Managing Assets & Debts in Probate
One of the many duties of the Personal Representative is being responsible for managing assets of the estate. Certain steps need to be taken to ensure that the value of the estate is preserved, even before the Personal Representative is appointed by the Court. The Personal Representative needs to be careful not to commingle their own money and property with the money and property belonging to the estate.
Inventory & Appraisal
The personal property of the decedent, such as furniture, furnishings, vehicles and appliances should be transferred to the estate and appraised as quickly as possible. All cash and bank accounts should be deposited into an interest-bearing estate account and any safe deposit boxes inventoried and re-opened in the name of the estate. Any real property owned by the decedent needs to be maintained, including the taxes, insurance and utilities. An Inventory and Appraisal, which includes detailed descriptions of the property, will be completed by both the Personal Representative of the estate and the a Probate Referee, often within four months from the date the Letters appointing the Personal Representative were issued by the Court.
Supplemental Inventory & Appraisal
If the Personal Representative discovers new assets after the Inventory and Appraisal was filed, or if the decedent’s real property was sold more than a year after their death, a Supplemental Inventory and Appraisal must be filed. The Supplemental Inventory and Appraisal can be filed before a year has passed if the housing market is unstable and it is likely that the value of the property has changed. If the value of an asset has changed, or the description (such as the value of gold increasing or the value of a vehicle decreasing) a Corrected Inventory and Appraisal should be filed. It is very important to have current Inventory and Appraisals on file when selling any of the estate’s assets, as all property must be sold for at least 90% of the value in which it was appraised.
In addition to managing estate assets, the Personal Representative is also responsible for managing the estate’s debts. Although the Personal Representative is not personally liable for the debts of the estate, they are liable for filing the final personal State and Federal income tax returns. Notice of the decedent’s death must be given to known creditors, state agencies or entities (such as credit card companies, utility companies, landlords, physicians, the IRS, county tax collector and Department of Health Services) so the creditors can file a claim against the estate.
To ensure that the value of the estate is preserved all accounts need to be titled in the name of the estate and should not be commingled with any other money. Furthermore, taxes must be paid and real property sold.