Most people picture big-ticket items like homes, cars, and investment accounts when thinking about inheritance. But sometimes what leaves executors and representatives with a big headache are the everyday belongings. These personal items can often be overlooked, requiring tons of time and attention to get valued correctly if going through the probate process.
When it comes to personal belongings being left for your loved ones, here are a few things to consider to stay organized and make the process smoother, not only for your heirs but also for your executor, who will be in charge of ensuring your personal property is valued and passed on correctly.
Why Is Valuing Personal Property Important?
Probate is the legal process that happens after someone passes away. Probate ultimately validates a person’s will and distributes their estate. This often complex process involves several steps, including preparing a thorough inventory list of the estate’s assets. Knowing and preparing the value of your belongings is crucial for several reasons:
- Smooth Distribution: A comprehensive and organized list will help your executor categorize and value your assets, ultimately making it easier to distribute the items according to your wishes.
- Estate Value: The total value of your estate can impact taxes and fees and determine how the estate is split among your heirs. A clear inventory ensures everyone understands the worth of each individual asset and overall estate.
- Guided Decisions: Knowing the value (be it monetary or sentimental) of personal items helps beneficiaries decide what to keep, sell, or donate. This way, everyone can make informed choices about what to do with the assets that were left behind or inherited.
- Transparency: A detailed inventory reduces the chances of conflicts during probate. Complications are less likely to occur if everyone understands how you have decided to distribute assets.
- Step-up in Basis: Assets owned by a decedent acquire a step-up in basis to their fair market value at the time of the decedent’s death. This can result in reduced capital gains taxes when the assets are later sold by the beneficiaries.
What Should Your Personal Property Inventory List Include?
Creating a personal property inventory can feel overwhelming, but creating categories helps organize your assets:
- Personal Items: This includes anything that doesn’t quite fit into other categories, like clothing, jewelry, and sentimental items. Consider getting higher priced items appraised or comparing them to similar items online.
- Vehicles: This goes beyond your daily driver. This category includes cars, boats, trailers, and even ATVs. Use resources like Kelley Blue Book or get a quote from a dealer to determine their value.
- Real Estate: List all your properties, including homes, condos, rental and investment properties.
- Financial Accounts: Include bank accounts, savings accounts, and retirement accounts. The probate court will want to see the values of these accounts at the time of your death.
- Investment Accounts: This covers stocks, bonds, cryptocurrencies, and any other investments you might have.
- Salaries and Wages: Account for any unpaid wages, commissions, or stock options you may have.
- Business Interests: If you own a business, provide detail of your holdings and assets, as well as any succession plan you may or may not have in place. If needed, an appraiser can help determine the value of your business.
- Debts: Don’t forget about personal loans made to others or any money received through court judgments.
- Antiques, Art, and Collectibles: These can be tricky to value, so consider consulting an appraiser or an antique dealer for an accurate appraisal value.
- Furniture: Typically valued as a group unless there are unique high-priced items like a piano. Furniture is usually appraised at fair market value, not what you originally paid.
- Intangible Assets: This includes things like copyrights, trademarks, patents, websites, domain names, and even social media profiles.
When in doubt, it’s best to consult a professional to get your assets appraised at their proper value. Leaving behind an organized inventory in your will, will not only help out your executor in navigating the probate process and distributing your legacy, but you will ensure your assets are properly distributed according to your wishes.
Contact Caress Law
If you’ve been named an executor or have lost a loved one, download our free guidebook, “What to Do When A Loved One Dies,” for tips on managing these challenging times and gain insight into the next steps to take. Have any specific questions? Contact our office by calling (503) 292-8990 or by filling out the form below.