How to Liquidate an Estate’s Securities and Real Estate
Liquidating — distributing or selling — estate assets is one of the primary responsibilities of an estate administrator. Liquidation can help to pay the estate’s debts and expenses and make distributing the remaining assets easier. The process for selling securities, like stocks and bonds, depends on how the decedent held these assets while living. When liquidating real estate, you should always hire a broker and obtain any necessary probate court approval.
If the decedent specifically bequeaths or devises an asset, or leaves a piece of real estate by will, the executor or administrator can’t sell it unless it’s necessary to pay the decedent’s debts or estate expenses.
There are several possible reasons for liquidating assets before distribution of the estate residue (what’s left over after paying all debts, expenses, taxes, and specific bequests and devises) including:
The necessity to raise cash for pecuniary (monetary) bequests, the decedent’s debts, estate administration expenses, or taxes.
Ease of division and distribution of the residue.
Fairness; you may not be able to distribute the assets unless they’re equitably held.
Liquidating securities: How to sell stocks and bonds from an estate
Most stocks, bonds, and other securities are held in brokerage accounts. Gaining access to these accounts in order to sell the securities requires providing the brokerage with a copy of your appointment as executor. There are two possible scenarios when liquidating securities:
The decedent held all securities in a brokerage firm account which you transferred to the estate’s name or you placed the securities in a brokerage account in the name of the estate:
Call the broker to sell them.
The decedent liked to hold onto his or her physical stock and bond certificates:
To sell securities held in physical form, you need the original stock certificates, a certified copy of your appointment as executor, and a stock assignment form with your signature guaranteed by a commercial bank. It costs up to $500 to replace each original certificate if you can’t locate them. You must replace the certificates before transferring the stocks.
Liquidating real estate: Get a license to sell
The quickest way to sell real estate at the highest price is to have the property listed with a reputable broker. Choose a broker who has comparable properties to back up the price he or she proposes for your property. The executor must be able to give clear title, ensuring that the property was owned by the decedent and has no liens upon it, to any real estate being liquidated.
The decedent’s will may require an executor to obtain probate court approval prior to any sale. If the power to sell isn’t stated in the will, you must get approval of the probate court for the sale of real estate held in the decedent’s name. If the decedent had no will, the probate court must grant a license to sell real estate.
The purchaser or the title insurance company, who the purchaser pays to guarantee that the property title is clear, may also require probate court approval for the sale to proceed. A license to sell from a probate court or other evidence of court approval assures that the title is clear of debts and any claims of the estate and heirs.
You may want to get a license to sell, or equivalent approval, even if you’re not required to. You have a duty to get the highest price for the property. In some states, a license to sell from the court protects the fiduciary by conferring the presumption that the highest sale price was obtained.