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 Jennifer MacDonnell

By: Jennifer MacDonnell

This article was reprinted with permission from the Institute for Paralegal Education. To subscribe to IPE’s monthly newsletters (where this article was published) go to: http://www.nbi-sems.com/subscribe. It’s free and a great resource! We highly recommend it.  You can also join IPE’s LinkedIn group!

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Institute for Paralegal Education, Tools of the Trade, December, 2011.
Guest Author: Jennifer MacDonnell

Billionaire Howard Hughes died in 1976, and supposedly had a Will, however, the Will was proved to be a forgery and his Estate was painstakingly divided among 22 beneficiaries.  Famed Sonny Bono died in a skiing accident in 1998, without a Will.  His then wife, Mary Bono immediately began court proceedings to be appointed the estate’s representative, while ex-wife Cher contested the action claiming a percentage of Sonny’s massive estate.  Love song crooner, Barry White, died in 2003, without a Will, and left children, wives and girlfriends fighting over his fortune. 

As you can imagine, an estate representative’s job is not easy, particularly when it comes to inventorying a decedent’s assets.  One of the many tasks of a representative (hopefully with the help of an attorney and faithful paralegal) is to complete an Inventory and Appraisal listing all property owned by the decedent at death that is subject to probate administration.  Before attempting to accomplish this task, consider the following Top Ten Fundamentals of Completing a Successful Probate Estate Inventory and Appraisal:

1.  Identifying the Decedent’s Assets:  Regardless of whether the decedent left a Will — all assets subject to probate must be identified and valued as of the decedent’s date of death, including, real property, jet skies,  investment and cash accounts, coin collections, jewelry, antique dishes, cars, record collections and computers.  After identifying the assets subject to probate, they are listed on an Inventory and Appraisal form.  As an initial organizational tool, the decedent’s assets can be listed in two separate categories:  Real Property and Personal Property.  

2.  Real Property:  Real property is land or an item permanently fixed to land, such as a house or an apple tree.  Under no circumstances should it be assumed that real property is owned solely by the decedent until the deed or deeds are reviewed.  For example, a person can own real property as an individual, joint tenant, tenant in common, community property, or it may be discovered the real property was transferred into a Trust.  The deed or deeds should be read very carefully to ensure the decedent’s proper percentage ownership is identified and whether or not the real property asset is subject to probate. 

3.  Personal Property:  Personal property is a broad reference to assets other than real property.  For instance, personal property can be items you can touch, such as automobiles, jet skies, coin or record collections, antiques and cash.  In addition, personal property can take the form of a document conveying the right to be paid money, such as promissory notes, stock certificates and deeds of trust. 

4.  NonProbate Assets:  Commonly, assets not subject to probate are those with beneficiary designations, such as life insurance policies, certificates of deposit, individual retirement accounts, property held in Trust or property passing outright to the surviving spouse.  Again, assumptions should not be made when determining property ownership.  Keep in mind — It is not uncommon for a decedent to leave the beneficiary designation portion of a policy blank, and consequently leave an asset subject to probate.  A complete review of the asset’s statement or policy should uncover beneficiary designations (or lack thereof), property held in Trust, or property that should pass outright to the surviving spouse. 

5.  Estate Representative’s Appraisal Duties:  The estate representative is responsible for appraising the “cash” assets.  A probate referee’s appraisal is not required for these items because their value is generally obvious.  For example, a checking or savings account statement will clearly indicate the amount of cash in that account at the time of the decedent’s death.  Other examples of cash assets are checks issued on or before the date of death that can transformed to cash, certificates of deposit, money market funds, investment and cash accounts or lump sum benefits payable to the estate. 

6.  Probate Referee’s Appraisal Duties:  In many states, a referee or appraiser is appointed by the court to value all the “noncash” assets.  Examples of noncash assets are real property, jet skies, security accounts, jewelry, and cars.  Although, outside appraisals of specialty items, such as a collector’s car or heirloom jewelry may be forwarded to the referee for assistance in producing a fair appraisal.  Further, household items and personal effects that are low in value and could be sold in a yard sale are not typically valued by the probate referee.  Instead these assets are grouped together and the representative’s estimated value is forwarded to the probate referee to assist in the appraisal.   

