Hello. A divorced man died intestate this year (2012). His adult children, his only heirs, want to sell his home. It seems easier for the estate (personal rep.) to sell it (then distribute the net proceeds) instead of them inheriting and selling it. Is that an option? What are the pros and cons of either approach? Does the estate get the stepped-up tax basis like the heirs would to avoid a capital gains tax? Thank you for any input.
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The answers and information provided on this site are for informational purposes only and are NOT substitutes for professional legal advice. Before making legal decisions, you should discuss your specific circumstances with an attorney.
Selling the Real Estate of an Intestate Decedent in MA
The date of death will determine which probate procedures are available, as the new Uniform Probate law took effect on March 31, 2012. How the estate is actually probated and settled will thus depend on whether Dad passed away before or after that date.
What’s important for your purposes is that real estate owned by an intestate decedent under either the old or new law can only be sold under a License to Sell as governed by the provisions of General Laws of Massachusetts - Chapter 202. (Additional provisions are typically added to purchase and sale agreements when property is being sold in this manner.)
Property acquires a step-up in basis reflecting the fair market value (FMV) of the property as of (usually) the date of death under existing law. If there has been a significant fluctuation in that value in the first six months after the date of death, an alternate valuation date may be available, for which a tax advisor may be needed. The FMV as of the date selected will be the one used for all tax reporting purposes when calculating gain or loss.