4.04.25 Decedent's Estates

A. Conveyances out of an Estate

Property is conveyed by an estate through   the following three methods:

  1. By the personal representative through the exercise of a power of sale in a will.
  2. By a deed of distribution from the personal representatives to the appropriate heirs or devisees.
  3. By personal representative pursuant to order of the court under Section 62-3-1301, et seq.

1. Power of Sale in Will

Frequently, a will contains a power of sale which grants to the personal representative authority to convey title to real property. The effectiveness of the power of sale has been the subject of debate among attorneys for some time. Some attorneys argued that under the probate code, title to property passed to the heirs or devisees immediately upon the death of the testator. It followed, according to the argument, that there was no estate vested in the personal representative and that any conveyance required joinder of the heirs and devisees.  At the very least, a marketability issue would arise from a conveyance by a personal representative pursuant to a power of sale.

The 2000 amendment to the probate code added Section 62-3-910(B) that addresses this situation.  That section provides that if a will authorizes a personal representative to sell real property, a purchaser from the personal representative takes title "free of rights of any heir or devisee or other interested person in the estate and incurs no personal liability to the estate or to any heir or devisee or other interested person in the estate". Under this section, a purchaser for value is protected without regard to whether heirs or devisees consented to the sale.  If the personal representative breached his or her fiduciary responsibility, then the recourse of those interested in the estate is against the personal representative and not the real property. Proof that the sale was made for value is evidenced by a recorded deed on which the appropriate recording fees are affixed.

Of course, the language in the will must be clear as to the intent of the testator to grant the power of sale to the personal representative. Also, in the case of a specific devise of real property (example: to my son John, I devise my house at 123 Main Street ) it is prudent to have the devisee to join in the conveyance. This section should not be relied upon for conveyances under power of sale made prior to the effective date (August 17, 2000)

UNDERWRITING GUIDELINE ? As for conveyances made subsequent to August 17, 2000, you may accept a deed from a personal representative to a purchaser for value without joinder of the heirs or devisees if there is a clear power of sale in the will.

2. Deeds of Distribution

The 2000 amendment to the code clarifies the effect of a deed of distribution. Under Section 62-3-907(B), if the real estate is devised to a devisee who is not the personal representative, or if the decedent dies intestate, the deed of distribution has the effect of releasing the personal representative's power over the title to real property and affords the purchaser for value from the distributee the protection provided in Section 62-3-910.

Section 62-3-910 provides protection to a mortgagee or purchaser for value from a  distributee under a deed of distribution. The section protects a purchaser from or mortgage lender to a distributee whether or not the distribution was proper. This includes claims of creditors filed against the estate.

Under Section 62-3-907(c) if the real estate is devised to the personal representative, the deed of distribution constitutes a transfer of title to the real property from the personal representative to the distributee as well as a release of the power over the real estate.

A new provision under the 2000 amendment clarifies that the personal representative has the power to recover real estate improperly distributed to the devisee as the result of a deed of distribution that fails to conform to the terms of the will or the law of intestate succession.

3.  Sale by Personal Representative under Section 62-3-1301

A personal representative may sell directly to a third party in an intestate estate or a testate estate with no power of sale with an order of a probate judge. There must be filed a petition and proper service of process on all having an interest in the estate, including heirs, devisees and creditors.

B. Claims of Creditors

Purchasers for value from the Personal Representative (Item 2 above) and from distributees under a deed of distribution (Item 3 above) are protected from claims of creditors.

C. Estate Tax Liens

A federal estate tax lien may arise at the time of a decedent's death. The duration of a federal tax lien is 10 years from the date of decedent's death. The estate tax lien is a secret lien; that is, there is no recording necessary to perfect the lien.

If an estate passes entirely to a spouse, then there is a marital deduction and no tax would be due. Also, there is a unified credit applied to estates and only estates in an amount of $850,000 or more (in 2004) would be subject to the tax. The size of estates exempt from the tax increases in subsequent years, topping out in 2006 at $1,000,000.

The possibility of a federal estate tax lien indicates the possibility of a state estate tax lien. The amount of the state tax is based upon a credit in computing the federal tax.

If there appears to be a possibility of an estate tax due, please contact the District Office for South Carolina.

D. Non-resident Decedents

If there is an out of state decedent in title to real estate in South Carolina , consider first whether there is a probate proceeding in the decedent's state of domicile. If there is not, then there must be an administration of the estate in South Carolina .

If there is a probate proceeding in another state, then a personal representative may file authenticated copies of the appointment, the will, if any, and the order of the foreign probate official probating the will.  After these documents are filed, the personal representative has the same powers over the real estate as would a personal representative appointed in South Carolina . This would include the execution of a deed or distribution or a deed pursuant to a power of sale in a deed. If a will is simply filed in the foreign jurisdiction and there is no order of probate, then an order probating the will should be obtained from the South Carolina probate judge.