The estate of a decedent in New York may contain many different types of assets. The New York Probate Lawyer Blog has discussed in past posts that such assets may include bank accounts, stocks and bonds and real estate. In fact, real estate, in the form of a family residence, is commonly one of, if not the most, valuable asset involved in estate settlement.
An Executor or Administrator who is handling an estate that has a real property asset faces many issues. To begin with, the fiduciary must determine the ownership of the property. Real estate can be held in many different ways such as tenancy by the entirety between spouses, or joint tenancy with rights of survivorship, or tenancy in common among a number of parties. The manner in which a property is owned will determine the extent to which the decedent's estate has an interest in such property. Moreover, there are a number of overlapping fiduciary responsibilities that flow from the determination of ownership. For example, if the decedent's house is owned by the decedent and his spouse as tenants by the entirety, upon death the full ownership interest in the house passes to the surviving spouse and no portion would be part of the probate or intestate administration estate. However, the value of the house would need to be included in the decedent's estate tax return (if a return must be filed). The estate fiduciary has a responsibility to prepare and file the estate tax return and pay any Federal or State estate taxes.
Suppose that the property was owned by the decedent along with others as tenants in common. In such a case, only the decedent's share of ownership would be part of his probate or intestate estate and includable as part of his gross estate for estate tax purposes.
If, however, the decedent owned property as a joint tenant with rights of survivorship with a person who was not a spouse such as a child, upon the decedent's death, the entire property interest would pass to the surviving joint owner. However, the entire value of the property would be includable in the decedent's estate for estate tax purposes unless it can be shown that the survivor contributed monetarily towards the property such as payment of part of the purchase price.
Also, determining whether and to what extent a decedent owns real property may not always be an easy task. Many persons own property for many decades and may have inherited an interest in the property along with others over time. There may be co-owners of the property who predecease the decedent. In the event the estates of these co-owners were not have been administered it may prevent the clear transfer of the decedent's property interest.
Another challenge facing a fiduciary is the valuation of the real estate. In most cases, a certified appraisal will be needed to provide an accurate and acceptable valuation for estate tax purposes and the potential sale of the property. If approval of the sale of property is needed from the Surrogate's Court, the Court will require that a proper appraisal is obtained. In many instances of intestate administration, the Surrogate's Court will appoint estate Administrators but place a restriction on their powers that requires the approval of the Court before the estate real property can be transferred, sold or mortgaged.
I have represented Administrators who have been required to obtain Court approval of their sale of real estate. Based upon my over 30 years of experience helping clients in Surrogate's Court and real estate closings, I have prepared the necessary contracts and Court papers to obtain approval of the transactions.