Removing Personal Property from the Home
When a house is sold through probate, one of the biggest logistical hurdles a personal representative faces is removal of the decedent’s personal assets from the home before listing it for sale (or at least prior to closing). There are options available to a personal representative:
First and foremost:
Secure the house. Change the locks and make sure there are no broken windows or other means of accessing the property. After the house is secured, you can begin dealing with the property in the house.
STEP ONE: It is generally good practice—and possibly required by the will—to allow beneficiaries to request items of personal property for themselves, if the items are not specifically devised through the will to another beneficiary. It is often helpful to allow beneficiaries to access the home (while the personal representative is there to supervise) and identify items that the beneficiary would enjoy keeping. As part of this process (and as soon as possible after the decedent dies), a personal representative or trustee should take photos or videos of the entire residence with all its contents. This can be sent to out-of-town beneficiaries for them to determine what, if any, items from the house they want. It also can be used for purposes of making an insurance claim if anything gets damaged or stolen. The personal representative can then make a list of who wants what and devise a fair method for allocating these items to various beneficiaries.
STEP TWO: Everything that is not claimed by a beneficiary should be liquidated—either sold, recycled, or thrown away. This can be done through an old-fashioned estate sale conducted at the house, with the personal representative supervising the sale. All net proceeds from the sale are part of the probate or trust estate. They should be deposited into the estate or trust’s bank account for payment to creditors or distribution, according to the terms of the will, trust, or Colorado intestate succession laws. Alternatively, the personal representative can hire firms to come to the house and evaluate all the personal property and agree to sell what they think has value. Some companies conduct the sale right at the house, while others will take the property to their store for sale.
STEP THREE: Get rid of the remaining personal property. Again, there are companies that will do this for you. This can be an attractive option if the decedent was a hoarder and lived in squalor. Another way to do it is to rent a roll off dumpster and throw everything into it. If helping hands are needed, they can be paid from the estate or trust. Again, keep track of your expenses!
Accountant: Part of your duties as a personal representative or successor trustee involve filing and paying taxes of the decedent, and any taxes that may be incurred by the probate estate or trust subsequent to the decedent’s death. Probate estates are viewed as separate taxpaying entities apart from the decedent himself. Estates are required to obtain and use their own taxpayer identification number (the entity equivalent of a social security number). Probate estates are also required to file income tax returns (generally IRS Form 1041) to report any gross income above $600 they receive during administration. In addition to accounting and reporting income taxes, a qualified accountant can also help the estate maximize and document the step-up in basis that real estate receives upon the death of the owner. This is vital to ensuring that the estate pays the least amount possible in taxes after the real estate is sold.
Appraiser: C.R.S. §15-12-707 states: “The personal representative may employ qualified and disinterested appraisers to assist him in ascertaining the fair market value as of the date of the decedent’s death of any asset the value of which may be subject to reasonable doubt. Different people may be employed to appraise different kinds of assets included in the estate. The names and addresses of any appraiser shall be indicated on the inventory with the item or items he appraised.” If there are any disputed issues with the value of probate or trust real estate, it is highly advisable to obtain an appraisal of the property. An appraisal also can help the estate or trust maximize and document the step-up in basis for real estate received from a decedent (mentioned above). Accountants and appraisers can work together to get the best possible taxable outcome for the sale of a decedent’s property.
Expenses incurred for professional services provided to the estate or trust are paid by the estate or trust itself—not the personal representative or the trustee (See C.R.S. §15-12-805). These expenses are also generally deductible by the estate on the estate’s income tax return. Again, it is vital to obtain competent professional assistance to make the most of the probate or trust sale situation.
REMEMBER: Probate and trust settlement can be complicated and time-consuming. They can also be fraught with perils for the personal representative or successor trustee. Working with the appropriate professionals not only helps the personal representative or successor trustee streamline the process and get the most from any transaction, it can also protect the personal representative or successor trustee from liability to the beneficiaries or creditors.
