One of the earliest and most important jobs for an executor or administrator of an estate is to create an inventory of all the major assets of the estate, and assign a value to those assets.
If it is required by the probate court, the estate inventory must be filed with the court within six months of the appointment of the executor or administrator, and it must also be served on heirs or beneficiaries of the estate.
Things can get complicated and overwhelming quickly — especially for large estates that may include multiple homes, vehicles, art work, jewelry, investment accounts and other assets.
It’s important to get organized, develop sound methods for documenting your work, and create good processes and systems for tracking expenses and keeping copies of receipts and other documentation.
Start by creating a spreadsheet of the assets, with additional columns so you can track the change in value of certain assets — such as bank accounts, or the value of a house — over time.
An estate inventory typically includes:
House(s)
Cars
Boats, motorcycles, recreational vehicles, etc.
Life insurance policies
Bank accounts
Investment accounts, stocks, bonds, CDs, etc.
Art work
Jewelry
Some assets, like a car, are pretty easy to value by using a service such as Kelly Blue Book or Carfax to determine the market value of what you could expect to get for selling that item.
Other assets such as a house may be harder to value. At a minimum you should determine the value assigned by the tax assessor. It may be necessary to obtain an appraisal or a report of comparable sales in the area to determine the value of a home or other real property.
Certain assets such as jewelry and art work may be harder to value, and could require the engagement of professionals in the industry.
There may be a requirement to have a bond for the estimated value of the assets of the estate. Bonds and inventories can be waived in certain instances by agreement of heirs or by provision in a Will. Waiver of inventory and bond can save the executor or administrator time and hassle.
Keep in mind that the executor or administrator is also responsible for taking care of and maintaining the assets of the estate. That may include keeping the electricity and gas on at the house, and hiring a landscaping service or pest control company regularly. For automobiles, that may include getting the car serviced or driving it occasionally to keep the battery running.
If it is required, you may also file annual returns with the probate court to account for any changes in the value of the assets, such as a decline in the estate checking account as you paid for services related to running the business of the estate.
Some courts are more particular than others about the exact format of estate inventory reports, and they may reject filings that don’t meet their requirements. Be prepared to work with an experienced estate attorney who can help you navigate the process of re-preparing and re-filing with the court.
Here are a few tips and pitfalls to avoid when creating and maintaining an estate inventory:
Keep scrupulous records to document what you did
Save copies of receipts and related documents
Create digital versions of all spreadsheets, receipts and records so it’s easier to share them with an attorney, an accountant or the courts
Be mindful of the dates when you’re expected to file reports to the court (pro tip: it’s based on when an executor or administrator is appointed; not by calendar year)
Once a good baseline estate inventory is established, it will be relatively easy to update it as assets are sold or transferred to heirs and beneficiaries. Keep all records as a digital archive of the work you performed in case you or others need to refer back to those documents in the future.
Disclaimer: This content is for informational purposes only, and does not constitute legal advice nor create an attorney-client relationship with Bequest Law.