Marshalling and Liquidating Assets

• Author: Margaret A. Munro, Kathryn A. Murphy
• Profession: Has more than 30 years' experience in trusts, estates, family tax, and small businesses/Attorney with more than 20 years' experience administering estates and trusts and preparing estate and gift tax returns
• Pages: 111-134

CHAPTER 7 Marshalling and Liquidating Assets 111

Chapter7

Marshalling and

Liquidating Assets

Marshalling the assets brings to mind wonderful pictures of bank accounts,

cars, houses, and the beautiful barometer on the wall all standing in an

orderly line, just waiting for you to acknowledge and count them. As the

executor of an estate, your rst job is to marshal the assets— to determine what

exactly the decedent owned on the day that he or she died. In this chapter, we dis-

cuss step by step the best ways to search for each type of asset. Your ease in nd-

ing all the assets depends, to some degree, on how well you knew the decedent

(for the more obvious assets) and on the decedent’s state of mind at the time of

death. Someone who suered from Alzheimer’s disease or another form of

dementia may well have done unusual things with his or her assets or asset

records (including disposing of them).

As you gure out what the decedent owned, you also come across what the dece-

dent owed. Debts of the decedent or claims against the estate come to light in

several ways. You may nd record of them in the decedent’s papers, receive bills

in the decedent’s mail, or hear from a creditor as a result of notifying creditors as

your local probate court requires (typically by publishing such a notice in a local

IN THIS CHAPTER

»

Figuring out what the decedent

owned

»

Taking stock of the big-ticket

possessions and other assets

»

Keeping tabs on the household items

and getting property appraised

»

Checking for employee benets,

insurance policies, and miscellaneous

death benets

»

Taking a probate inventory and

selling what needs to be sold

112 PART 2 Administering an Estate

paper). You may even get a knock on the door or hear from a friend or relative

from whom the decedent borrowed money. See Chapter8 for details on paying

creditors.

Understanding Why You Need to

Determine What the Decedent Owned

Most decedents won’t have had the foresight to leave you an inventory, or list, of

their assets with a helpful notation of where each asset is located. One of our aunts

(who lived to be 101) made a hobby of it, but in our experience, she’s the exception.

More common are decedents who not only didn’t plan but also couldn’t possibly

have told you everything they owned. Still, in order for you to carry out their

wishes and fulll the requirements of the probate court, your job is to look under

the sofa cushions, check under the oorboards, and behind not only Door Number

One but also Doors Number Two and Three in order to nd everything owned by

the decedent on the date of his or her death.

Whether you’re handed a helpful list or need to start excavating on your own, your

starting point in organizing an estate and planning its administration is to locate

and list all the decedent’s assets. From this inventory, you’re able to determine

whether probate of the decedent’s estate is necessary (depending on whether or not

the decedent owned property in his or her name alone). If the total value of the pro-

bate assets is small enough, or if your state allows for informal probate for all

estates, you may be able to do a simplied version of the probate process. Otherwise,

you’ll have to go through full probate. Not to worry though, the probate process

itself isn’t really so bad. We guide you through the entire process in Chapter6.

So if you’re wondering about what some of the items in this chapter are and why

you need to include them in your list of estate assets, don’t worry. Although some

of these items may be unfamiliar to you, we have you covered. They all appear on

Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return,

which we describe more completely in Chapters16 and17. But see Chapter 16 to

determine if you even have to le a Form 706, as the exemptions from estate tax

are sizeable.

As you create your list, be sure to note who actually owns each asset. For instance,

an asset may be held in the individual name of the decedent, jointly with one or

more other people, in trust, or in partnership. You need to know this to decide

whether the asset must be probated (if in decedent’s name alone, held as a tenant

in common, or jointly for convenience only). See “Preparing and Filing the Pro-

bate Inventory” for more info.