It’s common when both parents die, that they leave their home to their children. However, what happens when the sibling, who’s the executor, refuses to sell the home (which still has a home equity loan).
nj.com’s recent article, “What happens when siblings can't agree about selling parents' home” explains that even though an executor has some discretion in administering the estate, she has a duty to settle and distribute the estate expeditiously and efficiently for the best interest of the beneficiaries.
Unless the parent’s will has specific instructions for the home, the executor—at her discretion—has two choices. She may sell it and distribute the net proceeds. The other option is to distribute the home "in kind" to the beneficiaries. That means retitling a deed from the estate to the beneficiaries as tenants in common. If the property is distributed in kind, the beneficiaries will then own the property jointly and will be jointly obligated on the home equity loan. State law may dictate that this loan isn’t not paid off with other estate assets, unless specifically instructed in the will.
Creditors have a specific time period in which to present a claim to the executor. As a result, many executors won’t make distributions before that time has concluded. In California, an Executor can sell property during probate if given the power to do so but cannot distribute any assets until the court approves the distribution, usually at the end of the probate process.
If an estate has been open for a very long period of time, and family members think that the executor isn’t fulfilling her obligations, they may sue to have the executor discharged and a new one appointed. The court may discharge an executor for not obeying a court order, like filing an accounting or an inventory of estate assets. The executor may also be removed, if she is found to have committed embezzlement, waste, misappropriation, if she’s incapacitated, or if she neglects or refuses to perform the required duties of the office. Beneficiaries can also ask the court to direct the executor to perform a particular action.
One of the main goals of our law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation. Call our office today to schedule a time for us to sit down and talk about your estate plan, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security. Our office is located in Santa Ana, CA but we serve all of California including Irvine, Orange, Tustin, Newport Beach, and Anaheim.
Reference: nj.com (October 4, 2018) “What happens when siblings can't agree about selling parents' home”