When Someone Passes On, What Happens to Their Property?

When Someone Passes On, What Happens to Their Property?

If you're handling the estate of a deceased individual as an executor or administrator, part of the probate process often involves dealing with the deceased person's property. This article explains the procedures involved in managing a deceased person's home or property during the estate administration process.

Step 1: Establish Ownership of the Deceased Person's Property In the estate administration process, the first task is determining the ownership of the deceased person's property. Here are various scenarios to consider:

  • If the deceased person was a tenant in a rental property, and there's no surviving spouse or dependent continuing to live there, the property should be returned to the real estate agent after removing the deceased's belongings.
  • If the deceased person's home is jointly owned with a surviving spouse as joint tenants, the property usually transfers to the surviving spouse without court proceedings. A Death Certificate typically serves as proof. The surviving spouse can often transfer real estate arrangements and utilities into their name, and the deceased person's share isn't considered part of the estate.
  • If the deceased person co-owned the property with someone else as 'tenants in common,' their share becomes an asset of the estate and may be sold or transferred to beneficiaries according to the Will or state laws. Generally, the real estate should be transferred into the executor or administrator's name before going to beneficiaries. For investment properties, utilities should also be managed, including payment and transfer to a new name.
  • If the deceased person solely owned the property, it usually becomes part of the estate for distribution based on the Will. Executors should check the Will for specific instructions regarding real estate distribution, and these instructions must be followed closely. Additionally, ensuring that notice period requirements are met before distributing real estate assets is crucial to avoid potential claims against the estate.
  • If the deceased person's property is rented out, the lease continues between the tenant and the executor or administrator. If current lease agreements need termination, tenants should receive the appropriate notice period as per their lease. If a lease ends during the estate administration process, the executor or letting agent should contact the relevant real estate authority to request the bond's release.

  •   Step 2: Clearing the Home and Asset Inventory When the deceased person lived alone at the time of their passing, their home may need to be cleared. Before removing personal belongings, an inventory of the contents must be created to determine the estate's value.
    Consider the emotional attachment of the family to the deceased person's home. They may want time in the home before it's cleared.
    Consider securing home and contents insurance if not already in place to protect beneficiaries during the potentially lengthy administration process.
    If nobody resides in the property, it's wise to turn off unnecessary electrical equipment and remove perishable food items from storage areas.

    When Can Items Be Removed from the Deceased Person's Home? While loved ones may wish to take sentimental items, it's essential to know that removing items from the deceased person's home should only occur after official documentation and total estate value are determined, unless a specific item is bequeathed in the Will. The deceased person's belongings are part of the estate, and premature removal can lead to disputes among beneficiaries.

    An exception is when the Will specifies items intended for nominated beneficiaries. In this case, it may be convenient to invite those beneficiaries to collect ONLY the specified items as soon as possible, provided they are easily identifiable. Beneficiaries do not need to wait for the overall distribution in this scenario, and documenting items taken is advisable.

      Step 3: Valuation or Sale of Deceased Real Estate (if Applicable) Once ownership and contents clearance are complete, it's time to decide what to do with the deceased person's real estate, depending on ownership and Will provisions.

    Valuing Deceased Estate Property To determine accurate property value, obtain a professional appraisal or free valuations from three different real estate agents, averaging their values. Pay for a professional valuation if property value may become contentious among beneficiaries.

    If the property is to be sold, waiting for the final sale price ensures precise estate value determination.

    Managing Mortgaged Deceased Real Estate Mortgaged property typically requires settling the mortgage balance, so it's usually sold. The mortgage is then paid off, and the remaining proceeds are distributed according to the Will's terms. Mortgage protection insurance, if present, should be claimed.

    A situation where a beneficiary takes ownership of a mortgaged deceased person's property is less common, but if it occurs, the mortgage may also transfer to the beneficiaries if circumstances permit.

    Selling Deceased Person's Property Most often, property from a deceased estate is sold during administration. The final title transfer can only occur after obtaining a Grant of Probate or Letters of Administration from the Supreme Court.

    Executors can list the property for sale, including specific conditions in the contract to clarify:
    1. The seller is the estate's executor or administrator.
    2. The Grant of Probate or Letters of Administration must be granted by a specified date, as this process can take weeks or months.
    3. Property settlement can only happen after obtaining the Grant of Probate or Letters of Administration.

    4. The buyer can exit the contract if the Grant of Probate or Letters of Administration isn't obtained within the specified time frames.

        Step 4: Transferring Property Ownership of Deceased Real Estate If the deceased person co-owned the real estate jointly with a surviving individual, it typically transfers to the surviving owner, bypassing the deceased estate.

      However, if the deceased person solely owned or co-owned the property as 'tenants in common,' it must first transfer to the executor or administrator before becoming part of the deceased estate. Subsequently, it may be sold or transferred to the appropriate beneficiaries.

      In cases where real estate must be sold for distribution, it's essential to maintain evidence of valuations, advertisements, and sales contracts to demonstrate acting in the estate's best interest.

      Before distributing real estate assets, ensure that the notice of intent to distribute complies with your state or territory's requirements. This notice allows potential creditors, other family members, or former spouses to claim their inheritance. Neglecting this may result in claims against the estate for which you could be held personally liable.

      Once the deceased estate's full value is determined, all debts and taxes are paid, Supreme Court applications are filed, and relevant notice periods expire, the estate is generally ready for distribution to beneficiaries.

      Before submitting your documents to the Land Registry Services, assess whether stamp duty applies, which may involve presenting forms and documents to the Stamp Duties Division of the Office of State Revenue."
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