When a person passes away and leaves behind a will, they are referred to as a testator. Generally, the testator names an executor in the will whose responsibility is to manage the deceased’s estate, including assets and debts.
A crucial aspect of the executor’s role involves representing the estate during the probate process, where a court reviews the will to establish its validity.
Other steps involved in the probate process include filing a petition for probate, settling estate taxes, and inventorying the testator’s property.
What Types of Property Must be Included in the Inventory?
An inventory should encompass all property owned by the testator at the time of their death.
This includes:
- Real property: Houses and land, irrespective of whether the land has been developed or not.
- Personal property: This category includes all non-land property, such as jewelry, computers, vehicles, artwork, and more. Personal property can be tangible (physically touchable items) or intangible (assets or rights that cannot be physically touched, like money in a 401(k) or certain securities).
The executor must present the court with a comprehensive and accurate inventory for the probate process to function effectively. This necessitates a thorough and honest effort on the executor’s part to locate all real and personal property owned by the deceased.
How Is the Property Inventory Conducted?
The executor is responsible for inventorying the property, which entails classifying items as either real or personal property and determining their value.
Cash is valued at face value. Other assets, such as family heirlooms, real estate, or rare coins, are assessed based on their fair market value or the amount a reasonable buyer would pay a reasonable seller in the current market.
For challenging valuations, the executor might enlist the help of a professional appraiser.
Appraisers are trained and qualified to provide objective and accurate assessments of the value of assets.
The following are some reasons why an executor might need to enlist the help of a professional appraiser:
- Complex assets: Some assets may be difficult to value, such as artwork, antiques, or collectibles. A professional appraiser can provide an independent valuation based on their expertise and knowledge of the market.
- Disputes: When a disagreement between beneficiaries or the IRS challenges a valuation, an independent appraisal can help resolve the dispute.
- Estate tax purposes: The executor may need to determine the fair market value of the assets for estate tax purposes. Professional appraisers can provide an objective valuation that can withstand scrutiny from the IRS.
- Legal requirements: Some jurisdictions require appraisals for certain types of assets, such as real estate, before they can be sold or transferred.
To enlist the help of a professional appraiser, the executor can research and select an appraiser with experience in the type of asset being valued. The appraiser will then visit the property, research the asset and the market, and provide a written appraisal report. The executor can use this report to make informed decisions about managing and distributing the estate assets.
How Are Disputes Over Inventorying Resolved?
Disputes related to inventorying can arise between relatives or beneficiaries and may stem from simple errors made by the executor, who may not be experienced in inventorying. Alternatively, disputes could arise due to fraudulent inventorying, where the executor or appraiser intentionally overvalued or undervalued a property item, often due to a financial interest in the property or the outcome of the distribution.
In cases where disputes cannot be resolved informally, an individual with a stake in the estate can seek court intervention. During the probate process, courts adhere to the “intent of the testator” standard, which aims to fulfill the testator’s wishes regarding the distribution of their property.
Evidence of the testator’s intent may be admissible in court, and individuals who were familiar with the testator could potentially provide insight into their intentions, making them suitable candidates for assisting with the inventory process.
What Does a Professional Executor Do in the Estate Inventorying Process?
A professional executor, sometimes referred to as a corporate executor or a professional fiduciary, is a person or an institution with expertise in managing estates and navigating the probate process.
Professional executors can be particularly helpful in complex estate situations or when family dynamics might make the probate process challenging.
Some of the ways a professional executor can assist in the estate inventorying process include the following:
Expertise in Asset Management
Professional executors have experience managing a diverse range of assets, from real estate and investment portfolios to collectibles and unique personal property. Their expertise can help ensure the assets are properly identified, appraised, and managed during the probate process, maximizing their value for the beneficiaries.
Impartiality and Objectivity
One of the benefits of hiring a professional executor is their impartiality. Unlike a family member or friend, a professional executor has no personal stake in the outcome of the estate distribution.
This objectivity can help prevent disputes and conflicts among beneficiaries, ensuring the inventorying process is conducted fairly and efficiently.
Knowledge of Probate Laws and Procedures
Professional executors are well-versed in probate laws and procedures, which can vary significantly from one jurisdiction to another. Their knowledge can help streamline the inventorying process, ensuring that all necessary steps are taken in compliance with local regulations and that potential legal pitfalls are avoided.
Time and Resource Management
The estate inventorying process can be time-consuming and complex, particularly in larger or more complicated estates. Professional executors have the resources and expertise to manage the process efficiently, freeing up the beneficiaries to focus on other aspects of the estate or their personal lives.
Assistance With Debts and Taxes
Professional executors are experienced in handling the financial obligations of an estate, including settling outstanding debts, managing ongoing expenses, and ensuring that all necessary taxes are filed and paid. Their expertise can help prevent costly errors and ensure that the estate’s financial obligations are met promptly and efficiently.
Access to a Network of Professionals
Professional executors have access to a network of qualified professionals who can be called upon as needed to assist in the inventorying process, ensuring that all aspects of the estate are managed effectively and professionally.
Here are some examples of the types of professionals who may be called upon:
- Appraisers: As mentioned earlier, appraisers can assist with valuing assets that may be difficult to assess, such as art, antiques, and collectibles.
- Accountants: Accountants can assist with financial aspects of the estate, such as reviewing financial records, preparing tax returns, and advising on tax planning strategies.
- Real estate agents: If the estate includes real property, a real estate agent can assist with valuing and marketing the property for sale.
- Auctioneers: If the estate includes valuable items that will be sold at auction, an auctioneer can assist with organizing and conducting the auction.
- Insurance agents: If the estate includes valuable assets that require insurance coverage, an insurance agent can assist with obtaining and managing the necessary insurance policies.
Do I Need the Help of a Lawyer With Probate Estate Inventorying Issues?
Probating a will is a complex process that involves several significant steps. One such step is inventorying, which in itself can be quite complicated and time-consuming. If you have any questions, issues, or disputes related to inventorying, it’s advisable to seek assistance from a probate lawyer.
A probate lawyer is a legal professional who has experience in reviewing wills and trusts. They have the knowledge to advise you on any questions or disputes you may have and can ensure that the estate’s property is distributed accurately and properly.
Consult with a local probate lawyer in your area for any assistance you need.
