executor of their Will, managing their estate can add to the stress—particularly if it involves selling property.
As an executor, your role includes ensuring that the deceased’s personal assets and gifts are properly distributed. This might also involve transferring the title of a property directly to a beneficiary or selling any properties, which can seem overwhelming. To help, we’ve outlined the essential steps for selling a deceased estate and addressed some common questions.
The executor of the estate of the deceased person can sell property in a deceased estate.
How do I become the executor of an estate?
The answer depends on whether or not the deceased person had a Will.
The executor of the Will can sell property of a deceased estate.
Selling property without a Will
When someone dies without a Will or an appointed executor, their estate must undergo a process to establish who will handle the distribution of assets according to intestacy laws. This involves obtaining a grant of Letters of Administration from the court. Once granted, this authority allows the newly appointed administrator to manage and distribute the deceased’s estates property.
Selling property with a Will
If the deceased left a valid Will, the process begins with probate to confirm the Will’s authenticity and appoint the named executor. This Grant of Probate empowers the executor to distribute the estate according to the Will’s directives. If the estate includes property that needs to be sold, especially something like the family home, the executor will need to manage this sale before distributing the proceeds.
Steps for Selling Deceased Estates Property in NSW
To sell property from a deceased estate in NSW, the executor must follow these steps:
Will provisions – Ensure that there are no provisions in the Will, which effects their ability to sell the property such as those mentioned in this article below.
Building insurance – Ensure the property is adequately insured, particularly building insurance. You will also require contents insurance, if contents remain in the property. The building insurance should contain public liability insurance which should cover the estate in the event that someone injures themselves in the property.
Apply for and obtain a Grant of Probate or Letters of Administration where the person passed away without a Will: The conveyancing for the property cannot be completed until this legal document is issued and the transfer of the property ownership has been transferred to the executors.
Transfer title: Have the property title transferred into the executor’s name. This is usually done by way of a Transmission Application.
Valuation: Get one or more property valuations to determine the market value. This is a good idea to avoid any issues which may arise with the beneficiaries of the estate.
Inspect Property: Assess the property for necessary repairs to ensure it’s sale-ready.
Hire Real Estate Agents: Interview real estate agents who are knowledgeable about the local market. We recommend having at least 3 real estate agents provide an appraisal and quote on the sale.
List the Property: Place the property with a real estate agent for sale. In some circumstances we will recommend that you sell the property by public auction.
Vacant possession. Ensure that all items in the property not included in the sale are removed from the property before completion. You may need to arrange storage.
Complete Sale: Provide all required documentation to finalise the sale.
Distribute Proceeds: Allocate the sale proceeds as specified in the Will. Sometimes you will not be able to distribute at this stage. If so, the proceeds of the sale will be held in the deceased account or invested. We can assist you with this.
Are you considering selling a deceased estates property before you obtain the actual grant of probate? We can provide advice on this.
Tax Considerations for Deceased Estates Property
When selling property from a deceased estate, several taxes may apply:
Three-Year Rule: If there is no named beneficiary for the property, it stays under the control of the executor. Taxes must be paid on the property, and decisions about its distribution should be made within three years to avoid changing tax rates.
Capital Gains Tax (CGT): This tax is due when the property is sold. The executor will need to pay CGT from the sale proceeds before distributing the remainder to beneficiaries.
Inheritance Tax: Australia does not have inheritance tax, so this is not a concern. However, be aware of other possible tax issues.
For detailed tax advice, you must consult a lawyer or accountant, or refer to the Australian Tax Office.
Timeframe for Selling a Deceased Estates Property
Typically, an executor has 12 months from the date of death to distribute the estate. This period may vary depending on specific circumstances and potential extensions.
Executor’s Authority to Sell a Deceased Estates Property
An executor can sell property if:
The Will does not specify a need to retain the property;
The will does not require that the property is given to a specific beneficiary; or
The will does not contain a valid life estate or right of residence.
Sometimes a deceased’s Will, specifies that certain beneficiaries are specifically gifted a property.
On some occasions, the Will of the deceased may contain provisions to give an interest of a property to a third person for their lifetime or until they cease living in the property. These rights are known as a life estate or a right of residence, and do not give an ownership interest of the property to that person.
Life estates and rights of residence are sometimes contained in Wills to give an interest to a person for their life or until they no longer live in the property and provides that a beneficiary or beneficiaries under a Will are not entitled to the property until the life estate or right of residence of the property has ceased to exist.
The person granted this right, may or may not be required to pay expenses relating to the property like council rates, water rates, insurance. Sometimes the Estate is required to pay this.
There also may be provisions in the Will, which allows this person to bring this right to another property if they want to move homes, downsize or go into retirement living. The executor would typically need to manage this arrangement.
As the estate’s manager, the executor has the authority to make such decisions, provided the sale aligns with the Will’s terms and no specific restrictions are mentioned.
What happens when probate is granted?
When probate is granted, then the executor can transfer the title of the property to their name as executor. This is done by way of a transmission application.
When the title of the property is in the executor’s name, subject to the provisions in the Will, they can then complete a sale of a property. If the property is not yet on the market or sold at this stage, then the property can be put on the market and completed, subject always to the provisions of the Will.
How long after probate is granted does it take to receive inheritance in NSW
Legally you cannot distribute proceeds of the sale of property, which will form part of the assets of the estate for at least 6 months from the date the deceased passed away. You must also have letters of administration or a grant of probate. This also applies to all other assets of the deceased which are also covered by the grant of probate or letters of administration. Certain public notifications also need to be published before you distribute an Estate.
You must obtain legal advice in relation to the distribution of Estate assets and when you should be doing this. In many cases it is prudent to wait 12 months from the date of death to distribute an estate to minimise your risk as an executor.
We can assist you with distribution of an Estate.
Need Assistance with Selling Deceased Estates Property?
Estate matters can be complex, particularly when dealing with property sales and related tax issues. For guidance, it’s important to speak with specialist estate lawyers with experience in estate administration. At Thornton + King we have a history of providing advice on deceased estates which dates back to 1924, so there isn’t much that we haven’t seen or done before. We also have a team of property law and conveyancing specialists to assist with the sale of any property in the estate. To speak to one of our specialist lawyers, give us a call or submit an enquiry now.
