Detailed Answer
When an heir to Maryland real estate is a minor, the child cannot legally sign agreements or deeds. Maryland law provides several paths to sell or transfer the property for the child’s benefit while safeguarding their rights.
1. Petition for a Guardianship of the Minor’s Property
Under Md. Code Ann., Estates & Trusts § 13-801 et seq., a parent or other interested person may petition the Orphans’ Court in the county where the property lies to appoint a guardian of the property. Once the court appoints a guardian, that person can manage or sell the real estate, but only after obtaining specific court approval for each sale. See § 13-811 (Court approval of sale). The court will review the sale terms to ensure they serve the minor’s best interests.
2. Use of a Custodial Account under UTMA
Maryland’s Uniform Transfers to Minors Act (Md. Code Ann., Estates & Trusts § 13-601 et seq.) allows an adult custodian to hold financial assets for a minor. While UTMA generally covers personal property and financial instruments, it does not authorize the outright sale of real estate. Transferring a minor’s real estate interest into a custodial account may simplify record-keeping, but selling the actual real estate still requires a guardianship sale.
3. File a Partition Action
If multiple heirs (including the minor) co-own the property, any co-tenant may file a partition action under Md. Code Ann., Real Prop. § 3-201 et seq. The court can order the property physically divided or sold at auction, with proceeds divided among owners. The court will appoint a guardian ad litem to represent the minor’s share throughout the proceedings.
4. Establish a Trust
As an alternative, the adult heir(s) can create a trust that holds the minor’s share until they reach majority. A trustee manages or sells the property per the trust terms. Trust administration often avoids repeated court oversight but may require initial court approval to fund the trust with real estate.
5. Handling Proceeds and Future Distribution
After a court-approved sale, sale proceeds typically deposit into a blocked or custodial account overseen by the Orphans’ Court or held by the guardian/trustee. The minor gains full access at age 18, unless the court orders a later distribution.
Disclaimer: This article provides general legal information under Maryland law and does not constitute legal advice. Consult a qualified Maryland attorney for advice tailored to your circumstances.
Helpful Hints
- Review your county’s Orphans’ Court local rules before filing a guardianship petition.
- Obtain a professional appraisal to support the proposed sale price in court.
- Prepare to post a bond for the guardian of the property when required by the court.
- In partition actions, ensure the court appoints a guardian ad litem for the minor.
- Consult a tax professional about capital gains and gift-tax implications for the minor.