Personal Property Appraisals are an important tool for many different situations, such as estate planning, insurance, and charitable giving. At Rainier Estates, we work with clients across the Puget Sound region to provide professional appraisal services, and our team created this helpful overview of all aspects regarding personal property appraisals.
Personal property, also referred to as tangible personal property, encompasses movable assets that are not permanently affixed to real estate. This includes items like furnishings, artwork, antiques, collectibles, jewelry, equipment, vehicles, intellectual property, and more. Essentially, personal property is composed of all physical possessions other than real estate.
Personal property can be divided into two main categories – depreciable and appreciable. Depreciable personal property decreases in value over time and with use, like furnishings, electronics, vehicles, machinery, etc. Appreciable personal property generally increases in value over time, like fine art, antiques, vintage items, rarities, and other collectibles.
Understanding the nature of personal property is important because it determines the valuation methodology and informs the appraisal process. Since personal property is movable, it requires different assessment approaches compared to real estate. Values are influenced by different factors like condition, provenance, rarity, aesthetic qualities, and intangible associations that do not impact real property.
The Role of a Appraiser:
A personal property appraiser provides an independent, impartial professional opinion on the value or replacement cost of identified personal property assets. Appraisers must have the proper credentials, qualifications, and affiliations to appraise different types of property.
For example, appraising residential contents requires different expertise than appraising antiques, machinery, jewelry, or fine art. There are no universal regulatory bodies that oversee or license personal property appraisers. Instead, appraisers obtain credentials through various professional appraiser organizations and must commit to ongoing education and ethical codes of conduct.
Appraisers are not authenticators – they rely on specialists for authentication. Their role is to research, inspect, analyze, and develop an unbiased, justified opinion on the value of property. Appraisals need to be updated every 3-5 years to remain current. Relying on outdated appraisals or non-professional valuations often leads to problematic outcomes.
Common Types of Appraisals:
Insurance Appraisals: Required to adequately insure items above standard policy limits, which are often quite low for categories like jewelry, fine art, antiques, collectibles. Needed to settle claims – having a recent appraisal simplifies the claims process significantly.
Liquidation Appraisals: Assess the orderly liquidation value of personal property that must be sold or divested relatively quickly, such as the contents of a home for an estate sale. Consider the type of sale venue and time frame.
Probate Appraisals: May be required during the probate process to value estate assets above a certain threshold, especially for tax compliance purposes. Can help divide property among heirs and beneficiaries.
Trust Appraisals: Provide current values for property held in trusts, which may be required to obtain insurance coverage, calculate taxes, or distribute to beneficiaries.
Inheritance Tax Appraisals: In addition to federal estate taxes, some states levy separate inheritance taxes. Specific appraisals tailored for state requirements may be needed.
Guardianship Appraisals: Allow court-appointed guardians to make sound decisions regarding the management, sale, or distribution of property they are overseeing for someone else.
Casualty Loss Appraisals: Analyze the decrease in fair market value of personal property lost or destroyed due to theft, disaster, accident, or other catastrophic event for claiming tax deductions.
Asset-Based Lending Appraisals: Establish the value of personal property used as collateral for securing business or personal loans, lines of credit, and other debt obligations.
Charitable Donation Appraisals: Document the fair market value of non-cash charitable contributions for tax deduction purposes. An appraisal is required by the IRS for donated property valued at $5,000 or more.
Loss/Damage Claim Appraisals: Assess the specific damage or loss in value of an item attributable to an insured incident in order to settle insurance claims. Differs from a standard appraisal.
Equitable Distribution Appraisals: Used to determine the fair, just distribution of personal property and contents that were jointly owned, often in divorce proceedings or probate disputes.
Selecting a Qualified Appraiser:
Choosing a qualified appraiser to value your assets is critical, and yet can be challenging given the lack of licensing and minimal regulation for personal property appraisers. It will be important to take a more-hands-on role in vetting and selecting your appraiser (like Rainier Estate’s founder, Lisa Taylor). Here are important factors to look for:
Compliance with the Uniform Standards of Professional Appraisal Practice (USPAP).
Membership in professional appraiser organization like the American Society of Appraisers (ASA), International Society of Appraisers (ISA), or National Auctioneers Association (NAA, which offers Graduate Personal Property Appraisal GPPA certification).
Relevant education, degrees, and professional training in personal property appraisal concepts and methodology.
Documented experience appraising similar types of property like yours.
Charges reasonable hourly or flat project rates rather than percentages of valuation, which can be unethical.
Provides appraisal reports meeting IRS requirements and your intended purpose.
It’s also recommended to verify credentials, seek references, and interview prospective appraisers before engaging services. By choosing an appraiser from a reputable group (such as those mentioned above), you can more easily avoid mistakes or oversights.
Common Purposes for Appraisals:
When engaging an appraiser, they will first need to understand your intended purpose in order to determine the appropriate type of value definition to apply during the valuation process. Some typical purposes for personal property appraisals include:
Death: Estate planning and probate are one of the most common reasons to get an appraisal. A detailed appraisal will be needed to accurately distribute inheritances to heirs, calculate inheritance tax, and maximize proceeds from estate sales and auctions.
Debt: In situations involving debt, appraisals can be used for establishing values for bankruptcy filings, divorce settlements, loan collateral, and asset division.
Damage: When an item is damaged, a written appraisal can be the most important piece of evidence for an insurance company (if you didn’t get an appraisal before the damage, it can result in lost or diminished claims). An appraisal can also be used for filing casualty loss deductions with the IRS after catastrophic events.
Divorce: In the case of a divorce, an appraisal is needed for an equitable distribution of marital assets and shared personal property. It’s highly recommended to get an appraisal for all assets before either party is allowed to remove any items.
Donation: When you are making a generous charitable donation, you want to ensure that you’re receiving the maximum tax benefits. An appraisal will substantiate the fair market values required by the IRS for claiming charitable contribution tax deductions.
Downsizing: During this stressful transition, an appraisal can be a helpful tool when preparing possessions for sale, or determining which items you would prefer to keep based on their appraised values.
Collateral: An often-overlooked use for appraisals. Banks can extend personal loans or lines of credit based on appraised values of personal property (such as art collections, jewelry, etc). The appraised items are used as collateral in this instance.
Typical Appraisal Report Contents:
A professional personal property appraisal report will contain extensive details about the property, analyses performed, research conducted, and the valuation conclusions. While formats can vary, appraisal reports typically include the following:
Title page clearly identifying the report subject, location, value type, and valuation date
Letter of transmittal (a type of cover letter accompanying a financial report) summarizing key information
Table of contents
Signed certification page with applicable standards
Summary of important conclusions
Photographs of property
Overview of property location and condition
Statement of appraisal type (complete or limited) and report type (self-contained, summary, restricted use)
Disclosure of extraordinary assumptions or hypothetical conditions affecting the valuation
Statement of general assumptions and limiting conditions on the appraisal
Identification of intended use and intended user per engagement terms
Detailed scope of work performed by the appraisal
Definition and effective date of value
Thorough description and condition assessment of the personal property
Discussion of current ownership and relevant sales history, if available
Highest and best use analysis for the personal property
Application of relevant valuation approaches with explanations
Depreciation analyses (physical, functional, economic) as applicable
Market research, case studies, and comparative analyses to support conclusions
Reconciliation of approaches into a final opinion of value
Statement of appraiser’s professional qualifications and credentials
Addenda with supporting exhibits, documents, and supplementary data
Keep Your Appraisals Updated:
You may be thinking that getting a personal property appraisal is a “one and done” task, but that’s not the case. The value of personal property items like collectibles, jewelry, art, antiques, and other household contents fluctuates over time, so it’s advisable to have appraisals updated or reviewed every few years.
Why would the appraised value change?
Market Conditions. Supply and demand for certain items may increase or decrease over the years. More demand drives prices up. More supply drives prices down. Collectibles often behave like stocks, and you want to buy and sell at the right time!
Economic Factors. Values tend to track inflation and consumer price indexes. Inflation makes money less valuable over decades, and therefore can also impact appraised values.
Popularity and Trends. Styles and collecting preferences come in and out of fashion. Trendy items become worth more, while outdated items lose appeal.
Rarity. For collectibles, the number of surviving artefacts determines rarity. As items become more rare over time, values often increase.
Condition. Items deteriorate with age and use. An antique in poor condition is worth less than one in excellent shape. Conversely, a restored antique can have dramatically increased value. You want to ensure that your appraisal accurately captures current condition.
Historical Significance. Some items gain importance as they age, like artifacts from significant historical events. For instance, an artist’s work will often increase in value after their death.
New Discoveries. When new information about an item comes to light, it can positively or negatively impact value. Examples include newly discovered provenance of an artwork or recent auction results.
In summary, many forces cause personal property valuations to change over years or decades. Markets fluctuate, tastes change, items deteriorate. What was commonplace 30 years ago may be collectible today. And condition is paramount. Well-preserved items command premium prices. Appraised values must capture how all these dynamics affect current worth.
Appraising personal property assets like collectibles, jewelry, art, antiques, vehicles, equipment, and other valuables requires specialized expertise. Appraisers must have extensive training in property valuation concepts, methodologies, and report standards.
Appraising personal property assets serves a variety of important purposes, including the following:
Ensures adequate insurance coverage reflecting current values
Provides loss verification and documentation critical for settling insurance claims
Allows equitable distribution of property in divorce, estate disputes, bankruptcies, and contract dissolutions
Enables prudent property management by trustees, guardians, executors, and other fiduciaries
Maximizes proceeds when assets must be sold in downsizings, relocations, estate sales, auctions
Substantiates charitable deductions and reduces taxes owed on donations
Verifies casualty losses for claiming tax deductions after catastrophic events
Facilitates lending decisions by establishing collateral values for asset-based loans
Streamlines inheritance planning and probate resolution for beneficiaries
By providing extensively researched, impartial third-party expert opinions on the value of personal property, appraisals help minimize conflicts while optimizing outcomes.
Addendum: Real Estate Property Appraisals:
In addition to appraising the value of your personal property, it is often necessary to appraise the value of real estate property as well. Real estate appraisals require niche skills and training, completely separate from the qualifications required for personal property appraisal.
What is a Real Estate Appraisal?
A real estate appraisal is a professional opinion of what a home or property is worth on the open market. This is a requirement for most banks to loan on a property, estate asset distribution, and more.
Who Does Real Estate Appraisals?
Real estate appraisals are done by licensed appraisers (these licenses are typically provided by the state, Washington included). Appraisers have training requirements and must follow industry standards and ethics rules.
Real Estate Appraiser Qualifications and Training:
Bachelor’s degree in subjects like real estate, finance, economics, business, or statistics is often required
Coursework in valuation principles, property analysis, market analysis, and appraisal methodology
Must obtain state license to perform appraisals meeting federal guidelines
Multiple levels – Licensed, Certified Residential, Certified General
Higher levels need more experience hours and examination requirements
75+ hours of approved qualifying education required before initial licensing
30+ hours of continuing education every 2 years to renew license
1,000 – 3,000 hours of documented appraisal experience needed, depending on license level
Experience requirements increase for higher certifications
Mentorship by experienced appraiser often required
Must pass National Uniform Licensing and Certification Exams
Test knowledge of appraisal methods, standards, ethics, and federal regulations
Additional specialty exams required for higher Certified designations
Adherence to Standards
Expected to follow Uniform Standards of Professional Appraisal Practice (USPAP)
USPAP sets standards for ethical behavior and acceptable appraisal methodology
In summary, real estate appraisers must meet rigorous qualification requirements through training, experience, testing, and professional affiliations. Proper credentials guarantee appraisers have the skills to provide fair, accurate, and unbiased property valuations.
Why Get a Real Estate Appraisal?
There are several common reasons to get an appraisal:
To establish a sale price for a property
To challenge a property tax assessment
To determine value before making an offer
To verify value for a mortgage loan
To get insurance for rebuilding a damaged property
To substantiate value for inheritance taxes
To confirm value for property division in a divorce
What’s in a Real Estate Appraisal Report?
A typical property appraisal report contains:
Details of the property like square footage, bedrooms, baths
Photos of the property exterior and interior
Sales of comparable nearby properties
Analysis of values using approaches like cost, income, sales comparison
Adjustments to comparable sales for differences like upgrades
Statement of the property’s estimated value and effective date
How are Properties Appraised?
Appraisers use market research and valuation methods to justify their opinion of value. Some of the key considerations that appraisers analyze in their report:
The property’s features – age, size, condition, renovations
Sales prices of similar homes sold recently in the same area
Replacement cost to rebuild, factoring in depreciation
Market trends for the neighborhood, city, and region
Income generated by rent for investment properties
Every property is unique, and therefore it’s important to hire an appraiser with a detail-oriented approach and keen understanding of the current real estate market (often connecting with local agents or brokers to gain more knowledge of niche markets).
Often the bank hires the real estate appraiser, but that doesn’t mean you can’t have a positive impact on the final appraisal outcome. See the helpful guidance below.
Tips for Getting a Good Real Estate Appraisal:
Hire an appraiser with local experience and strong reviews
Give the appraiser property details like surveys and inspection reports
Provide a list of property upgrades and unique features
Share information that may impact land value like pending new developments
Make any necessary small repairs, especially those that are visible
Get a professional floor map of your house that includes a square footage calculation (we’ve had clients gain square footage as a result of doing this, because in the past the accurate technology to calculate sqft wasn’t available)
Estate Planning is critically important for protecting a person’s legacy. While many people avoid thinking about estate planning, a solid estate plan can lead to greater clarity and peace of mind moving forward. At a high level, estate planning is the process of organizing and distributing a person’s assets and finances incl. estate taxes, both while they are living and in preparation for incapacitation or death. It involves legal strategies to correctly transfer wealth to chosen beneficiaries. Estate planning ensures one’s wishes are carried out and provides security for your loved ones. A key component of estate planning is naming an executor – the person responsible for carrying out the terms of your last will and testament. This article will provide an overview of end-to-end estate planning best practices, and the critical role of the executor, drawing key information from our decades of experience assisting families at Rainier Estates.
*Before we jump in, we’d like to take a moment to reiterate that each estate situation is unique, and the proper legal professional should always be consulted before any estate planning decisions are finalized.*
Key Elements of an Estate Plan:
Creating an effective estate plan is essential for ensuring the smooth transfer of assets and wealth to your beneficiaries while minimizing potential conflicts and tax liabilities. A well-structured estate plan provides peace of mind and financial security for your loved ones. This report highlights the key elements that constitute a comprehensive estate plan.
Will and Testament: A will is the cornerstone of any estate plan. It outlines how your assets will be distributed upon your passing and allows you to appoint guardians for minor children. A properly drafted will help avoid intestacy laws and ensure your wishes are carried out.
Trusts: Trusts offer flexibility and control over asset distribution. Revocable living trusts allow assets to be managed during your lifetime and easily transferred to beneficiaries upon death, bypassing probate. Irrevocable trusts can minimize estate taxes and protect assets from creditors. Your estate planning attorney will assist you with creating your Trust and explaining your options.
Beneficiary Designations: Updating beneficiary designations on retirement accounts, life insurance policies, and other assets is crucial. These designations often take precedence over wills, so keeping them current ensures your intended beneficiaries receive the assets directly.
Power of Attorney: A durable power of attorney authorizes a designated individual to make financial and legal decisions on your behalf if you become incapacitated. This prevents the need for court-appointed guardianship and ensures your affairs are managed as per your wishes.
Healthcare Directives: Healthcare directives, including a living will and a healthcare power of attorney, detail your medical preferences and designate someone to make healthcare decisions if you are unable to do so. This ensures your medical wishes are respected.
Letter of Instruction: While not legally binding, a letter of instruction provides valuable guidance to your loved ones regarding your personal wishes, funeral arrangements, and the location of important documents.
Estate Tax Planning: For larger estates, strategic planning can minimize estate taxes. This may involve gifting assets during your lifetime, creating irrevocable life insurance trusts, or other advanced planning techniques.
Regular Reviews and Updates: Estate plans should be periodically reviewed and updated to reflect changes in your family structure, financial situation, and laws. Failing to update your plan can lead to unintended consequences.
Crafting a comprehensive estate plan involves several interconnected elements, each serving a unique purpose in preserving your legacy and ensuring your wishes are carried out. By addressing wills, trusts, beneficiary designations, powers of attorney, healthcare directives, and more, you can provide your loved ones with financial security and peace of mind during challenging times. Seeking advice from legal and financial professionals is crucial to tailoring an estate plan that aligns with your unique circumstances and goals.
Keep reading more on Estate Planning and Estate Executor best practices…
Elements to Consider when Creating a Trust:
When creating a trust as part of an estate plan, there are several key elements to consider. First, decide on the purpose of the trust – is it designed to avoid probate, minimize estate taxes, protect assets, or ensure assets are used for a certain purpose after your death? Clarifying the goal will shape other trust decisions.
What are the different types of estate trust?
The most common types of trusts used for estate planning purposes include:
Revocable Living Trusts: A revocable living trust is a trust created during the grantor’s lifetime that can be altered or terminated at any time by the grantor. Upon the grantor’s death, the trust becomes irrevocable. The main benefits of a revocable living trust are avoiding probate, maintaining privacy, and allowing for a smooth transfer of assets to beneficiaries. A revocable trust also allows the grantor to maintain control over the assets during his or her lifetime.
Irrevocable Trusts: An irrevocable trust cannot be changed or reversed once executed. The grantor effectively gives up all ownership rights to the assets placed in the trust. A common purpose of irrevocable trusts is to minimize estate taxes by removing assets from the grantor’s taxable estate. Other benefits include asset protection, providing for a beneficiary with special needs, and controlling when beneficiaries receive their inheritance.
* Revocable trusts provide more flexibility, but fewer tax benefits than an irrevocable trust.
Testamentary Trusts: A testamentary trust is a trust created through instructions in an individual’s will. It does not take effect until after the grantor’s death and is irrevocable at that point. Testamentary trusts are useful for accomplishing goals like providing for minor children or beneficiaries with disabilities. They allow the grantor to specify conditions for asset distributions.
Charitable Trusts: A charitable trust is established to benefit a charity and reduce the tax liability for the trust creator’s estate. Charitable remainder trusts pay income to the grantor or other beneficiaries for a period of time, with the remaining trust assets ultimately going to charity. Charitable lead trusts pay income to a charity for a set period, after which the remainder reverts back to the grantor or beneficiaries.
Once you’ve determined the type of trust you need….
Next, appoint a trustee to manage and distribute the trust assets. Choose someone competent, trustworthy and willing to take on trustee duties. Consider naming a successor trustee in case your first choice cannot serve for whatever reason. Your trustee can also be your estate executor, or someone different. Make sure that you communicate the scope of responsibilities with your trustee(s).
Determine what assets you want to place into the trust. Popular trust assets include real estate, investment accounts, life insurance policies and business interests. Make sure assets are properly retitled in the name of the trust.
Specify when and how trust beneficiaries will receive distributions. For example, you may want grandchildren to receive certain payouts at specified ages, or that no beneficiary can exceed a set annual distribution.
Outline trustee powers concerning investments of the principal and distributions. You can allow broad discretion or impose strict limits depending on your trust goals and beneficiaries’ needs. It is also wise to choose beneficiaries and contingent beneficiaries in case a beneficiary dies before receiving his or her share of the trust (in which case you can provide instructions that the beneficiary’s heir(s) receive their share, nominate an alternate beneficiary, or share those assets amongst the other beneficiaries).
Work closely with an estate planning attorney when creating a trust to ensure your goals are fulfilled and plan is legally valid. Periodically review the trust terms to make updates as needed over time (especially after births, deaths, marriages, and divorces).
While you’re pondering on Estate Planning and Estate Executor choices, Estate taxes can significantly reduce wealth transferred at death. In 2023, federal estate tax applies to estates over $12.92 million. Several states also impose estate or inheritance taxes at much lower thresholds. For instance, in the state of Washington the estate tax threshold is $2,193,000, and the tax rate ranges from 10-20%. Proper planning is key to minimizing taxes on an estate. Assets left to charities and surviving spouses qualify for unlimited estate tax deductions.
Even if your estate doesn’t meet the state or federal thresholds for inheritance tax, there are other tax implications to keep in mind. For instance, all property taxes related to estate assets must be paid on schedule until the estate is closed (sometimes it can take months or years to completely resolve estate negotiations, liquidation, and distribution of estate assets).
Trusts, reductions of asset valuations, and gifting assets all help reduce estate tax liability. Estates can claim income tax deductions for charitable contributions made as part of a bequest. Flexibility is important since tax laws frequently change. Reviewing plans every few years ensures tax efficiency and incorporates law modifications. Using experienced counsel and financial advisors will help to maximize tax benefits and minimize costs.
Tip: If you plan ahead, you can ensure that your beneficiaries can receive some portion of tax-free inheritance during your lifetime via the “gift tax exclusion”. As of 2023, a person can gift another person $17,000 annually with no tax implications.
Estate Tax Experts in the Puget Sound Region:
Nelson Tax & Consulting Services. Estate Tax, Personal Tax, and Business Tax and Planning Services. They have offices in Kirkland, WA and Spokane, WA. 425-616-1040.
Planning with Purpose. Estate planning, probate law, and estate tax services. They have an office in Lynnwood, WA. 425-939-9948.
Capital Tax Service. Estate Tax, Trust Tax, Retirement Tax Planning, Personal Tax, and Business Tax Services. They have an office located in Kent, WA. 425-251-3203.
H&R Block. Estate Tax, Personal Tax, and Business Tax Services. They have offices in every major city in Washington State, including Bellevue, Kirkland, Redmond, Woodinville, Bothell, Lynnwood, Seattle, Kent, Issaquah, Kenmore, and Gig Harbor, WA. 425-643-1730.
A goal of estate planning is often avoiding the potentially lengthy probate process which is subject to public disclosures. Several strategies can minimize assets passing through probate. Jointly held property with rights of survivorship automatically passes to the surviving co-owner. Assets with properly designated beneficiaries like life insurance and retirement accounts will bypass probate.
Living trusts funded during life avoid probate since trust assets are managed by a successor trustee after death per the trust terms. Outright gifts made while living also reduce the assets that could be considered for probate. For real estate, a transfer on death deeds passes property to beneficiaries without probate. Lastly, payable on death and transfer on death designations on bank accounts, securities, and vehicles designate successors to receive those assets while avoiding probate.
Choosing an Attorney:
If you do not currently have an estate planning attorney, that is a good place to start. Selecting the right estate probate attorney is a critical decision that can greatly impact the smooth administration of an estate. An experienced and skilled attorney can guide you through the complexities of probate, ensuring that all final wishes are fulfilled. This summary provides valuable insights into selecting the ideal estate probate attorney for your needs.
Experience and Expertise: When searching for an estate probate attorney, prioritize those with extensive experience in estate and probate law. Look for credentials, years of practice, and a strong track record of successful cases. An attorney with specialized knowledge in estate planning and probate matters can navigate complexities effectively.
Reputation and Reviews: Online reviews, testimonials, and referrals from friends or family can provide insights into an attorney’s reputation. Positive feedback is an indicator of their professionalism, reliability, and client satisfaction.
Local Knowledge: Opt for an attorney who is well-versed in local probate laws and regulations. They should have a deep understanding of state-specific probate procedures, deadlines, and court requirements.
Communication Skills: Effective communication is vital throughout the probate process. A responsive attorney who explains legal terms in plain language and keeps you updated on case developments can ease your concerns and foster trust.
Personalized Approach: Each estate is unique, so your chosen attorney should be willing to tailor their approach to your specific needs. A customized strategy can help achieve the best possible outcome for your situation.
Transparent Fees: Clarify the attorney’s fee structure upfront to avoid surprises. Some attorneys charge hourly rates, while others may offer flat fees. Understanding the cost involved ensures a transparent working relationship.
Availability and Accessibility: Probate can be a lengthy process, and you’ll want an attorney who is available to answer your questions and address concerns promptly. Accessibility can alleviate stress during an already challenging time.
Compatibility and Trust: Building a rapport with your attorney is essential. You should feel comfortable discussing personal matters and trusting their guidance. Initial consultations can help you gauge this compatibility.
Referrals from Professionals: Other legal professionals, financial advisors, or accountants can provide recommendations for reputable estate probate attorneys they have worked with before.
Choosing the right estate attorney requires careful consideration of their experience, reputation, communication skills, and personalized approach. By conducting thorough research, seeking referrals, and utilizing initial consultations, you can identify an attorney who will guide you through the probate process efficiently, ensuring that final wishes are respected and assets are distributed seamlessly.
Recommended Probate Attorneys and Law Groups in the Puget Sound region:
Iddins Law Group. Estate planning, probate law, and elder law services. They have an office in Kent, WA. 253-854-1244.
Gig Harbor Law Group. Estate planning, probate law, and business law services. They have an office in Gig Harbor, WA. 253-509-0625.
Choosing an Executor:
One of the most important estate planning decisions is choosing an executor. The Estate Planning and Estate Executor go hand-in-hand. The executor is responsible for carrying out the terms of a will and managing the estate after someone dies. This involves collecting assets, paying debts and taxes, and distributing remaining assets to beneficiaries. Key factors when selecting an executor include financial responsibility, attention to detail, impartiality, and likelihood to outlive the will maker.
Many name family members or close friends as executors. However, for complex estates, hiring a professional executor like an attorney or accountant is advisable. They have expertise managing estates and dealing with court proceedings. An executor should be financially stable with no significant debt or creditor issues. The role requires extensive record keeping and organization.
The executor must be objective when carrying out wishes and dealing with beneficiaries. Emotions can run high during estate administration, so impartiality helps ensure assets are handled appropriately. Finally, the executor should be younger than the will maker to help ensure they outlive the will maker and can fully carry out all estate administration duties.
Duties of an Executor:
The executor has significant legal and financial responsibilities. Their overarching duty is to act in the best interest of the estate. The first step is to locate the original will and file it with the appropriate probate court to be appointed executor. They must notify all beneficiaries named in the will and heirs at law. Government agencies like Social Security and financial institutions holding assets must also be informed.
The executor must create a detailed inventory of all estate assets and liabilities. This aids the court in verifying the estate is handled properly. They open an estate bank account to pay any debts or administration costs. Outstanding taxes and expenses must be paid before assets are distributed. For taxable estates, the executor files any necessary returns.
Throughout administration, the executor must maintain proper records. Asset appraisals, court filings, and correspondence should all be retained. They must keep beneficiaries reasonably informed of the process. When ready to distribute, the executor obtains any necessary court approval before transferring assets to beneficiaries according to the will’s terms.
Limits on the Executor:
While executors have substantial authority, they cannot modify the will’s terms or act beyond their scope as fiduciary of the estate. The executor cannot make distributions not specified or change asset allocations among beneficiaries. Self-dealing or mingling personal and estate assets is prohibited.
Executors should consult an attorney before selling any significant assets not needed to pay estate expenses. Any transactions must be at fair market value with proceeds going to the estate. Executors cannot modify the title of assets or access accounts until officially appointed by the probate court. Any unilateral actions taken could result in removal as executor or personal liability.
Secure Estate Property within 48 Hours. Most issues that we have observed among heirs and executors are due to personal property being removed from the estate by an individual without prior permission. As an example, a sibling of the deceased could use their house key to enter the home and remove many items that they want… without the executor or other heirs knowing about it. Once the personal property is gone, it’s very hard to prove it was ever there. We’ve seen family members stop speaking due to “stolen property” such as this. Therefore, we recommend changing the locks and securing all personal and real estate property within 48 hours of when the executor’s legal authority is appointed by the court.
Honor the Estate Above Others’ Preferences. After your loved one passes away, the executor is the only person who can protect their wishes and desires for their estate. Other friends, family, or heirs may try to make their wishes and desires more important, but it’s not their estate. As the executor, don’t feel bad about doing your job fairly and according to the instructions of the estate plan.
Make Time for Self-Care. Being an estate executor can be very physically and mentally draining. We’ve known many executors who stop sleeping consistently or taking proper care of their needs as a result of the high-pressure situation/others involved. The executor should literally schedule time for themselves to do self-care; even if it delays the estate work by a day or two, nothing is more important than health!
The Value of a Power of Attorney:
A Power of Attorney (POA) is an important legal document that allows you to appoint someone you trust to manage your finances and make health care decisions if you become incapacitated. Having a plan in place with a POA can bring tremendous peace of mind that your wishes will be carried out and your loved ones will avoid a costly, public guardianship process if you cannot make decisions for yourself.
Unexpected health emergencies like strokes, heart attacks, and accidents can happen at any age. Debilitating conditions like Alzheimer’s disease can also steal decision-making capacities before death. If you were to experience an unexpected health event and could no longer make sound decisions, your family would have limited options without a POA in place. They may have to petition the court to appoint a guardian, which involves legal proceedings and public records. The court may appoint someone you would not have chosen yourself. Establishing a POA allows you to proactively name someone you know and trust.
Your agent under a POA can pay bills, access bank accounts, negotiate with creditors, and file taxes on your behalf. A POA specific to health care authorizes your agent to interact with doctors, understand treatment options, and make medical decisions according to your preferences. Without this, your family may not be able to obtain details about diagnoses and recommended treatments. A POA provides clear legal authority for your agent to step into your shoes for finances and medical choices if you become incapable of representing yourself.
The small upfront investment of time and money to formalize a POA while you are still competent will pay off tremendously if an emergency strikes. It helps ensure there is no disruption in managing your living expenses, investments, and tax filings. It also avoids stressful questions later about what medical care you would want. Evaluating potential agents, understanding their roles and responsibilities, and reviewing your specific wishes will give everyone confidence if the POA is needed to act.
Planning for unexpected health situations through a POA provides peace of mind that your affairs will be handled as you desire. It prevents added family stress during an already difficult period. By appointing someone you trust to serve as your agent, you retain control over how decisions are made on your behalf. A POA offers an inexpensive way to thoughtfully prepare for the possibility of incapacity.
Typical Choices for POA agent:
– Domestic Partner or Spouse
– Trusted Friend or Family Member
– Business Partner
– Executor, Trustee, or Beneficiary
Downsizing and Relocation:
Relocating, and often downsizing to a smaller living space, involves both logistical challenges and emotional hurdles. By thoroughly planning ahead, you can make the transition go smoothly.
Start by honestly assessing your needs where you’ll be relocating. Ask yourself, when was the last time I actually used this? You may be surprised what you no longer need, and what you truly can’t live without. Use this as an opportunity to declutter and ensure your new space has a fresh start.
Be strategic and realistic about what you can fit into a smaller space. If downsizing, measure furniture and major belongings to determine what will work best in your new home- you don’t want to hire movers only to realize the sofa doesn’t fit. Sketch out floor plans to visualize how pieces can fit together; we’ve found that these visuals really help our clients. This will help ensure that your most important belongings can transition with you.
After you’ve determined which items to relocate with, you’ll probably require estate liquidation services to sell or clear-out all the remaining items (more on that in the next section).
Research moving companies and get multiple quotes. Book professional movers well in advance of your moving timeframe. Make sure to give yourself ample time to pack up and move out, perhaps even hiring a professional organizer to assist.
Selling real estate? If financially possible, it’s always recommended to handle home maintenance fixes and improvements ahead of listing your property on the open market. Investing in minor repairs, fresh paint, and home staging will help make your property more appealing for buyers, and fetch a higher sales price. The real estate market is competitive, and you want to ensure that your property can stand out from the pack.
Be kind to yourself during this big transition, and create space for self-care as needed. Leaving a beloved home naturally stirs up many feelings and memories. Make time to say proper goodbyes to your current space and community. Focus on the exciting potential of your next chapter.
Many senior communities offer services to assist new residents during the relocation process, a great resource to take advantage of at some locations. At Rainier Estates, we can help with every step of the process.
By giving yourself plenty of time and planning ahead, you can make your downsizing or relocation journey smooth, efficient and even exciting. The preparation will pay off with a fresh start in a home and community that perfectly suits this next phase of life.
Recommended Senior Care and Living Facilities in the Puget Sound Region:
If an unexpected (or even a planned) relocation into a senior care facility or senior living community happens in the future, it’s best to do the research and planning when you’re of sound mind and body. Learn about the types of services and environments each option can offer, and also the pricing and availability. Ensure that your loved ones know your preferences, discuss those ideas with your estate planning attorney and tax professional, and then relax with peace of mind that everything will fall into place when and if the need arises. You may even find a community you love so much that you bring your plans forward!
Aegis Living. This is fine senior living. They provide beautiful living spaces, full dining experience, and many activities for residents of all abilities to enjoy. Services they provide include assisted living, memory care, and respite care. They have locations in Bellevue, Kirkland, Mercer Island, Seattle, Lynnwood, Issaquah, and more. 866-688-5829.
Emerald Heights of Redmond. This wonderful community offers assisted living services, with a focus on independent senior living. There are many activities, including outdoor activities like bocce ball or wine tastings with friends, for residents to enjoy. They are located in Redmond, WA. 425-556-8100.
Fairwinds Redmond. This wonderful community offers assisted living services, with a focus on independent senior living. They have nice amenities like a pool and theater, and also guest suites if you have visiting family or friends. They are located in Redmond, WA. 425-558-4700.
The Park at Belle Harbour. A premium assisted living community, with 24/7 staff support available to residents. Fine dining for every meal, game nights, and excursions to excited locations across the region are planned every week. They are located in a central area of Bellevue, WA. 425-504-8468.
The Watermark. Between their two Bellevue, WA locations they offer independent living, assisted living, and memory care services. For the independent senior living community, they offer a variety of activities and experiences every day. 425-504-8001.
Pacific Regent. Independent living offered in an upscale central downtown Bellevue, WA location. They offer daily on-site activities, and multiple excursions around the region every week. 425-688-1460.
Sunrise Senior Living. This award-winning facility offers independent living, assisted living, memory care, and hospice coordination services. They have a location in downtown Bellevue, and also in Redmond, Issaquah, and Mercer Island, WA. 425-546-1604.
Solstice Senior Living. With a focus on independent living, this community enjoys group dining, billiards, arts & crafts, and many other on-site activities. They have locations in Renton, Normandy Park, and Tacoma, WA. 425-243-1253.
Chateau Bothell Landing. Senior living located along the Sammamish River Trail in Bothell, WA, with easy access to local continued education and senior center activities. This location offers independent living, assisted living, and memory care. 425-485-1155.
Edmonds Landing. This is a quality assisted living and independent living community located in Edmonds, WA. Enjoy the group dining and on-site activities room. 425-906-3917.
Merrill Gardens. Quality senior communities offering independent living, assisted living, and memory care services. With premier locations on the Kirkland waterfront, Renton, Burien, and within the Ballard, University District, and First Hill neighborhoods of Seattle, WA. 206-676-5300.
Queen Anne Manor. This senior living community focuses on assisted living, memory care, and respite care. They ensure that the activities enrich the lives of residents, and spacious common areas. They also allow small pets (unless the individual requires memory care). Located in Seattle, WA. 206-312-5435.
Brookdale Senior Living. Across their various locations they offer a wide range of services, including independent living, assisted living, memory care, skilled nursing, retirement community, and at-home care. Locations include Seattle, Bothell, Lynnwood, and Everett, WA. 360-845-7494.
The Lakeshore. At this Era Living community, enjoy your golden years on the waterfront of Lake Washington. They offer independent living, assisted living, and memory care services. Amenities include fine dining, active social activities calendar, care services that evolve with your needs. The Lakeshore is located in Renton, WA and Era Living also has other locations in Bellevue, Issaquah, Seattle, and Mercer Island, WA. 206-504-1976.
Village Concepts. This charming community has locations in Bothell, Issaquah, Burien, Renton, and Gig Harbor, WA. Sound Vista Village in Gig Harbor offers independent living, cottages, assisted living, and memory care services. 855-265-4349.
Appraisals & Valuations:
Accurate appraisals are critical for successful estate planning and administration. An appraisal is an estimate of the fair market value of an asset performed by a qualified, impartial professional called an appraiser. We trust Graduate Personal Property Appraiser (GPPA) training and certification, and recommend Lisa Taylor in the greater Seattle area. We also recommend appraisers trained with the American Society of Appraisers (ASA) and the International Society for Appraisers (ISA). There are several common types of assets that regularly require valuation:
Real estate is often a major component of an estate. Property appraisals consider the property location, size, condition, improvements, zoning, usages, and recent comparable sales to estimate real estate market value. For large properties like farms or commercial buildings, the income valuation approach may also be used. Real estate represents a significant portion of many estates, so accurate real estate appraisals are key.
Privately held business valuations establish the current value of a business based on its financials, assets, market value, and earning potential. Since buyers determine prices based on profitability, certified business appraisers analyze the company’s financial statements, proprietary assets, and market comparable. For minority partnership interests, adjustments are made for lack of control.
Equipment, vehicles, and machinery are valued based on age, condition, maintenance records, replacements costs, salvage values, and comparable sales. Outdated appraisal methods like book value or tax assessments are often inaccurate for estate purposes. Up-to-date appraisal methods (such as subscriptions to online databases that constantly update) establish more realistic market prices.
Art, collectibles, jewelry, and antiques can be challenging to value properly. These specialized assets have volatile markets driven by subjective factors like aesthetics, rarity, provenance, and intangible cultural importance. Qualified appraisers combine financial valuation methods with specific subject matter expertise. At Rainier Estates we specialize in these types of appraisals.
Quality appraisals provide impartial, substantiated value estimates. They are worth the investment to optimize estate distributions, minimize disputes, properly calculate taxes, and achieve compliance. Accurate appraisals can also help reduce potential conflicts among estate beneficiaries.
There are many important factors to consider when preparing for an estate liquidation. Here we will cover the different approaches that can be taken for an estate liquidation, and the steps required for each approach. The estate liquidation typically begins after the estate owner, heirs, family members, and/or friends have removed all items from the property that they are permitted to remove. Rainier Estates provides all the following services to the greater Puget Sound Region.
Estate Sale: This strategy is ideal for those who have at least 2-3 months to manage their estate liquidation, and where the home has a good quantity of quality items and home goods. Find a reputable company that can assist with sale organization, quality photography, in-depth research, pricing, marketing, and professional staffing on the days of the estate sale. Estate Sales are typically the most effective way to sell as much as possible in a home. It’s important to determine if the home in question is subject to any HOA; if so, you’ll need to verify whether an estate sale is permitted.
Not sure where to find a good estate sale company near you? If you’re not in our service area within the Puget Sound region, we recommend submitting your service request via EstateSales.net or EstateSales.org (yes, these are two different companies that can both generate leads for you).
Auction: When there are high-end collections of original art, antiques, jewelry, rugs, books and other collectibles, an auction is the best course of action. This is also true for cars, trucks, boats, farm equipment, and expensive tools. An auction creates a high-competition environment for these sought after items, forcing buyers to bid against each other and drive up the price.
*For apartment buildings that do not allow traditional estate sales, an online auction can be a good solution.*
Clear-Out or Buy-Out: This strategy is for situations under extreme time constraints or where the personal property is deemed of low monetary value. This is also a helpful tool if there are a number of items remaining after an estate sale or auction is complete. In those situations, either a clear-out or buy-out is recommended. If time is very short, but there are some valuable items in the estate, advertising for a buy-out proposal can accomplish clearing out the home quickly and making some money (these are typically wholesale offers, and the buyer removes the items from the premises). Buy-Outs are another service that you can submit leads via EstateSales.net or EstateSales.org. Typically, local clear-out companies are found by searching online for junk removal companies nearby.
Garage Sale or “Free Day”: If there are not many items left in the estate, and most of those items are household and generic (and you don’t want to pay out of pocket to have them removed), this is a good strategy. Set up a small garage sale, and after you’ve sold what you can switch to “Free” to clear out as much remaining as possible (posting the “free sale” on Craigslist often has great success, and then delete the post when you’re done).
Consignments: If there are quality collections or individual items of greater value, but the bulk of the estate goods are more commonplace, consigning those higher-end items can be a great approach (and then one of the above strategies can be applied for the remaining items). This strategy allows you to maximize the return you make for the sale of your luxury consignments, while also moving swiftly forward to completing your estate liquidation goals.
Estate Planning Pitfalls:
Failed estate plans often result from inadequate updates, improper asset titling, and lack of communication. Titling assets incorrectly, like keeping real estate solely in your own name versus a revocable living trust, can increase costs and probate delays for heirs. Also, not adding children or grandchildren to accounts with named beneficiaries can leave assets subject to probate.
Wills and trusts should be reviewed every 2-3 years especially after major life events like marriage or divorce. Estate plans out of date with current law might not maximize tax advantages. Insufficient communication about plans while living can lead to bitter disputes and confusion over a testator’s true wishes after death. A clear written record of intent helps avoid problems.
While do-it-yourself estate planning is tempting, mistakes often lead to family conflicts, sizable tax penalties, or even liens on property. Online forms typically do not account for state laws and unique circumstances. Experienced estate planning attorneys are worth the investment for customized guidance, avoiding legal woes in the future, and peace of mind in the present.
Wrap up on Estate Planning and Estate Executor:
There you have the comprehensive guide on Estate Planning and Estate Executor best practices. Responsible estate planning with professional assistance enables individuals to prepare for incapacity, distribute assets as they choose, minimize taxes and fees, and ensure their final wishes are honored. Key components include properly drafted wills, trusts, power of attorney, healthcare directives, and beneficiary designations. Meticulous asset titling and ownership are equally important.
The executor plays a central role in carrying out the estate plan and has wide-ranging duties and limitations. Choosing an organized, impartial executor who outlives the estate owner helps ensure that the estate is professionally managed according to final wishes. With diligent maintenance and quality communication with the heirs and executor, an estate plan can provide tremendous peace of mind that your loved ones and heirs will be provided for even after you’re gone.
Let us know your thoughts on our blog on estate planning and estate executor best practices! Rainier Estates is the go-to Estate Liquidation company in Bellevue and throughout King County