Executor Won’t Sell The Property
Often one of the tasks of an executor is to liquidate the assets of a deceased estate. After the assets are sold, the executor distributes the proceeds of the sale to the designated beneficiaries. Sometimes, a beneficiary will complain that an executor won’t sell a property as instructed in the will or according to the wishes of the beneficiaries. There may be a legitimate reason for the delay in disposing of a particular piece of property. However, if the executor fails to liquidate property in the interests of the estate, he or she may be guilty of breach of their fiduciary duty. This article explains the duties of an executor to manage the assets in a deceased estate, and what a beneficiary can do if an executor won’t sell the property as appropriate.
Duties Of Executor
An executor may be tasked with a variety of duties in the administration of a deceased estate. One of the first jobs of an executor is to make a list of assets and liabilities and to take the steps necessary to preserve the assets and satisfy the debts. Sometimes a testator will leave instructions in a will telling the executor to sell certain assets to discharge debts. Even when there are no such instructions, an executor has a duty to discharge all the debts of the estate, and this may well require that assets are liquidated.
Any sale of assets within a deceased estate must be completely transparent, and the executor must keep meticulous accounts of all transactions. The executor will need to obtain court authorisation in order to have the legal authority to sell real property of the estate. For instance, in New South Wales, the Supreme Court can issue a Grant of Probate to validate a will and authorise an executor to deal with the assets of a deceased estate.
Executor Delays in Sale
An executor is obligated to finalise a deceased estate within a reasonable amount of time. Typically, an executor will sell a property within the “executor’s year” following the death of the testator. When the executor won’t sell a property within this year, they should seek professional advice to ensure that this will not be considered executor misconduct.
If the executor won’t sell for an indefinite period of time, then they may be found to be unreasonably withholding funds from the beneficiaries of the estate. This opens the executor up to personal liability for failing to resolve the estate in a timely manner.
Obtaining Market Value
The executor’s obligation to sell assets in a timely manner can come into conflict with the executor’s other responsibility to extract as much value as possible from the sale of assets. Properties in deceased estates are often sold at auction as this is demonstrably reflective of market value, but only if the auction is a suitable mechanism to achieve the best price.
The fiduciary duty of an executor to achieve the best price in a property sale was reiterated in the case of Booth v Public Trustee (1954). In that case, an executor sold a property without obtaining an independent valuation, and the plaintiffs asserted that the property was sold well under market value. The court found that the executor had breached his duty, and the sale was reversed. It is therefore highly advisable for an executor to obtain a formal valuation of any real property in the deceased estate. Although this will incur costs on the estate, having an assessment means that valuation is independently established, and the executor will have protection from liability for underselling the property.
The executor may believe that the property will not achieve the best price in the current market and therefore, it is not in the interests of the beneficiaries to sell immediately. However, it should be noted that if the market has dropped, the executor has no obligation to wait for the market to rise, and can sell at the current market value. If the executor determines that it is in the interests of the beneficiaries to delay the sale, then the executor should seek the cooperation of the beneficiaries in this delay. In addition, such a course of action would only be appropriate if there are sufficient other assets in the deceased estate to discharge debts and meet the requirements of the estate. In that case, the executor won’t sell the property but would set up a limited form of trust to hold the property until the property sale. For instance, in Victoria, the Administration and Probate Act 1958 allows an executor to “limit or demise” (rent) a property for any period of time up to 50 years.
Sometimes an executor won’t sell a property because they are neglecting their duty towards the estate or have other, unlawful intentions. In that case, the beneficiaries can ask the court to remove the executor on the basis that their continued tenure is detrimental to the estate and the interests of the beneficiaries.
The contested wills team at Armstrong Legal can advise you if an executor won’t sell a deceased estate asset, or sells the asset undervalue. Our team can provide comprehensive and timely advice so that you understand your legal options. Please call 1300 038 223 for assistance with any estate or will dispute or email for advice.