Can an executor transfer her own portion of an estate to another heir in a preliminary

[Flummoxed]

Jurisdiction

Georgia

Our father designated his home be given to one of my siblings, who is the tenant and also is the sole executor of the estate. The estate is still open and no distributions have been made so far. The home has a reverse mortgage that is deep underwater, and foreclosure is looming. My sister and I want to work together to retain the house. I want to pay off the loan and rent the home back to her. In return, she wants to sign the deed over to me in a preliminary distribution. (NOTE: Our father stated in the will that he did this with full knowledge that there was no value in the home; he hoped that ownership would give her some leverage in negotiating with the lender toward staying in the house. It didn't.)

There are other beneficiaries, but none is affected and none object. The rest of the estate is composed of personal effects and there is no monetary value in any of it. We are long past the period when creditors can petition the estate.

Can we achieve this, and if so, how?

 

[adjusterjack]

Does she have court papers appointing her as executor or representative of the estate? If not, she isn't doing anything on behalf of the estate until she gets those papers.

Here's some information about Georgia probate.

Standard Forms – Georgia Judicial Gateway (georgiacourts.gov)

The local probate court should have more information.

If she has, or gets, the court papers you and she can make whatever deal you want about the house as long as all the estate's debts and expenses are paid.

I suggest you use a title/escrow company for the transaction and paperwork, and get yourself an owner's title policy.

You'll also need to address insurance. You'll need a policy on the house and your liability as owner. She will need a renter's policy on her personal property and her own liability.

 

[zddoodah]

Can we achieve this, and if so, how?

Yes. Consult with the attorney that your sister hopefully hired to represent her in her capacity as executor or hire one of your own. Trying to do this without an attorney to make sure you do it right would be extremely foolish.

 

[Flummoxed]

Fantastic! Thank you for this advice and link. Yes, she has the papers/letters that she needs.

 

[Flummoxed]

Oops, my reply was to AdjusterJack before I saw the post by Zddoodah. Thank you, also, for your advice.

We were able to register the will and have her executorship validated without a lawyer. I worried that we might need a lawyer for this transaction, and I appreciate your confirmation of this. Do you anticipate legal issues with the lender, insurance company, IRS, or other entity, or is the concern over issues among the beneficiaries? I want to make sure the lawyer covers the most important bases for the heirs' protection.

Is there a specialty term I should use when searching for the right lawyer for this?

Thank you again, AdjusterJack and Zddoodah.

 

[Flummoxed]

AdjusterJack, I visited the URL you gave me. Is the proper form "GPCSF 14 Petition of Conservator for Leave to Sell Property or Rent, Lease, or Otherwise Dispose of Property"? I would like to manage as much paperwork on my own as possible, prior to completing matters with a lawyer.

 

[Flummoxed]

Re-reading the replies, I find a point of confusion.

Do I use a title/escrow company for the transaction and paperwork, as recommended by AdjusterJack, or a lawyer, as directed by Zddoodah? Or do these agents address different facets of this process?

AdjusterJack, is a title owner's policy the name of the document that insures the house, or is this a separate instrument protecting my (subsequent) right of ownership?

 

[Flummoxed]

AdjusterJack, I googled title owner's policy, as I should have done before asking for more of your time. Ignore that question, please.

 

[zddoodah]

Do you anticipate legal issues with the lender, insurance company, IRS, or other entity, or is the concern over issues among the beneficiaries?

I have no way of anticipating issues. The reason you should have an attorney is to make sure things are done correctly. Administering a simple estate can be a reasonable DIY project. What you described is not.

Is there a specialty term I should use when searching for the right lawyer for this?

A probate/estate attorney should be able to guide you through this.

Do I use a title/escrow company for the transaction and paperwork, as recommended by AdjusterJack, or a lawyer, as directed by Zddoodah? Or do these agents address different facets of this process?

What you described should not require a title or escrow company (unless you want to buy a policy of title insurance).

 

[adjusterjack]

I worried that we might need a lawyer for this transaction,

If you worry that you might need a lawyer then you probably do need a lawyer.


However, if the only estate item in question is the home, I suggest first calling a title/escrow company to find out what services they perform. They generally will do the title search, issue the title policy, provide and record the deed document, hold the funds for disbursement, pay the lender the balance of the loan when all the conditions are met. You, of course, have to know what instructions to give the title/escrow company. Those get determined by any agreement you and your sister make.

You can also consult a probate attorney to learn about services and costs.

