04 Oct Selling a home after parents’ death

Q. My parents both passed last year and the house was left to me and my siblings. The sibling who is the executor refuses to sell the home, which still has a home equity loan. What are my rights? The deed is in my parents’ names.
— Sibling

A. It sounds like your sibling – the executor – has some work to do.

Although the executor has some discretion in administering the estate, the executor has a duty to settle and distribute the estate expeditiously and efficiently for the best interest of the beneficiaries, said Catherine Romania, an estate planning attorney with Witman Stadtmauer in Florham Park.

She said unless the will provides specific instructions regarding the home, the executor, at his or her discretion, has two choices. The executor may sell it and distribute the net proceeds, or distribute the home “in kind” to the beneficiaries, which means having a deed prepared from the estate to the beneficiaries as tenants in common, she said.

“If the property is distributed in kind, the beneficiaries now own the property jointly and will be jointly obligated on the loan, which pursuant to statute is not paid off with other estate assets unless specifically so directed under the will,” she said.

Because creditors have nine months to present a claim to the executor, many executors will not make distribution before nine months, Romania said.

Then, if there are any beneficiaries who are not Class A beneficiaries – which include grandparents, parents, children, stepchildren, grandchildren, spouses or domestic partners – or if there is a trust, then a New Jersey Inheritance Tax Return is required to be filed within eight months of death, Romania said.

For that reason, therefore, many executors will not make distribution before a Notice of Assessment, which shows no additional tax is due, is received from the New Jersey Division of Taxation.

“If your parents passed away in 2017, and if either estate exceeded $2 million, there may have been a New Jersey estate tax return required to be filed and possibly a tax owed,” Romania said.

There is no longer a New Jersey estate tax for decedents dying after Dec. 31, 2017.

Even if there is no tax and all the beneficiaries are Class A beneficiaries, New Jersey requires a waiver be obtained from the Division of Taxation to release its lien on the property of a decedent, she said.

If an estate has been open for a substantially long period of time and you believe the executor is not fulfilling his or her obligations, you may bring an action in court to have the executor discharged and a new executor appointed, Romania said.

“Discharge is generally considered by the court when an executor refuses to obey a court order, for example, to file an accounting or an inventory of estate assets; or is found to have committed embezzlement, waste, misappropriation; is incapacitated; or neglects or refuses to perform the required duties of the office,” she said.

Alternatively, Romania said, you can request the court to direct the executor to perform a particular action. In your example, it would be to sell the home and distribute the proceeds.

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