Executor Anxiety: What if the Estate Doesn’t Sell?

Executor Anxiety: What if the Estate Doesn’t Sell?

There is frequently confusion about the role of the Executor who manages the family’s estate after the death of a parent. An article in The New York Times underscores the uncertainty and anxiety that an Executor may be experiencing. An “Executor” carries out a person’s Will (common in New York because Probate is more workable there), whereas most California people will have a Trust, so the person doing all these tasks is the “Successor Trustee”. Anxiety is not uncommon—none of us has trained for this role, and we don’t normally bring any experience to the job.
In the article, one person is the Executor of her mother’s estate. The sale of her house and its belongings will be divided equally among the surviving children. The Executor had the home’s furnishings appraised and is preparing them for sale. She’s concerned that if the furnishings don’t sell, as Executor, she will be responsible for the shortfalls.

Fiduciary duties: Acting in the best interest of the beneficiaries

An Executor is legally responsible for sorting out the finances of the person who died, generally making sure debts and taxes are paid. What’s left is distributed among the heirs. As an Executor, you can’t act against the interests of any of the beneficiaries—these are your fiduciary commitments.

 

According to these fiduciary duties, you can’t sell assets for less than fair market value without agreement of the beneficiaries. Your job is to settle the financial affairs and divide the assets in accordance with the Will. It’s not your job to pay your siblings if the estate is ultimately not as valuable as everyone seems to think. You are expected to make prudent decisions about how you liquidate it.

 

What’s “prudent” can be a matter of supply and demand

“What’s prudent is going to depend on the nature of the assets,” said Douglas F. Allen, Jr., a trusts and estates attorney in the Manhattan office of the law firm Seyfarth Shaw. If the estate has a valuable 19th-century armoire and you sell it at a yard sale, your siblings could hold you responsible for being careless with their inheritance. Your job is to figure out how to appraise it and find the best venue to sell it, whether that’s at an auction or through an antiques dealer. If the piece appraises for a modest sum, you may decide to sell it at an estate sale. If it sells for far less than the appraised value, then it was only worth that much—it’s a matter of supply and demand. If it’s perceived as just a hulking piece of furniture in the marketplace, then the estate is responsible for the cost of disposing of it.

 

A reality check: No one seems to want old bulky furniture

I recently helped a friend downsize. They sold the estate where they had lived for 30 years. They had a home full of beautiful things, including dishes, silver and antique furniture. All of these items were expensive and in excellent condition. We tried all of the online sales sites and didn’t get as much as a nibble. No one wants this stuff, including her own children. So while they may have paid a lot of money for these items, they were virtually worthless in today’s marketplace. They only have value when someone wants them.

 

When it comes to real estate, partner with a broker you can trust

Decide whether to list property as-is or spend money from the estate on upgrades, repairs and staging. If the broker suggests listing it for $750,000, but it sells for $700,000, then that’s all the money you have to split up, minus whatever expenses you incurred for staging, repairs and broker fees, according to Robert D. Steele, a partner at the Manhattan law firm Schwartz Sladkus Reich Greenberg Atlas, where he is head of the firm’s trusts and estates department.

 

Have these conversations now

To avoid a conflict among your siblings, start the conversation now, before any heirlooms are sold or divided up. Do some research to understand the local market value. Explain the process and whatever guidelines have been laid out in the Will. For heirlooms that have sentimental but limited monetary value, split these up now to avoid turmoil at what will undoubtedly be a difficult time.

 

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This article is based on an article in The New York Times by Ronda Kaysen.

janet
jpeischel@top-mindmarketing.com