Once the court has formally appointed you and issued the papers that prove it, you can generally sell a note the estate owns. Whether this particular sale also needs court approval or the heirs’ consent depends on the will and on state probate law, so put the question to the estate’s attorney before you sign anything.
An executor is the person a will names to settle the estate. Where there is no will, the court appoints an administrator for the same job, and many states call both a personal representative.
A buyer needs more than your name in the will. The document that counts is the court’s confirmation of your appointment, commonly called letters testamentary, or letters of administration when there is no will. Before it is issued you can gather information and ask for quotes, but signing the note over has to wait.
What a buyer will ask an executor for
- A copy of the court papers appointing you, recently certified
- The death certificate
- The original note and the recorded mortgage or deed of trust
- A record of payments, including any received since the death
- Any court order or heir consent the sale requires in your state
Payments on a note the estate owns belong to the estate while it is open. Deposit them in the estate account and record each one, because a buyer prices the note partly on that history and the court may ask to see it.
Whether the decision is yours alone
Start with the will. Some wills give the executor a broad power to sell estate assets. Others leave the note to a named person, and then selling it may be out of your hands. Next comes the kind of administration: some states allow an independent or unsupervised process in which the executor acts without a court order for each step, while others require approval or notice before certain sales.
Then there are the heirs. Even where their consent is not legally required, a sale they learn about afterwards is the kind that ends up in front of the judge. The estate’s attorney can answer all of this in one conversation, which neither we nor a buyer can do for you.
Your duty when you accept a price
An executor acts for the estate and for the people who inherit from it. That is a fiduciary duty, meaning their interests come ahead of your own convenience. Applied to a note sale, it comes down to whether you could show the heirs, or a court, why you took the price you took.
A single offer gives you little to show. Several written offers, each with the pricing behind it, give you a record. That is the reason to send us the estate’s note for pricing: we take it to more than one buyer, and each offer that comes back shows how it was worked out. Keep the offers in the estate file with a short note on why you chose the one you did.
Sell, split or hold
Nothing obliges the estate to sell, and the choice is wider than sale or no sale.
| Choice | Suits an estate where | Watch for |
|---|---|---|
| Sell the whole note | Cash has to be divided, or debts and costs must be paid | The discount, meaning the gap between the balance owed and the price paid |
| Sell a partial, a set number of upcoming payments | The estate needs a set sum and the heirs are content to keep the rest | Someone must still own and track the note afterwards, and the note has to suit a partial |
| Distribute the note itself | One heir wants the income, or all are happy to share payments | Shared ownership needs a clear written arrangement |
Where heirs want different things, the note does not have to go one way for all of them, and there are ways for several heirs to split a note between those who want cash and those who want the income.
Timing, and the tax question
A quote can be requested at any stage, even before your letters are issued, and it gives the attorney a figure to plan around. If the estate is still open and the heirs are pressing for cash, selling a note before probate closes explains what can be done in the meantime.
A sale may have tax consequences for the estate or the heirs, and a CPA should look at them before closing.
What to ask the estate’s attorney
Ask whether the will or the court limits your power to sell, whether the heirs must be notified or must consent, and which account the proceeds should be paid into. Write the answers down and file them with the offers, because the sale is one task inside the larger one of settling an estate that holds a note, and the court may ask about any part of it. If the note has a second complication, such as a co-owner or a payer who has fallen behind, find it in the situations guide before you accept a price.
Related questions
Can I get a quote before the court appoints me?
Yes. A quote needs only the note's details, not your court papers, and it gives the estate's attorney a figure to plan with. Signing the sale has to wait until your authority is confirmed.
Do all the heirs have to agree to the sale?
That depends on the will and on state law. In some estates the executor can sell without consent, in others notice or approval is required. Ask the estate's attorney, and tell the heirs either way.
Who receives the payments while the estate is open?
The estate. Payments should go into the estate's own bank account, with a clear record of each one. Mixing them with personal funds creates problems for you as executor and weakens the payment history a buyer relies on.