How are the proceeds of estate property paid out?
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How are the proceeds of estate property paid out?
Deceased parent’s house will be bought shortly. According to the estate, the proceeds to the house goes to the 5 adult children. Will the check from the buyer go the estate or to each one of the 5 adult children?
Asked on June 28, 2011 under Estate Planning, Maryland
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
The law does not mandate any particular method or practice, as long as the outcome is correct. How to do this is up to the administrator or executor. In practice, paying the estate is undoubtedly easier; that way, the estate can first pay out any expenses (realtor, appraisor, closing costs, lawyer, etc.) and any taxes owed--which amounts properly come out of the gross proceeds--then distribute the rest to the heirs. It's hard to imagine having the seller write checks to each heir separately is a good way to do this, but again: if at the end of the day, all expenses, creditors, and taxes and paid properly, and the heirs all get the amount coming to them, the law doesn't really particularly care. If in doubt, ask the surrogate court or some experienced administrator for the best practice.
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