Putting together an Executor’s Estate Settlement Team is no Game
In odd moments, I occasionally daydream about creating a board game titled “Estate Settlement.” Yeah, I know what you’re thinking; it should be called a “bored game” instead. But let me assure you, settling an estate can have all the intrigue of “Masterpiece Theatre” and all the surprises and disappointments of “American Pickers.”
In my imaginary game, a player moves around the board by a roll of the dice, with the goal of getting an estate settled. When a player lands on a space, he draws a card from either the Character deck or the Event deck. The Character deck introduces “influencers” who can either help or hinder the player. It could include heroes, villains, comic sidekicks, grumpy bureaucrats, or others. The Event deck would present challenges or rewards that can introduce setbacks or successes, like finding a genuine Picasso in the attic or learning that an heir is challenging the will.
I’ve never followed through with this game idea for two reasons: One, I don’t think anyone would buy it and, two, I’ve spent plenty of time playing the game in real life, both professionally and personally. So let me segue from my imaginary game to the real-life “game” of estate settlement. This cast of characters is real but just as colorful as those in the board game. Below are the key players that an executor will encounter in his personal game of Estate Settlement. Like my imaginary board game, they can present an executor with challenges, rewards, setbacks and successes.
The Heirs: Some families are as normal as The Brady Bunch and are a delight to work with. Other families get along like the Hatfields and McCoys. The former understands that the estate settlement will take time and they wait patiently for the executor to do his job. The latter, though, may burglarize the decedent’s house, call incessantly about when they will get their inheritance and threaten to have you removed if they don’t get their way.
The Co-Executors: Unfortunately, some testators designate a “team” of executors in order avoid hurting anyone’s feelings. The team may be comprised of all of their children, their banker and their spouse, their best friend and their accountant, or any combination of persons. Unless the co-executors get along and can come to a power-sharing agreement quickly, it’s best to remove oneself from this situation. A named executor is not required to accept the position, and can remove himself from the obligation by filing a renunciation with the court. Remember, executors are legally responsible for the care and distribution of assets, and if a creditor or heir is dissatisfied, they can sue the executor(s). You don’t want to be sued for another executor’s mistakes.
The Caretaker: An executor is responsible for maintaining an estate’s assets. Unless you want to change the locks on the house, cut the grass every week, winterize, fix broken windows, etc., then you should hire someone else to perform these duties. Real estate agents use such services regularly and will be glad to recommend someone. They will also try to get you to list the house with them. Be prepared.
The Insurance Agent: Generally, life insurance bypasses the estate and goes directly to the beneficiaries. Sometimes, the estate is named as beneficiary, and, on rare occasions, the testator and the named beneficiary die simultaneously—with no contingent beneficiary named—and the insurance money will go to the estate. Insurance agents are often the real “heroes” of an estate settlement: they can provide quick cash and lots of answers. Best of all, their advice is free.
The Probate Judge: The judge has but one job: to prove that the decedent’s will is legal and valid. If you’re thorough and careful, the judge will be favorably disposed to your efforts. Don’t waste the court’s time with incomplete paperwork. Don’t distribute any assets without getting the judge’s approval.
The Court Clerk: The court clerk is sort of like the goalie in a soccer game. If you do everything just right, then you may score (get your filings accepted); if you don’t, your “ball” will be blocked and you’ll have to try again. Don’t expect to get much help from the clerk; they are forbidden by law from giving you legal advice or telling you how to fill out the forms. For that, you will need an attorney.
The Attorney: When it comes to estate settlement, a good attorney is your best friend. Each state (sometimes each county) has its own set of rules about when and how filings must be done. Find an able local attorney who knows the ropes in your county. Don’t feel obliged to use the attorney who wrote the will or the decedent’s recent attorney. Interview several and hire the one who explains things clearly, returns your phone calls promptly and treats you with respect. Also, get the fees and charges in writing. Attorneys know what your state allows for an estate’s administrative costs, and they may try to bill you for every dime of that amount.
