Selling Assets Inside a Probate Estate.

Administering a decedent’s probate estate typically involves selling real and personal property assets to pay debts, taxes, expenses of administration, and to distribute what money remains to the decedent’s beneficiaries. Whether the personal representative – i.e., the executor named in a will and otherwise an administrator — is required to obtain court supervision (e.g., a court order), to seek the consent of the interested parties, or may proceed independently on their own initiative to sell estate assets dictates whether and how difficult, or not, it is for such probate sales to occur.

If the probate involves a will, then does the decedent’s will either require or authorize the personal representative to sell assets. For example, does the will say, “my executor shall sell all of my real property and distribute the net sale proceeds amongst my children.” If so, then the Executor is required to sell the real property and may not distribute the property in kind. How the Executor proceeds, however, depends on whether he or she has unlimited authority under the Independent Administration of Estates Act (“IAEA”), see below.

More typically, however, the will says something such as, “my executor may sell, with or without notice, at either public or private sale, for cash or terms, any property of my estate that my executor considers necessary for the estate’s proper administration and distribution.” Such authority allows the executor to sell personal property without any notice or court approval (section 10252 Probate Code).

However, unless the Executor has full independent authority the Executor is still subject to court supervision and must give public notice of the sale (private or public) and get any sale of real property confirmed by the court (Section 10537 Probate Code). However, if the Executor has full independent authority then the Executor may proceed using the simplified so-called, “Notice of Proposed Action” (“NOPA”) procedure (Section 10580 Probate Code). The NOPA procedure requires the written consent of the estate beneficiaries to consummate the sale. This is typically the hoped for approach as avoiding a court petition saves both time and money.

When a personal representative has full independent administration authority, they may sometimes ask that the beneficiaries all waive the NOPA requirement with respect to sales of personal property. Such waiver expedites the personal representative being able to sell personal property without having to obtain individual written consents. It is not typically wise to waive the NOPA with respect to sales of real property.

If the personal representative has only limited authority, such as when the petitioner did not request unlimited authority in order to reduce the cost of their probate bond (by excluding the value of the real property from valuing the bond amount), then the personal representative will need to involve court supervision, such as confirmation of sales of real property (section 10300 et. seq. Probate Code).

A well drafted will says whether the Executor is to be granted full independent administration authority, what powers the Executor is to have, and whether or not a bond is to be required (to protect the beneficiaries of the estate). Waiving the bond requirement can indirectly enable a personal representative both to be appointed and to obtain full independent authority because otherwise issues associated with the bond can sometimes prevent a personal representative from either requesting full independent powers of administration or from even serving as the personal representative if they are unable to obtain the necessary bond.

The foregoing discussion is not legal advice. Anyone confronting probate issues should consult with a qualified attorney. Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at Dennis@DennisFordhamLaw.com and 707-263-3235.