Fiduciary Primer

DECEDENTS' ESTATES

I. Testate - Decedent had a will. The will must be probated.

A. If the will contains specific power to sell real estate (the will must specifically mention real estate), only the Executor or the Administrator With Will Annexed (W/W/A) is needed to convey the real estate and the proceeds shall be payable to the estate.

B. If the will does not give specific power to sell real estate, either:

i. A court order allowing the Executor or the Administrator W/W/A is needed. This is set out at KRS 389A; or

ii. The Executor/Administrator W/W/A can sign as well as all the heirs and their spouses with the proceeds check made payable to the estate. However, this option can only occur after the expiration of six (6) months from the appointment of the Executor/Administrator W/W/A. If the closing is to occur within the six (6) month period, the KRS 389A court order is needed.

II. Intestate - Decedent did not have a will.

A. If an estate is opened and administered:

i. The Administrator needs a KRS 389A court order allowing the estate to sell the real property, or

ii. The Administrator can sign as well as all the heirs and their spouses with the proceeds check made payable to the estate. However, this option can only occur after the expiration of six (6) months from the appointment of the Administrator. If the closing is to occur within the six (6) month period, the KRS 389A court order is needed.

B. If there is no probate:

i. Record an Affidavit of Descent, and

ii. All heirs named in Affidavit of Descent and their spouses must sign the deed conveying the property.

iii. There is a two (2) year wait period from the date of death before this can occur (See KRS 396.011).

TRUSTS

If real property is held in trust, it is imperative to determine the validity of the trust and how it pertains to the transaction at hand. A copy of the original trust agreement must be obtained and reviewed. To determine if it is a valid trust for purposes of the real estate transaction, here are some things to look for:

• Name of trust

• Named trustee

• The trust is revocable

• The borrower is both the settlor and the beneficiary of the trust

• If sale, trustee has power to sell real property and remove property from the trust

• If refinance or purchase, the real estate owned by the trust may be used as collateral for a loan

• The trustee is authorized under the trust to encumber the subject real estate

• The trust appears to be validly created and is duly existing under KY law; document is signed and notarized

POWER OF ATTORNEY

It is entirely acceptable for a purchaser or a seller to use a power of attorney at the closing on the purchase of real estate. However, most lenders and title insurance companies have certain criteria they expect to be met when it comes to the content of the power of attorney document.

Listed below are a few of these:

The power of attorney document should be specific to the transaction. The POA should mention the real estate to be purchased or sold. When mentioning the real estate, it is good form to include the legal description as well as the property address. Also, there should be a specific reference to the note and mortgage which are to be executed by the purchaser at closing. This should include the name of the lender as well as the amount financed.

While it is acceptable for the POA to grant the power to execute certain general closing documents, it is a good idea that the POA specifically grant the power to execute the note, mortgage and deed as well as any documents which the lender feels need specific mention.

The POA should also be a durable one. This means it needs specific language that it will remain in effect despite the subsequent disability of the principal, the person granting the powers.

　

Remember, these are guidelines and there may be exceptions. If you need further information we are always available