The Accountant: If you think that estate tax law is written in Greek, you may be right. Fear not; CPAs speak Greek (figuratively, of course). In addition to filing tax returns, an experienced estate tax accountant will know how to handle difficult situations like valuing a partnership interest in a business.
The Banker: Banks sometimes have Estate and Trust departments that can help you through settling an estate, eliminating the need for an attorney or accountant. If a bank declines to become directly involved in your estate, they will likely be able to recommend a good local attorney and/or accountant. You will need to open a checking account in the name of the estate in any case, so be sure to choose a bank that’s convenient for you.
The Appraisers: You may need more than one appraiser. You will certainly need to have the real estate appraised, if there is any. Some real estate agents will try to convince you that a “competitive market analysis” is sufficient to value real estate. It’s not. Whether real estate is bequeathed to an heir or liquidated, it will ultimately need an appraisal. Also, a real estate appraisal gives you a baseline value that helps you evaluate offers.
You may also need one or more personal property appraisers if there are special collections or equipment. Make sure the personal property appraiser is qualified to appraise your specific items. Insist that in-person appraisals meet USPAP requirements (Uniform Standards of Professional Appraisal Practice) or you may find that the IRS refuses to accept your tax returns. Whenever a business is involved, you will need to have the business appraised by a business appraiser (although your accountant may be able to do that). If you just need an estimate of an item’s value rather than a fully documented appraisal, WorthPoint can handle that for you online.
The Auctioneer: Like an attorney, accountant or financial advisor, auctioneers are licensed fiduciaries (in most states). They are legally bound to look out for the estate’s best interest. But, the auctioneering trade has as many ne’er-do-wells as any other profession, and there is plenty of opportunity for wrong-doing when selling an entire estate. Before hiring any auctioneer, check with your state’s auctioneer licensing office to see if the auctioneer has any fines or complaints against him. A good estate auctioneer can save you a lot of work and trouble: when goods are sold at auction, they are considered to have attained “market price,” so there is no need to have them appraised. In most states, auctioneers can sell the real estate, personal property and sole proprietorship business assets. A reputable auctioneer represents “one-stop-shopping” for an estate executor.
The Real Estate Agent: Real property that doesn’t sell can tie up an estate interminably. For your own sanity and to avoid complaints from heirs, only list with real estate agents who have proven track records in selling “as-is” property. Some agents want homes to be painted and “staged” so that they can sell quickly, but don’t put a lot of money into fix-up of an estate property; it’s not necessary. If real estate agents balk at selling “as-is,” then call an auctioneer. Auctioneers specialize in selling real estate “as-is, where-is, with all existing faults.” If you do list with a real estate agent, don’t go past six months, and have an auction option available at the end of six months if the home doesn’t sell. Remember, Federal tax returns are due within nine months of death. Don’t drag out the settlement . . . get the property sold!
There are other characters that play peripheral roles in an estate settlement: trustees; guardians; stockbrokers; funeral directors; landlords; business partners; and others. Each estate settlement is different, with its own mix of characters and personalities. As executor, you can pick your team, but it’s the luck of the draw for family members and bureaucrats.
If a reader is inspired to create the Estate Settlement game, then go for it; you have my permission, free and clear. Just send me a thank-you note and a free copy of the game. I probably won’t play it, though; I’ll be too busy breaking up fights between heirs and inventorying the contents of boxes.
Wayne Jordan is a Virginia-licensed auctioneer, Certified Personal Property Appraiser and Accredited Business Broker. He has held the professional designations of Certified Estate Specialist; Accredited Auctioneer of Real Estate; Certified Auction Specialist, Residential Real Estate and Accredited Business Broker. He also has held state licenses in Real Estate and Insurance. Wayne is a regular columnist for Antique Trader Magazine, a WorthPoint Worthologist (appraiser) and the author of two books.