Dealing With Non-Monetary Assets In Probate

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August 16, 2024

Recently, there has been a lot of speculation about the so-called "Great Wealth Transfer" that is estimated to take place over the next 10-20 years as members of the Baby Boomer Generation age and eventually die leaving their assets to their Gen X, Millennial, and even Gen Z heirs. Government agencies such as the IRS and Bureau of Labor Statistics estimate that this immense transfer of wealth may have a profound transformative effect on the national economy both on the macro and micro scales, as a sudden, large passing of money into the hands of people who would spend it in potentially very different ways is essentially impossible to predict.

One area of concern, however is the fact that increased life expectancies among our elderly population, while an achievement unto themselves, could have a countereffect on this Great Wealth Transfer. As the population of our country ages, the added expense of long term elder care and medical costs which, while extending the lives of the elderly, often can end up eating away at a significant portion of the savings of these people. As a result, people who retire at the national standard age of 65 are living another 20 to 30 years drawing on their savings where in the past they would be using significantly less. Naturally, this has an effect on the estates that these people will leave behind.

These are interesting factors to consider when it comes to those of us in the elder care, end-of-life care, and probate business worlds, but ultimately money is only one of the assets of an estate that can be used to determine its value. All the assets, that is, everything a person owned, must be taken into consideration when determining the value of an estate. Real estate, vehicles, valuables such as jewelry or collectables like sports memorabilia could be considered probate assets. But how are the values of these tangible assets determined? For real estate, County property appraisers list current market values and realtors, depending upon market conditions, will be able to appraise home values either higher or lower than this average. Vehicles can be appraised by anyone in the business of selling them, and other appraisers and even auctioneers can be enlisted by the Personal Representative of an estate to determine how much an estate is worth. Of course, when it comes to household goods and personal items like clothing and furniture, often the best way to know is to conduct an estate sale. Any funds generated by an estate sale then become a probate asset of the estate, and can be either used to pay the expenses of the estate or transferred directly to an estate's beneficiaries at the end of the probate process. Knowing the value of an estate is an important piece of information because it factors into many steps of the probate process, from determining the need for either Summary or Formal Administration to the required filing of an inventory of the estate to whether or not a formal accounting must be performed.

But perhaps the most important reason for knowing the value of an estate has to do with one of the unfortunate realties of probate proceedings: dealing with creditors.

While a probate inventory is a confidential document that will remain unknown to anyone other than the court and the Personal Representative, if an estate has been determined by that inventory to have a certain value, and the total of all creditors' claims against the estate is less than that value, a Personal Representative has a fiduciary duty to either pay or settle those claims before they can distribute anything from the estate to the beneficiaries. Probate cannot be completed without handling all valid claims against an estate, and the people entitled cannot receive their inheritance until they are dealt with. This means that any real estate or vehicle titles cannot be properly transferred, nor can any proceeds derived from an estate sale be disbursed. It can come as a surprise to people and is often a source of frustration, since no one likes paying bills that are not their own, but unfortunately it is a required step.

This can be especially frustrating when faced with an estate which has valuable property, such as a second, non-homestead rental or vacation property, that the Personal Representative does not wish to part with. While it is unlikely that any Judge will require that a property be sold to settle debts, it is a possibility if the amount of the claims is sufficiently high and the value of the property is sufficient to pay them. It also means a Personal Representative cannot legally transfer ownership from the estate, so if they wish to keep the property in question they must find some other way of paying the claims. This is especially exasperating in testate cases, when a decedent's Will states that a certain person is to receive, say, their non-exempt vehicle, such as a boat or RV, only to be told by the Personal Representative that they must sell the item to settle debts or that they must pay out of their own pocket before they can claim that which their loved one wanted them to have. Conflicts like these have led to a great deal of hostility among family members who either do not understand the terms of a will or the order of operations of probate.

Fortunately, there are solutions to these issues and we are here to help you find them. We work with our clients to find the best possible outcome in any probate situation, even if it isn't the ideal outcome.

If you have questions about Probate issues, don’t wait—make sure your legal rights are protected. Call 863.250.2990 today to schedule your Free Consultation with our Probate attorneys.