Do you anticipate legal issues with the lender,

No way to predict but, as rep of the estate your sister should contact the lender and find out what the payoff is, including all accrued interests, costs and fees so that you know how much money you have to come up with to retire the loan.

insurance company,

No. Talk to your insurance agents. They know what to do.

IRS

No. A person who inherits real estate and then sells it reports the gain on their income tax return. The basis for determining the gain is the fair market value at the time of death. That amount is subtracted from the sale price. There may be other adjustments.

See Publication 523:

2020 Publication 523 (irs.gov)

Homes sold shortly after inheriting them generally have no gain when sold for the fair market value at time of death.

is the concern over issues among the beneficiaries?

That's between the two of you and any other beneficiaries. They should sign quit claim deeds relinquishing any interest that they might have. That makes sure that they can't come back later and file a claim of ownership.

Is there a specialty term I should use when searching for the right lawyer for this?

Probate lawyer or real estate lawyer, preferably one experienced with both.

Is the proper form "GPCSF 14 Petition of Conservator for Leave to Sell Property or Rent, Lease, or Otherwise Dispose of Property"?

No, you're not a conservator of anybody. If I had to guess it would be GPCSF13. Your sister (and you) should read the instructions carefully. I suspect that the form has something to do with property taxes. You should check with your property tax agency for details.

Do I use a title/escrow company for the transaction and paperwork, as recommended by AdjusterJack, or a lawyer, as directed by Zddoodah? Or do these agents address different facets of this process?

You would have to discuss services with both the attorney and the title office to see if any overlap.

AdjusterJack, I googled title owner's policy, as I should have done before asking for more of your time. Ignore that question, please.

OK.

 

[Flummoxed]

Thank you both for the information and advice. I will act on it.

Here's just a tad more information, in case it spurs any further thoughts:

As I said, my sister is named in the will as heir to the house, but no distributions have been made. The reverse mortgage company said they checked their records (a public copy of the will?) and find that I am eligible as an heir to pay off the loan at 95% of the current appraised value. We are waiting to hear from their appraiser to schedule an appointment.

My sister plans to sign over/distribute ownership to me when I pay off this debt. I don't believe a sale is involved — or do we treat this as a purchase, even though we are not paying her? The reverse mortgage company does not own the house.

My sister did a title search at the courthouse and found the name of the "most recent"creditor. I contacted this bank but never heard back from them; I suppose they hired this series of reverse mortgage companies to service the loan. Do we need a further title search?

 

[PayrollHRGuy]

Do we need a further title search?

If you are going to finance the house the bank is going to require a title search and likely title insurance.

 

[Flummoxed]

I am not going to take out a new loan for the house, but rather sell some assets to pay off the reverse mortgage.

 

[Flummoxed]

I just thought of this question: Am I going to have a tax liability from the transfer? The house taxes are due this month and of course I have to pay them, but will I have to pay some sort of inheritance tax or other because of the acquisition?

 

[Tax Counsel]

The house taxes are due this month and of course I have to pay them, but will I have to pay some sort of inheritance tax or other because of the acquisition?

Georgia currently does not levy an inheritance or estate tax, and the estate tax it did have was levied on the estate. The federal estate tax does not apply to estates of U.S. citizens who die with assets less than $11,700,000 for decedents dying in 2021.

 

[adjusterjack]

I don't believe a sale is involved — or do we treat this as a purchase, even though we are not paying her?

You are buying the house. She owns it, subject to the mortgage. You are paying for ownership to be conveyed to you even though you don't pay her directly. It's a purchase.

There may need to be a deed from the estate to her followed by a deed from her to you, though she may be able to convey the property from the estate to you. I'm not sure of that, so you'll want to get some professional advice about it. Either from a lawyer or from the title/escrow company.

Do we need a further title search?

Yes, Definitely. One that you pay for that's done for you to make sure nothing got missed.

 

[Flummoxed]

Update: What we needed was an Executor's Deed. I was able to draft one, and my sister, the executor, filed it with the county clerk. Afterward, I filed a Quitclaim Deed granting ownership to my husband in addition to myself. We did a title search just to be absolutely sure there was no lien other than the reverse mortgage. My parents built the house and there were no previous owners, so it was not complicated. We have paid off the heirs' portion of the reverse mortgage (95% of current, appraised value). All's well that ends well. Thank you, all, for guiding me through this.

 

[adjusterjack]

We are always gratified to see that our comments led to a successful conclusion. Thanks for letting us know.