The more Personal Representatives, Beneficiaries, and other interested parties educate themselves about how an estate is administered, the easier it will be to avoid mistakes and costly probate proceedings. The larger the estate and the more beneficiaries the more complicated the process can be. There are a lot of misunderstandings about how a probate process works, and that is why it is so important to work with an experienced estate attorney – someone who has your best interest at heart.
One of the most important things to understand is what a Personal Representative is able to do with the assets the deceased left behind. A beneficiary questions whether a Personal Representative can sell assets without the permission of all of the beneficiaries? The answer to that question is complicated. The good news, however, is that the Personal Representative has to be officially appointed by the Probate Court before they are able to do anything. This appointment is done after all beneficiaries and interested parties are provided notice of the appointment.
Has a Personal Representative Been Appointed?
The first thing for an interested party to do is find out if the named Personal Representative has been officially appointed by the Probate Court. You can check with the court to see if Letters of Authority have been issued to the Personal Representative. If you are an interested party, you would have received a copy of the appointment as part of the Personal Representative’s responsibilities.
Once the Personal Representative has been appointed, their power will depend on the terms in the Last Will and Testament that the deceased left behind. If the deceased individual died without a Will, their power is based on the Michigan Probate Code. The Personal Representative has a fiduciary duty to manage and distribute the assets in the estate, either to those identified in the Last Will and Testament or to the heirs based on Michigan Probate Code.
Property Distribution?
The Personal Representative is required to provide an Inventory to all interested parties within 90 days after appointment. This Inventory identifies all assets and their values. The Personal Representative will then begin the process of turning all liquid assets, investment accounts, mutual funds, stocks and bonds into cash. If there is not direction in the Will as to the distribution of personal items of the deceased, these items may also be liquidated by the Personal Representative as well. The Personal Representative may also sell real estate owned by the Decedent.
All monies from the sale of these assets are then deposited into a an “estate” bank account. The Personal Representative must first pay creditor claims, final expenses of the deceased, administration expenses, and other authorized expenses. Any remaining balance in this account is then distributed to the heirs. An Accounting is required by the Personal Representative to show all expenses paid and distributions. This Accounting is also requested to be provided to all interested parties.
Does this mean that the Personal Representative has the authority to sell real estate without the consent of all heirs?
The answer is yes. There are, however, some limited circumstances that may require the probate court’s approval first. The difficulty in handling real estate is a main reason why a Will is so important. A Will allows for specific instructions as to what the Personal Representative is to do in handling the real estate. If the real estate is to be distributed to a specific person, the Personal Representative needs to be told that through the Will. Otherwise the person may only receive the money from the real estate, instead of the home they were to live in.
While there are ways to try and stop a sale of real estate, the process can be quite challenging and costly. It would be important to engage the services of an experienced estate attorney. The estate attorney will try to find a Will to look for direction to stop the pending sale.
Can a Personal Representative Sell Property to Himself?
With or without a Will, it is possible for a Personal Representative or Individual to buy out the other heirs in the estate. If the proceeds of the estate are to be divided between three adult children, for example, one of the individuals may be able to buy out the other two. Or, the individual may decide to take the real estate instead of liquid assets.
In many cases, this is beneficial to the heirs in that it reduces expenses associated with the home and the sale of the home. This provides for more liquid assets to be available to distribute to the remaining heirs.
It is important to keep in mind that the real property should be sold for fair market value. If the Personal Representative attempts to sell the property for significantly less than fair market value, the sale will probably be challenged by the Probate Court, requiring an explanation as to the sale. Additionally, it could constitute a breach of fiduciary duty and the court would get involved.
SMITH BOVILL Can Help!
Dealing with an estate and an inheritance can be emotionally difficult. In addition to the death of a loved one, an heir is now dealing with the distribution and liquidation of their assets. Understanding how the estate process works can ease the burden during this difficult time. For peace of mind, contact us to set up a consultation today. We look forward to helping with your will and other estate planning needs.