Do All Heirs Have To Agree To Sell Property? Finding Common Ground

The inheritance of real estate assets can result in family members asking themselves a key question - “do all heirs have to agree to sell property?”  We share our insights on the complexities related to inherited property to help families in this situation find common ground.

Understanding property inheritance

Property inheritance is typically governed by the decedent's will or by state intestacy laws if no will exists. Inherited property may include real estate and personal items. Due to its significant value and emotional connections, real estate often becomes a focal point of inheritance discussions and disputes among heirs.

A well-structured will is crucial in defining how property should be distributed among heirs. It explicitly states the wishes of the decedent, offers guidance to an executor, and reduces potential conflicts among beneficiaries. Estate planning professionals play a vital role in drafting these documents, and ensuring they comply with legal standards while accurately reflecting an individual’s intentions.

For simple guidance about why and how to draft a will, see 10 Basic Facts About Writing a Will.

Probate and executors

When a person passes away, an estate typically goes through a probate process unless arrangements like living trusts had been made to avoid it. Probate is a legal procedure where a court oversees the distribution of an estate according to the will’s provisions or state law. During probate, the court appoints an executor—often named in the will or selected from close family members if no will exists. This executor is charged with several duties, including the liquidation of assets, payment of debts, and distribution of the remaining estate to the rightful heirs.

To ensure a fair and impartial process and potentially reduce family conflict, you could choose to appoint a corporate executor rather than a family member. A corporate executor, such as Hancock Whitney, has expertise in managing and settling estates to minimize conflicts and in accordance to fiduciary requirements. 

If the deceased did not leave a will, the estate is distributed according to state intestacy laws, which might not align with the decedent’s wishes or the expectations of the heirs. For example, in many states, if an individual dies without a spouse or children, the estate may go to their parents or siblings. This can complicate matters when multiple parties inherit a single piece of real estate and have different ideas about its use or disposition.

Selling inherited property

When it comes to selling inherited property, especially real estate, an executor's role is to manage the sale to maximize the estate's value for beneficiaries. This might involve choosing the right time to sell based on market conditions, overseeing negotiations, and ensuring the property is maintained until the sale is completed. The executor may also need to address any claims against the estate by creditors, which could necessitate the sale of the property to satisfy debts.

Local laws can significantly influence the probate process and the management of inherited property. For instance, in some jurisdictions, probate laws require that all beneficiaries be informed about estate proceedings and given a chance to contest decisions like the sale of a property. This ensures transparency but can also lead to delays and increased costs if disputes arise.

For insights about the taxable nature of inherited property, see this IRS guidance.

Do all heirs have to agree to sell property?

Disagreements among heirs over the disposition of estate property are not uncommon, particularly when significant assets or sentimental properties are involved. These disputes can be emotionally charged and complex.

 
Sources of conflict  

Conflicts among heirs often stem from differing emotional attachments to a property, varied financial needs, or disagreements on the perceived value or potential of a property. One heir may wish to retain a family home for sentimental reasons, while another may prefer to sell the property to divide the proceeds. Additionally, heirs may be at different financial points in their lives—some may need immediate financial liquidity while others may prefer long-term investment—which can lead to fundamentally conflicting interests regarding assets.

Legal framework for dispute resolution  

When heirs cannot reach a unanimous decision, the executor's role becomes pivotal. Executors are tasked with reconciling conflicts to the extent possible while adhering to the will's instructions and legal requirements. If the will is silent on how to proceed with the property or if there is no will, executors must act in a way that balances the interests of all beneficiaries.

Typically, executors have the authority to sell property without needing unanimous consent from all heirs. However, if the decision to sell is contested, an executor might need to seek approval from the probate court. The court then examines the merits of the case to take into account factors such as the executor’s reasons for selling, the benefits to the estate, and the objections raised by heirs.
Mediation and negotiation  

Before resorting to court intervention, parties are often encouraged to engage in mediation.  This involves a neutral third party helping heirs discuss their differences and ideally reach a consensus on how to proceed. Mediation can be less adversarial and more cost-effective than litigation, and can preserve familial relationships and allow for flexible, creative solutions that reflect a family's needs.

Executors and heirs should ideally approach disputes with open communication and a willingness to compromise. It's important for executors to clearly explain the reasons behind their decisions and for heirs to articulate their concerns and needs. Legal advice should be sought to ensure that all actions taken are within the bounds of the law and the will of the deceased, if applicable. The goal for heirs and executors is to lead to resolutions that honor the legacy of the deceased while addressing the practical needs of the living.

Court interventions in disputes among heirs

The probate court plays a crucial role in resolving disputes where heirs cannot agree. If an heir challenges the executor’s decision to sell, the court evaluates whether the sale aligns with the fiduciary duty to manage the estate wisely and fairly. The court's decision is based on a thorough analysis of the estate’s needs, the benefits and drawbacks of selling the property, and the overall impact on all beneficiaries.

Courts can order solutions like selling the property and dividing the proceeds, allowing one heir to buy out the others, or even ordering the property to be held in trust if selling it immediately isn’t in the best interest of the beneficiaries. Such decisions aim to preserve the value of the estate while addressing the concerns and rights of all involved parties.

Five practical tips for managing affairs

Here are five tips for executors and beneficiaries to help manage estate affairs more smoothly and equitably, reduce the likelihood of protracted disputes, and ensure an estate is administered in accordance with the decedent’s wishes and legal requirements.

1. Engage in Open Communication: Regular, clear communication can prevent misunderstandings and build trust among all parties involved. Executors should keep beneficiaries informed throughout the probate process and when making significant decisions.
   
   
2. Consider Mediation: When disputes arise, mediation can be an effective way to resolve conflicts without the cost and formality of court proceedings. Mediators can help explore creative solutions that meet the needs of all parties.
   
   
3. Get Professional Appraisals: Having property professionally appraised can provide a neutral basis for discussions about selling or distributing assets. This is particularly helpful in cases where emotional attachments may cloud judgments about a property’s value.
   
   
4. Consult Legal and Financial Specialists: Executors should not hesitate to consult legal and financial experts, especially in large and complex estates or when potential conflicts are anticipated. Professional advice can help you navigate legal obligations and financial planning more effectively.
   
   
5. Document Everything: Maintaining detailed records of decisions, communications, and financial transactions is crucial. These records can be invaluable if decisions are later questioned or if the probate court requires evidence of the executor’s adherence to fiduciary duties.

For more of our insights on generational wealth management planning, see our recent Insights blog, How to Prepare for the Great Generational Wealth Transfer.

Let us help with your wealth planning needs

The answer to our question - "Do all heirs have to agree to sell property?" - is no, not necessarily. However, the process involves careful consideration of legal guidelines, fiduciary responsibilities, and the objectives of the decedent’s estate plan. Your Hancock Whitney Wealth Management team has deep experience working with the estate planning needs of families in this situation and is here to answer questions, provide insights, and guide you on the path to financial freedom.

The information, views, opinions, and positions expressed by the author(s), presenter(s), and/or presented in the article are those of the author or individual who made the statement and do not necessarily reflect the policies, views, opinions, and positions of Hancock Whitney Bank. Hancock Whitney makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. 

This information is general in nature and is provided for educational purposes only. Information provided and statements made should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Hancock Whitney Bank encourages you to consult a professional for advice applicable to your specific situation. 

Hancock Whitney Bank offers investment products, which may include asset management accounts, as part of its Wealth Management Services. Hancock Whitney Bank is a wholly owned subsidiary of Hancock Whitney Corporation.

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