How do Executors Manage Tangible Property in Pennsylvania?November 18, 2015
Executor of an Estate in Pennsylvania and Tangible Property
Being named as an Executor in a family member’s Last Will and Testament is a very important role. The Executor has the duty to collect the deceased’s assets, pay any creditors, pay the required taxes and ultimately distribute the remaining assets to the heirs named in the Last Will and Testament. This can be a daunting task if the deceased never told you about their assets and debts.
Value of Property and Pennsylvania Inheritance Tax
The distribution of the household items, tangible personal property, often is the one area that causes dissension.
One of the first steps the Executor needs to take is to secure the deceased’s residence. Family members cannot be permitted to start removing items from the home simply because “Mom would have wanted me to have this!”
The Executor needs to secure the residence for two (2) important purposes. First, those items in the house must be reported for death tax purposes. All estates in Pennsylvania will be subject to the Pennsylvania Inheritance Tax. Some may also be subject to the Federal Estate Tax. This will require placing a fair market value on the items in the house. This is most often done through the use of an appraiser or their sale via a public auction.
Once valued, the items may be available for distribution to heirs. Keep in mind that nothing can be distributed until the Executor knows there are sufficient funds to pay all creditors and any taxes the estate is responsible to pay. If there is any doubt about the existence of sufficient funds, do not give anything away.
Disposition and Distribution of Property
Assuming, the decision has been made that the funds exist for all the legal obligations, the Executor may proceed to dispose of the household items. The Last Will and Testament will control the disposition of the items in the deceased’s home. These items may be specifically listed in the document, on a list referenced in the document or the Executor may be required to see that they are distributed among a group of heirs. The Executor must be careful to avoid favoring one heir over another.
When items are not directed to a specific person, there are numerous ways to distribute them among eligible family members. Again, it is important that the Executor remain impartial and that everyone has the same opportunity.
One creative approach is to hold a private family auction. At a designated time and place, those named to receive the household items are each given the same amount of play money. The executor proceeds thru the house and the heirs bid on the items they desire. If the house still contains items and everyone has spent their play money, the process starts again until either nothing remains or no one wants the items that remain.
There are many other ways to decide who gets which items. You can ask heirs to make lists of desired items or select them in a rotating order. The key is that all the eligible heirs understand how the process will work and that the process is fair to all the eligible heirs.