 7.  Preparing the Inventory and Appraisal Form:  The Inventory and Appraisal form must be filed with the court within the specific timeframe according to your state’s Probate Code.  The form itself is usually only three pages, including a face page, and two attachment pages.  The two attachment pages should only list the property owned by the decedent at death that is subject to probate administration.  Attachment 1 will list the “cash” assets and Attachment 2 will list the “noncash” assets.

8.  Cash Assets:  Attachment 1 lists the cash assets appraised by the estate representative.  Each asset should be numbered one after the other, specifically described, and valued in a column at the right of the form.  The value of each cash asset should be easily identifiable and the full description of the asset must be documented.  For example, simply listing an asset as a “checking account” and listing the value as “cash” is not acceptable.  Instead, you must list the name of the banking institution, account type and number, along with the actual date of death dollar value.

9.  Noncash Assets:  Attachment 2 lists the noncash assets that will be appraised by the probate referee.    Each asset should be numbered one after the other and specifically described.  The probate referee will fill in the appraised dollar value.  The probate referee should be able to easily identify each asset.  For example, merely listing a real property’s address is insufficient.  Rather, the real property’s address, full legal description and assessor’s parcel number must be documented.  Also, it is important to note – in the beginning of your description it must be indicated whether the decedent only owned a partial interest in an asset or the referee will appraise that asset at full value. 

10.  Supplemental or Corrective Inventory and Appraisal:  In some instances, an asset may have been discovered after the initial inventory and appraisal was filed with the court.  If this is the case, don’t worry because a supplemental inventory and appraisal can be completed and filed.  Additionally, there is the possibility that an error was made in the value or description of an asset.  In the place of an inaccurate inventory and appraisal, a corrective inventory and appraisal should be completed and filed. 

As you can imagine, an estate representative’s job is not easy, particularly when it comes to inventorying a decedent’s assets.  One of the many tasks of a representative (hopefully with the help of an attorney and faithful paralegal) is to complete an Inventory and Appraisal listing all property owned by the decedent at death that is subject to probate administration.  Before attempting to accomplish this task, consider the following Top Ten Fundamentals of Completing a Successful Probate Estate Inventory and Appraisal

 The Top Ten Fundamentals of Completing a Successful Probate Estate Inventory and Appraisal will assist in inventorying a decedent’s assets.   Further, this summary checklist will help you thoroughly consider and identify the decedent’s assets, while differentiating between probate and nonprobate assets.  Although many of you will not come across an estate as large as billionaire Howard Hughes, but if you did, utilizing these fundamentals will provide a foundation to completing a successful Inventory and Appraisal. 

Jennifer MacDonnell is a paralegal for Kathleen D. Crane, Esq., in Torrance, California, where she handles matters concerning probate, post-death trust administration and estate planning. She is a mentor and writer for The Paralegal Society™ (www.theparalegalsociety.wordpress.com), a social forum created to educate, motivate and inspire paralegals. She is also an active member of the El Camino College Paralegal Advisory Committee, an Associate Member of the Los Angeles Paralegal Association and a Committee Member of the Los Angeles Paralegal Association, South Bay Section. Jennifer is a 2009 Honors Graduate of the American Bar Association approved Paralegal Studies Program of El Camino College, where she earned an Associates of Science Degree in Paralegal Studies and a Paralegal Certificate. She has a true passion for paralegal education and mentorship. Please feel free to contact Jennifer at: jen.m0817@hotmail.com.

Institute for Paralegal Education • 1218 McCann Drive • Altoona, WI 54720 • © 2011, Institute for Paralegal Education, a division of NBI, Inc. All Rights Reserved.

As we enter the new year, our goal at The Paralegal Society is to continue to post helpful, informational articles regarding various practice areas, legal issues and other pertinent tidbits that are of interest to paralegals.  Would you like to suggest a particular topic?  Is there something we haven’t covered yet that we should?  Do you have a brilliant idea you’d like to share?  If so, please leave a comment, contact Jamie via LinkedIn or send her an  e-mail.  After all - it’s “your” blog - so let us know what you’d like to read about!!