Can the executer of a Will, sell a real estate asset for a very low amount and then purchase back the property?

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Can the executer of a Will, sell a real estate asset for a very low amount and then purchase back the property?

Are there precautions to take and taxes to pay to do so?

Asked on December 29, 2014 under Estate Planning, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

No, the executor cannot do this. An executor owes a fiduciary duty to the estate and to the heirs or beneficiaries inheriting from it--that is, a moral and, more importantly, legal obligation to act in their best interest. If he sells the asset for a low amount, then buys it back for me, he did NOT act in their best interest--since at a minimun, the asset would have fetched for the estate the higher amount he was willing to purchase it back for. In fact, if an executor purchases an estate asset for less than the fair market value, he has violated his duty and could be sued by the heirs or beneficiaries. In some cases, the executor's actions may be so wrongful that he actually would be considered to have committed a crime, such as conversion (a form of theft; stealing something entrusted to you).


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