When Property Meets Probate

It is not an infrequent occurrence that someone interested in selling or buying a parcel of real estate becomes involved with a decedent’s estate. If the parties to the transaction do their jobs without unnecessary delay, buying or selling when an estate is involved is not any more difficult than any other transaction. When a property owner dies with a sale pending, however, certain questions must be promptly addressed.

The initial question is whether the property is held solely in the name of the deceased or is it held jointly with another, i.e. spouse, child, etc? If the property is held jointly then, under Connecticut law, ownership of the property passes immediately upon death to the surviving joint owner. To convey the property only the surviving joint owner must sign the necessary transfer instruments.

However, if the deceased owned a portion of the property as a tenant in common with someone else, it becomes necessary to open an estate for the deceased to secure the appointment of an Executor or Administrator for the Estate. If the deceased left a Will, it is customary for the Will to contain language giving the Fiduciary power to sell the assets of the Estate, including any Real Estate. If the deceased left no Will, it then becomes necessary to obtain permission from the Probate Judge to sell the real property. This requires the Probate Court to conduct a hearing to determine if the proposed sale (including price and terms of sale) are in the best interest of the Estate.

Lien on Connecticut Property by State of Connecticut

In either case, there are additional steps that must be taken before a sale can occur. When a person dies, owning real estate either solely or jointly, the State of Connecticut and the United States Internal Revenue Service claim immediate liens on the property in the event it later becomes apparent that the decedent must pay either the State or Federal Estate Tax. At the Federal level there is no Estate Tax due unless the decedent’s taxable estate exceeds $5,450,000. The State of Connecticut says a tax becomes due if the decedent’s taxable estate exceeds $2,000,000. These taxes are called inchoate liens because although the lien exists, there are no actual lien documents filed in the office of the Town Clerk.

There are procedures available to expedite the obtaining of a release of the Estate Tax liens but quick action must be taken so that these Probate requirements do not cause an unnecessary delay in the closing.

There are other types of estates which may also cause Probate Court involvement. These may include Conservatorship Estates, Trusts, and Ancillary Estates (where, for example, the owner of property in Connecticut dies as a resident of another state).

The important thing to remember is that whether you are a Buyer, Seller or Agent, the death of a person owning an interest in Real Estate being sold causes additional action to be taken promptly to make sure that the title being passed to the buyer is good and that no unnecessary delays are caused by someone’s inaction.

This article is intended to provide a starting point for those dealing with real estate and probate. Your actual situation may be different or more complex. This article is not intended to be, nor should it be considered, legal advice. If you need information, or have questions, please call us at (860) 633-3651 for a consultation.