When a relative passes away, it is up to the executor of the estate to liquidate the assets, according to the Law City website. The executor is identified in the will of the deceased or, if there is no will, by the courts. Liquidating the estate is the process of selling or donating items and distributing property to family members. It can be emotionally difficult, but it can be made easier if you have a plan.
The executor of the estate should have a complete inventory of the estate done prior to any liquidation activities. Ideally, the executor should hire a third party to do an inventory that can be certified and admissible in court, if necessary. If the executor chooses to not use a third party, then he should do the inventory in the presence of a witness who is not a part of the family. The witness can sign off on the inventory and at least lend a small level of credibility to the list.
The will of the deceased may dictate who gets specific items of the estate. After those items are distributed, the rest of the estate must be sold or donated to charity. Keep detailed records of how each piece of the estate was resolved including whether it was sold or donated, who received the property, how much they paid or what the charitable value was. Get receipts from all charitable organizations that receive donations for tax purposes. Keep all associated paperwork from the liquidation together in a safe place so it can be referenced if someone tries to challenge the liquidation of the estate.
When a person passes away, they are no longer considered a tax-paying citizen, according to Ronald B. Hegt, writing on the USA Today website. The estate that is left behind becomes a taxable entity that is responsible for all of the income generated by liquidating assets and making charitable donations. It is up to the executor of the estate to make sure the taxes are taken care of. Because estate taxes can get complicated, the executor should consider hiring an accountant and an estate attorney to make certain that all of the proper steps are followed in the resolution of the estate.
If you have time, it can be more financially advantageous to liquidate the estate one item at a time, according to the Estate Liquidation Company website. Methods such as garage sales, online auctions, auction houses, estate sales and private sales through agents can bring a higher price for each item as opposed to selling the entire estate as one lump sum. But if the estate needs to be liquidated quickly, use a reputable liquidation company and be sure to check your estate inventory with theirs before accepting the offer.