Tag: Preliminary Inventory

Video

Hi folks, it’s Andy Stautz at Stautz and I am back talking about preliminary inventories. This is a follow up to my last video on preliminary inventories where things get kind of long and there was more to say.  

So just to follow up on a couple of points.  

Formatting the Preliminary Inventory

Once you’ve got the preliminary inventory prepared, so you’ve got, you think you’ve found all of the decedents property. You think you’ve got reasonably good estimates of value—we talked about how that could be a professional appraisal or that could just be a little bit of guesswork, but some basis.—You prepare the preliminary inventory, which is exactly what I’m talking about. It’s just item value, item value, item value. Just a list.  

And the court. Likes to see the list broken into separate categories. Especially in Marion County, it’s probably the most demanding. And some of these categories are always empty, some are like, you know, stock certificates. No one has stock certificates anymore.  

So it’s kind of weird sometimes how it breaks out, but it doesn’t matter what the sections are because ultimately it’s just a list and then you’ve got a total. Easy enough.  

What Do You Do With the Preliminary Inventory When It’s Ready?

Supervised Estates: File It

So once you’ve prepared this, you need to. . . basically . . . record it. So in a supervised state you file it. Because supervised estates, right, the court is involved at every step.  

Unsupervised Estates: Distribute and Verify

In an unsupervised state. You don’t need to file it. You just need to say Hi, Court, I promise I did it. And you also have to promise that the other beneficiaries of the unsupervised estate got a chance to see it. Or did see it.  

I think best practice there is probably just to send the inventory, instead of doing “they can see it if they want to”… just send the inventory to everybody, say “here it is.” And then file the verification with the court saying, “Yep, we prepared it and distributed it.”  

Because you know, with a lot of these administration things, the more clear and upfront you are, the lower your risk of conflict and conflict is the most expensive thing you can possibly do in a probate. So I’m trying to think if there are any other topics I wanted to cover, but I think that might have been it.  

Summary and Conclusion

You know you go searching for the property, you account for its value, you make a list, you tell the court you did it, and then you either show it to the court or distributees, you know, show it to the other people.  

And like I said it’s the basis, it’s the starting point that you’ll track to get to the final inventory and the closing statement. So it’s important to get it right and and preparing it is kind of the first big project for the personal representative. So there’s usually lots of back and forth between me and my clients on, OK, you know, what do we got here?  

So that’s all I have on preliminary inventories. I’m sure there are other topics or other questions that I could cover and I might later, but. That’s all for now. I hope you’ve enjoyed this one and tune in next time.  

Give me a call if you’ve got any questions about probate administration, because I love to help. Bye now. 

Video

Good morning. It’s Andy Stautz at Stautz law. It’s casual Friday here again. Recording another talk just after the last one and it is still 95°. Today we are talking about preliminary inventories, which is an important first step in administering a probate estate.  

To begin with the Personal representative is the person in charge of administering a deceased person’s estate. The decedent’s estate is all of their property. All of their property, I should say, that is titled solely in their name at time of death. We’ve discussed earlier and elsewhere the difference between probate and non probate assets.  

The First “Preliminary Inventory”: Applying to be Appointed Personal Representative

But here’s the situation. And here’s where the preliminary inventory comes up first: when you file your application– your petition to be appointed personal representative. On the filing, there’s a section where you say, you know, you say this is my name. Here’s why I’m suited to be a personal representative. There’s also, we think the estate is solvent. You know more assets than liabilities, more positives than negatives, if that’s true, and then you also say, here’s a preliminary inventory, just like a very preliminary like, here’s what we think we’re dealing with here.  

So that’s the first, most informal preliminary inventory. And sometimes I leave those blank. Sometimes, you know, I’m preparing the petition for my clients and I say we don’t know “to be determined.” Other times, especially if there’s a question of the court ordering a bond, like we talked about last week, I’ll say the only thing in this estate is this little house and a small bank account. Because if you can reassure the court that the estate isn’t that big, they’re more likely not to order a bond. We talked about that the other week.

So sometimes you put something there, sometimes you say yet to be determined.

The Real Preliminary Inventory: A Starting Point for Administration

The real preliminary inventory has to be filed soon after the court appoints the personal representative, and the letters of administration or the letters testamentary are issued. So. You know your first step is to figure out what’s out there. What the probate assets are, and the values at the time of death.

Determining Property Values at Date of Death

So. For some things, that’s easy. You know, if there’s a bank account, you look back at the statements and you say, OK, well, it was, you know, there’s this much.  

For some things like a house, it’s a little harder. It’s like, well, it’s assessed at this; Zillow says this. 

But you’re supposed to go through all of it and personal property, too. Furniture. You know furniture, $1000, bank account, $30,000, house 140,000.  

Preliminary Inventory as the basis for closing statement

So the preliminary inventory is your master list. This is. Here’s what we started with. And it’s important to get it right, because later when you go to close the estate, supervised or not, you need to tell the court, you know, here’s what happened to the stuff. Here’s where everything went. You know, we paid out this much in creditor claims. We had this much expenses for taxes and attorney fees. We distributed the remainder like, you know.  

You have to account for every dollar and the preliminary inventory is your starting point.  

So it makes sense when you think about it that way. It’s like, OK, we need to set the start. So that we can track it over the administration of the estate and then we can account for it all at the end.  

How precise do property values need to be in a preliminary inventory?

A common question I get though is wait a minute, you know? There’s one beneficiary here. Do we need to appraise the house? Like, do we need to go get a professional appraiser? Or two beneficiaries and they get along and they say, you know, do we really need to know what the furniture’s worth?  

And the answer there is not really. I mean, it’s OK. If there’s going to be a conflict. You want precise values. But otherwise it’s OK to use. To use an estimate for some of those. Less if it’s less contentious and less important. You know, nobody’s going to tell you. Yeah, spend $1000 to get a professional appraiser’s opinion of the clothes, which together are, you know, less than $1000. It just doesn’t make sense.  

So sometimes estimates are OK and sometimes saying, you know. Our realtor tells us we could probably sell the house for this, you know. You need some basis for the valuation, and if it’s a supervised estate, the court needs to approve it. But you don’t necessarily need to go like you know to the penny. This is what we’d get at auction. So that’s kind of… there’s kind of realism there. You know, you need to use some judgment in terms of. How precisely you need to pin down those values.  

But like I said, you need to account for everything at the end, so you can’t. UM. You know, you’re kind of stuck with what you started with. You don’t want to suddenly change your mind about the value of different items.  

Finding All Probate Property

You just don’t want to miss items, so some of it’s Detective work. You know you’re supposed to go through the decedent’s files and say, OK, well, here’s what we think they owned. You look at the tax returns. Oh, they got interest income from this. We didn’t know about that. You know, you got to go find things. And you’ve got a pretty quick time to do it. 

To be continued…

We’ll talk more. This video is getting long, so I’ll talk more about the verification of the inventory in the next video. Thanks for watching and bye for now.