Executors have the most important role in the probate process. They are responsible for everything from filing the will and death certificate and opening the probate process, through the final order and distribution of assets. In fact, they have legal duties to the estate and can be held personally liable if they breach these duties. Some of an executor’s essential functions include locating assets, creating an inventory, securing assets, protecting assets, and managing assets. In order to fulfill their duties, executors must determine the total cash value of the estate. How is this done? By getting the estate’s assets appraised.
The Significance of Asset Appraisal
Every valuable, non-cash asset in an estate must be inventoried and appraised during the probate process. For an estate’s cash assets, such as bank accounts, no appraisal is necessary since these assets have easily discernible values. Instead, appraisals should be conducted on assets such as:
- Artwork and antiques
- Expensive collectables
- Real Estate
- Business Interests
The purpose of appraising all of the assets in an estate is so that the executor can report the total value of the estate to the probate court. This is important because that number is then used to determine how much beneficiaries will receive after the estate’s debts are paid off. This value also determines whether the estate owes state and federal estate taxes.
Who Conducts an Appraisal
An appraisal should be conducted by a professional appraiser who regularly deals with that type of asset and is knowledgeable about values of property within that specific industry. For example, a housing real estate appraiser should be used to appraise the value of a house. A modern art appraiser should be used to assess a piece of modern art. That art appraiser should not be used to value a business interest.
The Consequence of a Bad Appraisal
It is critical that an executor hires a solid professional appraiser. If assets are wrongly undervalued, there is a real possibility that the executor will sell those assets for less than they should have. This means that the estate has effectively been depleted and the beneficiaries receive less than they should. If assets are wrongly over-valued, beneficiaries may receive far less than they were originally informed since the sale of the asset will bring in a lower than expected price. These discrepancies in the appraised value of assets can lead to a loss of credibility for the executor, and could even lead to a breach of fiduciary duty action in the most extreme case.
If you have been named or appointed the executor or administrator of an estate, I can help you. Call me. With over two decades of legal experience in wills, probate, and estates, I can help you obtain a reliable appraisal of assets and to fully manage the estate. You can reach The Law Offices of Robert S. Thomas at telephone number 847-392-5893 or visit our website to set up a consultation.