When a person dies in debt, the executor of his estate must settle this debt before any property may be transferred to his heirs. If a person has a will, they may specify which assets should be sold first, but outstanding debts must be paid in full before anything goes to heirs. To acquire this money, the state (through the authority of the probate court) will sell off assets until the debts have been paid.

Selling Property in Probate

Since the state rarely wants any of the property in an estate, it tries to liquidate assets until it can pay off the deceased's creditors. It is ultimately up to the executor which items are sold and which are not, and she will usually consult with the heirs about which assets are most precious to them. It is then the executor's responsibility to sell assets, which she must do following the terms of the Independent Administration of Estates Act (IAEA). If your executor is not a lawyer, it is wise to seek legal advice before proceeding with sales.

Typically, an executor will extend the courtesy of first offering items for sale to the heirs. If items have sentimental value to the heirs, they may choose to buy them instead of allowing them to be sold. If the heirs demur, the property is then up for public sale, and it is the responsibility of the executor to get the most fair price for the sold items.

Many people have been able to get great deals on everything from real estate to cars by buying items in probate. Although property must be sold at a fair price, depreciated houses and cars may not have very high list prices. With some attention and investment, these can be restored and sold for a significant profit.