Tips for Managing a Decedent’s Home and Personal Property

“What do I do now?” If you have been named as the personal representative of an estate or the successor trustee of a trust, that might be among the first questions that come to mind when you learn of the death of the testator (will) or trustor (trust).

Several years ago, we sought to help answer that question with the publication of two popular Arizona-specific resources: Personal Representative Handbook and Successor Trustee Handbook.

While both handbooks offer fairly in-depth guidance, we want to share with you a recent article, “Home Sweet Home – the Post-Death Edition,” by a Boston law firm. It provides a little more detail on how you might fulfill your immediate duties regarding an unmarried decedent’s home and personal property.

Below we will highlight some of their key points and include a few excerpts from our handbooks.

PERSONAL PROPERTY

From our PR Handbook:

“Gathering Assets. Initially, you (as the personal representative) must identify and collect the assets of the decedent’s estate and protect those assets from harm. … You must be able to account for all of the decedent’s assets as they existed on the date of the decedent’s death … and determine what the value of the decedent’s estate was as of that date.”

Article highlights:

To avoid theft, remove from the home easy-to-carry valuables, such as jewelry, small electronics, and cash. Other things to consider removing from the vacant home are:

• paperwork with the decedent’s Social Security number or account numbers (since you do not know what might be needed in the future, securely store such paperwork rather than rush to shred everything);
  
  
• prescription medications;
  
  
• guns and ammunition; and
  
  
• antiques and artwork.

Regarding antiques and artwork, a qualified appraiser can come to the house and advise you as to whether there are any items of significant value. Also, consider whether any items require special attention, such as storage in a climate-controlled area.

Regarding the decedent’s motor vehicles: Because of the potential for liability, you should usually try to transfer the decedent’s vehicles to the named beneficiary (if one was specifically designated in the will) or sell it as soon as practical. While they remain in the estate, make sure they continue to be insured.

DECEDENT’S RESIDENCE 

From our PR Handbook:

“Gathering Assets. … You may need to secure the decedent’s primary residence to protect it against vandalism or to prevent family members from removing items from the home.”

Article highlights:

Security. Day-to-day administration of the decedent’s home often begins with issues of security, including break-ins that occur after the death becomes known.

A security checklist might include the following:

• lock all windows and exterior doors;
  
  
• activate the security system, if there is one;
  
  
• change the locks on the property and update any alarm passcodes; and
  
  
• notify neighbors that the owner has passed away and ask them to advise you of any suspicious activity.

Vacancy. If the house is going to be empty for even a short period of time, try to make that less than obvious to the casual observer:

• have interior and exterior lights, and maybe a TV or radio, on timers;
  
  
• ask a neighbor to occasionally park in the home’s driveway;
  
  
• arrange for mail pickup until you can set up a forwarding arrangement with the post office – even then, have someone check the mail every few days and remove flyers and leaflets;
  
  
• cancel newspaper delivery;
  
  
• remove indoor plants; and
  
  
• maintain landscaping maintenance and watering.

For more suggestions, see the article authors’ Residence Maintenance Checklist.

Upkeep. Vacancy issues also include interior considerations:

• remove all perishable food items or non-perishables that might attract insects;
  
  
• retain basic utilities and services – electricity, gas, water, and trash collection – and cancel others (e.g., cable);
  
  
• set the thermostat to an appropriate temperature; and
  
  
• inform the homeowners insurance company that the property is unoccupied.

About insurance: If the insurance company does not cover vacant homes, or if the decedent’s death triggers a cancellation or other unfavorable change in coverage or expense, switch to a different company.

If you fail to take reasonable steps to update the homeowners insurance coverage, and an incident occurs that devalues the home, you could be personally liable for the loss of value.

Selling the Home. Selling residential real estate is often a part of estate administration. Be mindful that, in your fiduciary role, you are held to a high standard of conduct, and your decisions and actions must maximize the benefit to the decedent’s estate. Common questions include the following:

• If the probate estate or a trust holds the home, does it have to be sold? No, the fiduciary is not required to sell the home unless the will or trust mandates a sale. If it does not, you can simply deed the real estate out to the beneficiaries, who (generally) would own the home in joint tenancy or as tenants in common. But often the beneficiaries don’t want the burden of organizing a sale and might ask you to do that on their behalf. If you take on that obligation, take care that any costs of the sale are allocated to the sale proceeds, i.e., not paid out of another beneficiary’s share.
  
  
• Is the fiduciary required to receive the highest price possible for the home? A fiduciary has the duty to act in the best interest of the beneficiaries. The fiduciary also has the duty to act as a prudent investor would act in managing the estate or trust assets. Taken together, you must weigh many factors while establishing a sale price and accepting an offer, such as (i) the cost of carrying the home while it remains unsold, (ii) the real estate market, and (iii) the fair market value of the home as set by a qualified independent appraiser.
  
  
• Do I need to get permission of the probate court to sell the home? Once the estate has been opened and you have been appointed as the Personal Representative, you generally do not need special permission to sell real estate. It can be liquidated like any other estate asset, though the more valuable the property, the more care you should take in having it properly appraised and marketed in order to maximize value of the heirs. If you as the trustee are selling the home, the trust (or state law if the trust is silent) should grant you the power to sell the home.
  
  
• What information should I give to the beneficiaries? It is usually prudent to keep the beneficiaries reasonably apprised of estate administration matters, and most states impose this duty by law through its probate code or its trust code. Keeping the beneficiaries informed during the sale process will help ward off beneficiary complaints. Let them know how the realtor was selected and why one was chosen over another. Let them know the initial listing (sale) price and how it was determined. If the listing price is ultimately adjusted downward, let them know why.
  
  
• Is it OK to sell to a beneficiary of the estate? Absent language in the estate plan prohibiting such a sale, it is OK for you to sell the home to a beneficiary, as long as the sale is done at “arm’s length,” i.e., treated as if it was a sale to an independent third-party buyer. The home should still be listed with a broker and the beneficiary can make an offer like anyone else in the housing market.
  
  
• Is it OK for the fiduciary to buy the home? A fiduciary is prohibited from self-dealing, i.e., profiting from the fiduciary position. The will or trust should include language addressing this question.

In Arizona, real estate can be sold without going through probate under specific circumstances, primarily if the property is held in a way that bypasses probate, such as through a living trust or as joint tenancy with rights of survivorship, or if the estate qualifies for a small estate affidavit. Otherwise, probate is generally required to transfer property ownership after death.

For more suggestions on carrying out your duties as a fiduciary, visit the “Probate and Trust Administration” section of our articles index.