Inventory of Assets

Executors must prepare precise inventory of property and debts.

The executor is required to prepare a precise inventory of the estate's property and debts. An inventory is a listing and valuation. Preparing inventory is a good deal easier if the deceased started the job before death.

The deceased may have left a letter of instructions with the will that includes a listing of all his property and debts with up-to-date valuations. The executor merely has to double check and update this information to prepare the inventory. However, the deceased may have prepared nothing at all. This is common if the deceased has been in poor health for some time. In this case, the executor will have to start from scratch and assemble all the information himself. Although such a task is difficult and time-consuming, it is certainly not impossible. The executor can also get a lot of help from family members and professionals along the way.

Where to Begin

Assuming the deceased has left a listing of property and debts, the executor's first step is to prepare a rough inventory of the deceased's property. This inventory should also include a rough valuation of the property. In some cases, the executor may know or can easily determine the value of the property. For example, in some areas, the local taxing authority prepares a fair market value appraisal of real estate on a fairly regular basis. In other areas, the property tax appraisal may represent only a percentage of the property's real value. Even if there is no completely accurate appraisal of the property, putting an estimated value on each item provides some idea about the property's value, and these estimates can be verified later.

OBSERVATION The purpose of the rough inventory is two-fold. The executor has to prepare and present to the court a formal inventory of all the property and debts. Even before this happens, however, the executor is responsible for safeguarding the property and seeing to it that bills are paid as they fall due.

WARNING In most states the inventory normally needs to be completed and filed with the court three months after the executor's appointment. In practical terms this is a very short time. The executor needs to start the inventory process immediately after appointment.

Care of Property

Although the executor does not take title to the deceased's property, he is responsible for safeguarding the property and has a duty to take steps to manage, preserve, and protect it. The executor needs to decide who should have custody (possession) of the property subject to its ultimate distribution to the devisee and heirs.

The will may provide that survivors are entitled to remain in the family home. The executor needs to decide who should have custody of other items, such as autos and boats. Generally the executor will give custody of an item of property to the person who will ultimately receive it. The executor needs to make clear, however, that this is not a final distribution and that the executor may have to reclaim the property. This needs to be stated in writing, because the person receiving custody of the property may consider the property his, and may not pay much attention to the legal nuances.

EXAMPLE Ed's will provides that his brother Howard is to receive the Ed's Oldsmobile. During the administration of the estate, the executor lets Howard drive the car. However, the executor needs to get a receipt from Howard acknowledging that he may have to return the car. Additionally, the executor needs to verify that Howard has maintained adequate auto insurance on the vehicle.

Mail

Besides securing the residence and other property, the executor needs to attend to the deceased's mail. A surviving spouse who resides at the deceased's home can collect and sort mail as it comes in. The postmaster will forward the deceased's mail directly to the executor upon presentation of the death certificate and/or letters testamentary. The executor needs to carefully sort through the mail. Social Security and Veterans Administration checks must be returned to those agencies.

WARNING Neither the estate nor the surviving spouse is entitled to Social Security and/or Veterans Administration checks for the month of death, even if the deceased lived nearly until the end of the month. These checks must be returned.

Paying Bills

The executor needs to pay bills as they fall due. Utility bills, mortgage payments, and property taxes all need to be paid. The executor needs to open a checking account for this purpose.

Support of Family

There are several protections built into the law to protect families of the deceased. The executor needs to understand these important rights because the family will look to the executor for both emotional and financial support during the probate process.

Homestead Right

In most states the family has a homestead right, which allows them to remain in the family home during the probate proceedings even if the deceased left the home to someone else in the will.

Family Allowance

Most states provide a family allowance to continue supporting a surviving spouse and other dependents, for which the probate court orders the executor to use estate assets. In some cases, this family support may deplete the assets in the estate so that neither creditors nor persons named in the will receive anything. In most states the family allowance is not automatic, nor is the allowance amount fixed. The judge has discretion about how much to award, or whether any allowance at all should be awarded.

Election Against the Will

An important protection for surviving spouses is the "election against the will." This rule allows a surviving spouse to receive a set percentage of the estate - typically between 33 and 50 percent - no matter what the deceased's will provides. This effectively makes it impossible for the deceased to disinherit his or her spouse. This is exactly what the law is designed to prevent. On the other hand, it is possible to disinherit anyone else, including children, in all states except Louisiana.

TAX ISSUES

The executor will also be responsible for filing tax returns. The executor must see that the deceased's final Form 1040 is filed. Additionally, the estate itself must file a tax return, using Form 1041, to report any income such as interest or rents that are received after the deceased's death. Finally, if the deceased owned more than $600,000 in property, the executor will have to file a Federal Estate Tax Return (Form 706). Copies of these forms appear in Appendix E. The executor will need to know the details of property ownership to complete these returns. Of course the executor can hire an accountant to help prepare the returns.