When someone passes away, the executor or administrator of their estate will have to transfer any property in the deceased's estate. The property transfer forms a large portion of this role and requires careful consideration to avoid negligence.
This guide explains the property transfers following a deceased estate and what happens to a deceased's property during the estate distribution process.
Determine the type of property ownership
When transferring property in a deceased estate, the first thing the executor or Next of Kin needs to do is determine who owns the property. There are three common types of property ownership. These include:
This type of property ownership means that all tenants have equal ownership of the property. In this case, the right of survivorship applies, and the property automatically goes to the surviving joint tenant. As a joint tenant, the property does not make up a portion of the deceased's estate and therefore is not a part of the estate distribution.
Tenants in Common
Unlike joint tenants, tenants in common mean that two or more people who co-own a property have defined shares. They can dispose of these shares how they wish. For example, the deceased can leave their share of the property to a beneficiary in their Will.
If the deceased is the sole owner of the property, the asset is typically included in their Will and forms part of their estate for distribution. The executor or administrator of the Will should check the Will to understand the requests made for the property.
- Read more here: Joint Tenancy vs Tenancy in Common
Removing Items from a Deceased's Home
Before removing any belongings from the person's home, the executor or if there's no Will, the Next of Kin, must take an inventory of the contents to determine the estate's value. At this point, it's worth considering purchasing home and contents insurance.
This insurance will protect the executor and the beneficiaries during the administration process. Until everything in the home is officially recorded and the estate's total value is known, no one can remove any of the items unless an item is going to a beneficiary as outlined in the Will.
In this case, the executor would invite only those beneficiaries to the home to collect the specific items as per the Will. The beneficiary is not required to wait for the distribution of the estate to collect the item. However, the executor of the Will is not entitled to read out the Will until after Probate.
Transferring Property Following a Deceased Estate
Once the executor determines the estate's value, pays all necessary debts and taxes and receives Probate or a Letter of Administration, they can typically start to transfer property of the deceased estate to the beneficiaries. The current property title must show the name of the executor or administrator before the final transfer to any beneficiaries.
Property with a mortgage
Typically when a property has an outstanding mortgage, the property will go for sale to pay down the mortgage or the property is transferred to a beneficiary who will have to continue to pay the mortgage.
If the sales property from the property is not enough to cover the mortgage's outstanding balance, other assets will have to go up for sale to help fund the remaining balance. However, the deceased may have taken out mortgage protection insurance to cover mortgage repayments after death.
Selling the property
The final transfer of the property after selling can only happen after Probate or Letters of Administration is processed. The executor can list the property on the market and act as the vendor to sell the home. The contract must explicitly outline the following:
- That the seller of the property is the executor or administrator of the estate;
- That court must grant Probate or Letters of Administration by a specified date for the sale to become conditional
- That court must grant Probate or Letters of Administration before the property can settle
- The buyer can exit from the contract if they don't receive Probate or Letters of Administration by a specified date
Before the executor can distribute property assets, they need to publish a notice of intent to distribute. This notice may differ depending on the state or territory and gives creditors, family members, or previous spouses to pursue a claim if they feel entitled to the property.
More helpful reading: