Oct 23, 2009

16 Ways To Turn Estate Personal Property Into Cash

O.K.; you've been appointed Executor of the Estate. You don't know if this is a blessing or a curse. There is a stack of bills to pay: utilities, mortgage, funeral expenses. Heirs and relatives are clamoring for "their share". Before the bills can be paid, you have to collect all the money that is due the deceased, and liquidate all the possessions that won't be distributed to heirs. What's the best way to liquidate the furniture? The clothes? Kitchenware? The lawnmower? The car?

In this article, I'll discuss 16 ways that an Estate Executor can turn Estate Personal Property into cash so that the bills can be paid and the Estate settled. They are:

1. Estate (tag) sale: These sales are run by tag sale companies, and are done inside the deceased's home. For a percentage of the proceeds, a tag sale company will come in and sort, tag, price and display everything in the home. From the grand piano all the way down to a half can of Ajax, everything gets a tag and a price. The sale will be advertised and promoted. On the day of the sale, buyers will take a number and be admitted into the house a few at a time. When one buyer leaves, another is admitted. The tag sale company will handle all the money and provide an accounting of what was sold, and for how much. they will also handle price negotiations with the buyers. It is rare that everything in the house is sold at a tag sale. There will be a fair amount of stuff left over to dispose of.

2. "Dealer Only" tag sale: These are estate sales that are promoted as a private sale to dealers in antiques, jewelry, books, and collectibles. The sale is run by a tag sale company and is conducted in the decedent's home.

3. On-site auction: At an on-site auction, everything in the house is taken outside in the yard to be displayed and sold. Often, the auction company will provide tents, seating, and porta-potties for the crowd. The auction company will handle all the advertising and promotion. The auction "block" will be set up and everything will be sold to the highest bidder. There is seldom anything left after an auction.

4. Gallery auction: If your estate is to be sold at an auction gallery, everything in the house that is saleable will be picked up and moved to the gallery, where it will be sold to the highest bidder. Auction galleries will seldom take "run-of-the-mill" consumer goods that could be purchased for pocket change at a thrift store. Galleries are interested in high-end products.

5. Online auction (ebay, etc): Online auctions are good for small items that are easy to ship, or for large, expensive items (like boats, cars, or RV's) that buyers are willing to travel to pick up. You can list the items yourself or, for a fee, hire a company to photograph, list, sell, pack, and ship your items. You can find a list of "third party sellers" on ebay.

6. Half.com: www.half.com is an online service that is affiliated with ebay. New and used merchandise is offered for sale. Unlike ebay, there is no bidding; items are offered at a fixed price and can be purchased directly online. Nine categories of merchandise are offered for sale: books, music, movies, video games, software, electronics, sporting goods, trading cards, and toys.

7. Amazon.com: If you have a collection of books to sell, nothing beats Amazon. You can list your books for free, amazons commissions are reasonable, and they will deposit the money right into your checking account.

8. Retailer sale: Items that are commonly purchased used (cars, pianos, guns, musical instruments) are often purchased by retailers that sell the same items new. You can call the dealer directly, tell him what you've got, and he'll usually make you an offer. Dealers like to have some used items around for customers that don't want to buy new.

9. Consign to broker: Boats and boat trailers are often sold by yacht & boat brokers. You can find them in the yellow pages under "yacht brokers".

10. Newspaper classified: You can list anything for sale in the newspaper classifieds. The downside is, newspaper classified ads are expensive, and someone has to be available to answer the phone and show the property offered for sale.

11. Craigslist: Craigslist is a popular online advertising site. You can list your items for free at www.craigslist.org

12. Antique stores: Antique stores often buy entire estates. If you are looking for a fast sale with no fuss, this may be your best option. The downside is that this method brings only a fraction of the money that other methods bring.

13. Used furniture and appliance stores: Used furniture stores will often buy your "non-antique" furniture.

14. Consignment stores: If you must get a certain price for your property and are not in a hurry, consignment stores might be the way to go. Most consignment stores will continue to reduce an items price until it sells. My opinion is that it takes too long to sell items in a consignment store, and the prices received are no better that at an auction or tag sale.

15. Wholesale distributors: Wholesale distributors don't usually purchase used property, but they can sometimes tell you who does. If you have used medical equipment, stair lifts, hospital beds or other hard-to-sell items, call the manufacturer or distributor and they can usually point you in the right direction.

16. Charities: If you believe that "a penny saved is a penny earned", then donating property to charity is a way to increase the "bottom line" of your estate liquidation. Just like on your personal taxes, estate property donated to charity is a tax deduction and will net you more cash (check with your tax advisor). Be sure to use a recognized charity that will give you a receipt.

Once the property is liquidated, it's time to clean up the house to prepare it for sale. My next post will discuss 7 ways to get the real estate sold.

Oct 22, 2009

How To Inventory & Value Estate Personal Property

There's an old saying that goes "What's the best way to eat an elephant? One bite at a time!"

Personal property is the "elephant" of an estate. It's the responsibility that can take up most of your time, and it provides the estate with the least amount of money for the effort involved. But, dealing with the personal property cannot be avoided. The property must be inventoried, valued, distributed, or sold. Let's start our analysis by looking at what property we have (inventory); then we will determine what it is worth (valuation). In a future post, we will determine what to do with it (distribution/sale).

When you go to the courthouse, the clerk will provide you with the form you will need to fill out for the inventory. The form will ask you to provide general categories and a value for each category you have listed. For example, you would list: "furniture, $1500; office equipment, $300, etc.. You won't have to list the items separately, such as "sofa, $100; chair, $5; typewriter, $25. I suggest that you do keep a list of the individual items, though. Although you won't have to go into a lot of detail for the court, you will likely want a more detailed inventory for yourself. You'll want this for two reasons: to track the sale of estate property, and to protect yourself against claims of heirs and/or creditors.

You don't have to get real fancy with with the inventory; pencil and paper will do. If you are so inclined, there are "home inventory" record books available at office supply stores, or you can purchase software online. There are also companies that specialize in taking home inventories.

You'll need a helper. One person sorts and counts while the other writes. Start inside the house, and work your way from the top of the house to the bottom (or vice-versa). Go room to room with a consistent pattern so that you don't miss anything: always clockwise or counter-clockwise around the room. Write down what's on the walls as well, not just what's on the floor. For "small goods", write down identifiable groups of items such as "200 hardcover books, 100 paperback books, 42 nick-knacks, etc.. On your list, put a star next to any item that you think may be valuable. If the nick-knacks are Hummels or Lladros, the vase is Heisey and the books are first editions, they are valuable items. When you are finished, follow the same procedure for the outbuildings: the garage, shed, workshop, or whatever. If there is a rented self-storage unit, vacation home, recreational vehicle or boat, they will need to be inventoried as well.

When you file the inventory at the courthouse, you'll need to state a value for the personal property. For run-of-the-mill household items, a good resource for determining the value is the software program It's Deductible that comes bundled with the income tax program Turbo Tax. It's Deductible can also be purchased separately. The software lists the "thrift shop" value for most household items, and it's easy to use.

For the items that you have identified as being valuable, It's Deductible won't work. There are several ways to determine the value of single items or collections. A good place to start is ebay (www.ebay.com). To use ebay to help set your values, you will need to be a registered user. Registering for ebay is free; just follow the instructions when you get to the website. Once registered, type in the item you are researching, and ebay will search for the item. When the search results come up, scroll down and look on the left side of the page to where it says "Search Options", click on "completed listings", then scroll down further and click on "show items". The search results displayed will be for completed auctions, not for auctions in progress. The prices listed in green are items that actually sold; the prices in red are for items that did not sell. If you find your item listed, and the price is green, you have a good value. Compare the details of the item you found on ebay with the details of the item you have. Use the closest match as your value.

If you are unable to find your item listed on ebay, it's time to go to the library or bookstore. There you will find an assortment of price guides for every sort of antique or collectible. You will also find "blue books" for automobiles and equipment.

If you have lots of items and no time to research, then it's time to call in an expert. In your local phone book you will find jewelers, antique dealers, auctioneers, appraisers, and other professionals who will tell you what the property is worth. What they will offer you is an opinion of value, not an appraisal. An appraisal is based on actual sales data, not an opinion. I'll cover appraisals below; for now, just be aware that there is a difference. For probate valuation purposes, the value placed must be the fair market value at the time of the decedents death. This is the value you should ask your expert to provide.

In my home state of Virginia, individual items or collections that are valued over $500 must have an appraisal. Personal property appraisers are not licensed like real estate appraisers, but the content of their reports is regulated. For a personal property appraisal to be valid and accepted for tax purposes, it must be performed by a qualified expert and follow the federal guidelines of the Uniform Standards of Professional Appraisal Practice (USPAP). Most real estate appraisers do not appraise personal property. You can find a personal property appraiser online by checking the websites of the Certified Appraisers Guild of America, the National Association of Auctioneers, or the American Society of Appraisers.

Estate Executors will find that the inventory and valuation of estate personal property is their most time-consuming task, but there are resources available to help.

Oct 21, 2009

An Estate Executors' To-Do List

I just got off the phone with Nancy. She is feeling a bit overwhelmed. Her mother has just died, and Nancy has been appointed executor of her mothers' estate. Nancy has a full time job and a family of her own. Her mom lives in a different state. Nancy doesn't see how she will have time to be an executor, but her sense of loyalty to her mother and responsibility to her family compels her to "step up to the plate" and get the job done.

Nancy is in for some tough times. While still dealing with the emotional loss of her mother, she will have to empty her mothers house of forty-five years of accumulated memories. Everything in the house will have to be inventoried and values assigned. Her mothers doll collection and her fathers coin collection will have to be appraised. The inventory and appraisals will have to be submitted to the Probate Court. Property will have to be distributed to the heirs according to the Will. Then, the entire contents of the house, the furniture, appliances, bedding, pots & pans, clothing, car, even the lawn tools will have to be sold so that the house can be readied for sale. When both the titled and non-titled property are liquidated, the debts and taxes will have to be paid to settle the estate.

My purpose here is to help executors like Nancy understand the "big picture" of what must be done to settle an estate. Keep in mind that I am not a lawyer or an accountant, and I am not offering legal or accounting advice. The information I am offering is based on my experience as an Estate Property Specialist. If you have questions or concerns, my recommendation is to seek legal advice. A good Estate Attorney is an asset.

Let's start with an overview of an Executors' responsibilities. As executor, your first duty is to initiate probate, which is the formal process of "proving" the Will and confirming your appointment as executor. The Clerk of your county Probate Court can provide you with the forms that are appropriate for your county. My experience with probate court clerks is that they are very helpful and responsive to your requests. Many of the forms you will need can be downloaded over the internet at your state or county website.

The details and deadlines in settling an estate will vary from state to state. In general, there are 16 items that will be on your "to-do" list. They are: 1. Locate the will 2. Apply to appear before the Probate Court 3. Notify the beneficiaries named in the Will 4. Determine the debts of the deceased 5. Arrange for publication of "Notice to Creditors" and mail a notice to each known creditor 6. Send notices of the persons death to post office, utilities, banks, and credit card companies 7. Collect any money owed to the deceased 8. Inventory the assets, assign values, and have appraisals done if necessary 9. Check with the deceased's employer for unpaid salary, insurance, and other employee benefits. 10. file for Social Security, civil service or veterans benefits 11. File for life insurance and other benefits 12. File federal and state tax returns 13. Pay valid claims against the estate 14. Distribute assets and obtain receipts from beneficiaries 15. File papers to finalize the estate 16. Obtain a lawyer or accountant, if necessary.

Do you need a lawyer or accountant? Technically, no. There is no law in place that says you must have an attorney, or that estate taxes must be done by an accountant. But, remember this: taxes and probate can be complicated issues. Mistakes will delay the closure of the estate and the distribution of inheritances. A good lawyer and/or accountant is an asset. Legal and accounting fees are paid by the estate. My advice is to shop around for an experienced probate attorney. Fees vary widely, so be sure to find out what the estate will be charged for legal services before making a commitment.

I'll give you the same advice I gave Nancy: Stay organized, and you will be able to get through this. Find out what your deadlines are, and make a check list with "to be done by" dates. Prioritize your tasks, and dig in. Having a checklist will help you maintain control and minimize the effect on your personal life.