Q: My dad owned a house in NC when he died with a will. Who owns the house now, the estate or the heirs?
My dad lived in Greensboro, retired to Hilton Head. He had a SC will, with I filed with Beaufort County Probate Court. I filed an Ancillary Estate with the Alamance County Probate Court, specifically for the sale of the house. As Executor, I signed listing agreement and the sales contract. Now at closing, the closing attorney is requiring all heirs and their spouses sign documents and insists on directly distributing the proceeds to the heirs. The estate has some outstanding debt that was to be paid when the house sold. Shouldn't the proceeds from the sale of the house go directly to the Estate bank account?
A:
Unless the will directly conveys real property to the estate or Executor, title to real property vests in the devisees at the death of the owner. That is why the closing attorney wants the signatures of all the devisees and their spouses on the deed. Typically, proceeds from the sale of the property would go directly to the devisees, rather than the estate.
However, the Executor has the right (and obligation) to bring real property back into the estate when it is necessary to pay debts of the estate. The best thing to do in this situation is to place the proceeds in an escrow account until you can determine whether and how much of the proceeds will be needed to pay the estate's debts. You are right to worry about distributing the funds now: if there are not enough funds in the estate to pay the debts, you will be personally liable as the Executor for those debts. You should not distribute the house proceeds to the devisees until you are sure that the estate's debts are completely paid.
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