Handling Personal Property
Most executors, administrators and trustees have a lot of concerns regarding the remaining personal property of the decedent. It is important to be aware that the personal belongings are not worth the value they were originally purchased for. Personal property depreciates over time, so when it is finally sold it is worth pennies on the dollar.
When handling the personal property the first step is to allow the beneficiaries the opportunity to select items that they would like to have as mementos. The estate representative should consider items of real value, such as jewelry or antiques, during this process to ensure that they are divided up fairly. Once the family and friends have remove the mementos that they would like to keep, then the remaining personal property will need to be liquidated. There are three common ways to liquidate an estate: have an estate sale; sell everything through a buyout; or donate the items.
As was mentioned before most of the decedents personal property has little to no value due to depreciation. Personal property of the estate includes furniture, dishes, clothing, decorative items, and all other everyday items that can be found in most homes. Most probate and trust sales that I have been involved in valued the personal property at less then $5000. To keep this in perspective in San Diego the real property, also know as the house, is typically valued at a minimum of $300,000 with an average of about $450,000.
It is important to maximize the decedent’s assets for the probate beneficiaries or trust heirs. Therefore, selling the decedents house should be considered the most important step when liquidating the estate. To be absolutely certain and have all the facts start by getting a bid for an estate sale, and also a bid for a buyout. This way we have all of the facts to present to all any interested parties such as the beneficiaries, the heirs, and the probate attorney. Once we have the facts and have presented them to the involved parties for feedback, then it is time to choose the next best step. Estate sale? Or buyout?
If you should choose an estate sale, once the sale has concluded then the estate sale company will sell the remaining personal property to a buyout company. The total dollar amount that the estate receives will be minus the contracted percentage with the estate sale company. Keep in mind that the estate sale company provided an estimate of the dollar amount they believed would be made from the sale at the time that a contract was signed with them. Ultimately the dollar amount received could be less or more based on the interest in the personal property by the general public.
Estate companies naturally have to be scheduled. What that means to the estate representative is that several months time may be lost to the marketing, planning, and completion of the estate sale. This would, in most cases, postpone the selling of the largest asset of the estate, the house. If postponing the sale of the personal property is not an option then an alternative to an estate sale would be to go directly to a buyout company. In most cases when choosing a buyout the estate will earn less money but typically it is no more then a $1500 difference on the total value of the personal property. The good news is that the house is ready to be put on the market much sooner. When an estate needs to be liquidated quickly this is the most viable option.
The last option is donation. Most estate representatives choose this form of liquidating the personal property because they want, or they know the decedent would want them to donate the personal property. This is a bit more work for the estate representative because all the smaller items such as dishes, Glassware, clothing, and knick-knacks have to be boxed up and ready for pick-up by the donation company. The estate representative can prepare the personal property for donation themselves, or they can hire outside help to handle it for them.
Recently, I helped with a probate cases where the remaining personal property of the estate was not worth any real value. I knew this because I scheduled to have a buyout company give a bid on the remaining items but they would only remove the items for a nominal fee. Since I am always trying to gain the estate the most money for the personal property I decided that instead of paying a buyout company to take all the remaining items I would negotiate that any remaining personal property at close of escrow will become the buyers responsibility. The end result saved the estate between $500 and $1500.
Each estate has its own unique challenges, which is why having a certified probate real estate adviser, like me, can make all the difference in the ease of handling the estate and maximizing profit. Whether the estate representative has a clear idea of how they would like to liquidate the estate or if they need guidance, I can help them feel comfortable that they are handling the estate with they utmost care and getting the most value out of the decedents assets. If you have questions contact me, Kim Ward, today.