Having just finished the daunting task of closing my parents estate for my sisters and me, I can fully appreciate the stress involved in this process! Rachel Rabinowitz, a Baltimore real estate colleague describes beautifully the things one should consider when faced with being the executor of the estate of a loved one in her article below.
I am currently representing a family in an estate sale and find my own experience with being an executrix to be invaluable with helping this client. Rachel's guide is indespensible and a great place to start your process!
The administration of an estate can be a difficult assignment, especially if the loss was sudden or unexpected. I learned this first hand a few years ago. Working in the auction industry, I've worked with families on a number of estate accounts over the years. Here is some insight I've learned from the field.
Estate sales are never "just business" they're always personal. If you are appointed as the executor or personal representative to administer an estate, I strongly recommend hiring an experienced estate attorney. Personally, I interviewed several before finding someone that was right for the assignment. For me, it was someone who had a mid-size practice and a lot of experience. You will also likely need an estate accountant, I was lucky to find an attorney that was also a CPA.
I am going to skip a few steps and move on to the management of the estate assets which will likely include personal property and real estate. The steps I am skipping include issuing a "notice to creditors" in local newspapers and dealing with the ocean of grief that can engulf you during the first 30 days.
The personal property and the real property in the estate will need to be appraised. Typically they are given a "d.o.d" (date of death) evaluation, meaning the tax burden is assessed based on the appraised value of the assets on the date of death, even if you are having the appraisal done six months later. This can be tricky for determining the value of real estate in a declining market. An option you may have if the market has truly changed is to pursue an alternative valuation for the purposes of lowering your tax burden.
Once you have the assets identified and appraised you will be responsible for their distribution to the named beneficiaries according to the terms of the will. If you are instructed or elect to sell some of the assets in the estate, a qualified estate auction specialist can help expedite the process.
There are no shortage of ways to sell the personal property. My experience is that it is best to have a well developed plan. Begin with charitable donations. If the object holds no personal appeal, and it will not enhance the sale of the real estate, consider a charitable donation. Clothing is a good example. Some people form an equal amount of attachment to every item in the estate, so much so that they may have an inability to move forward. I've seen this more often than not, and this leads to a lot of heated discussions between family members. My advice is to try and remember that not everything in an estate is a meaningful object. Focus on the items that are a true reminder of your loved one, and let the generic items go.
Next, focus on the personal items including photographs and family documents. I found it was good to do this in waves. First thing, gather all the material. I chose to store it in a storage unit because I wasn't ready to deal with it. Knowing it is safe and secure can eleviate stress. Once you are ready to deal with this material, you are probably going to need a shredder. I spent a full work week reviewing documents and shredding non-essential documents like old telephone bills and bank statements. This task can pull on your heartstrings, as you may feel connected to the person by reading these old documents. Ultimately, it feels better to complete the task. Remind yourself that getting rid of document clutter does not mean in anyway that you are doing less to honor your loved ones memory.
Finally move on to the personal property that does matter. This can include family heirlooms such as works of art, china, oriental rugs and stamp collections. Get these items evaluated by a personal property auctioneer. They will offer you a complimentary consultation to let you know what they are worth in the market. You may want to consult more than one auctioneer to ensure that you've got an accurate analysis. Some items may appeal to a very specialized market, (such as civil war era firearms ) in the case of these specialized items, be sure you are working with an auctioneer that has experience selling them. I don't believe in the one-size-fits-all approach to handling estate property. Sell the right things with the right people - you are only going to sell them once. You may send stamps and coins to a specialist auctioneer at one firm, and the estate jewelry to a specialist at another.
The furniture market has been depressed for the last several years, apart from the truly exceptional material. Most of the time it no longer makes sense to pay the expense of moving the furniture to another location to sell it. Your best bet in this case is probably to have an "Estate Sale" at the property.
The estate sale can be an ideal way to promote both the personal property and the real estate concurrently. This can be done by offering the property for sale with fixed prices or by having a walk-around auction with a qualified auctioneer. Make sure you let buyers know that they need to be prepared to remove items the same day - otherwise you'll find yourself in the storage business. Consider having some items labeled "free" these are items that really don't have a monetary value. What you are really doing with this strategy is ensuring that the house gets cleaned out quickly. You'd be surprised what people will take if it is labeled "free" - this is especially good for broken furniture and odds and ends.
Once the personal property has been handled you are ready to sell the real estate. This can be done with an experienced agent, one who you trust to communicate with everyone in the transaction. Resist the urge to hire a family member that is an agent. I know that a lot of you may disagree with this point. You may find that the neutrality of an independent professional is a benefit to your peace of mind. Don't hire the agent with the lowest commission, hire the agent that is the best listener.
Consider selling the real estate through the auction method of sale. Estate sales are an excellent scenario for an auction, particularly if you are time sensitive and need to sell the property during the probate period before you can close the estate. Estate auctions will deliver you a contingency-free "as-is" contract so you can move through the transaction quickly without a lot of hiccups or stressful negotiations. If the property "needs some work" an auctioneer will be better at attracting an audience of investor-type buyers to compete with the end users. A good option is to have your preferred real estate agent work in collaboration with an auctioneer. The auction firm will compensate your agent directly for their assistance with the transaction.
Keep in mind, it is stressful to sell estate assets. Your family may have owned the property for years, and the financial output can seem low compared to your emotional attachment. You may be selling the assets to pay debts, and that it not only time consuming, it is flatly depressing.
Working in estate auctions, I've seen it all. I've seen lots of family disagreements, and I've seen tears. I've also seen the sense of relief that my clients get from finishing the task at hand and knowing that they worked with a qualified professional who is sensitive to their needs. Once you are done with the estate business, you are better able to move on to the important task of remembering all the good (hopefully) memories. This gets easier over time. Estate sales are never "just business" they're always personal.
Rachel Rabinowitz, GRI
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