One of the essential steps in the probate process is filing an inventory of all the assets that are part of the estate. This job is the responsibility of the executor, and it’s often no small feat. It involves determining the value and ownership of real estate, securities, bank accounts and other assets and filing a formal inventory with the probate court. Every state has different rules, forms and deadlines for this process. Therefore, you’ll want to check with the courts in your area before starting. Consider working with a financial advisor as you prepare your estate plan.
What’s Included in an Estate Inventory?
An estate inventory is used to determine the overall monetary value of the estate. When compared to any claims creditors have against the estate for taxes, mortgages or other debts, this will determine whether the estate is solvent. The inventory will also be used to determine whether the estate is subject to estate taxes.
Just about any asset someone held at the time of their death should be included in their estate’s inventory. This is where the executor’s work can get a little tedious, but it’s imperative that this is done accurately. Here’s a breakdown of the most common items in an estate inventory for probate:
- Real estate: homes, condos, apartment and investment properties
- Financial accounts: checking accounts, savings accounts and safe deposit boxes
- Investments: brokerage accounts or certificates for stocks, bonds, CDs and other investments
- Retirement accounts: 401(k)s, HSAs, traditional IRAs or Roth IRAs
- Wages: unpaid wages, unpaid commissions or unexercised stock option grants
- Insurance policies: life insurance or annuities
- Vehicles: cars, trucks, motorcycles or other vehicles
- Business interests: any business holdings in their name
- Debts/Judgments: any personal loans to people or money received through a court judgment
Preparing an Estate Inventory for Probate
Before the inventory can be filed, it must be prepared. This begins with checking state laws to make sure the inventory is prepared and, later, filed in compliance with local rules.
The central task in preparing the inventory consists identifying all assets owned by the estate. Again, these may include cash, bank accounts, retirement accounts, brokerage accounts, securities, life insurance policies, real estate, collectibles and personal belongings such as vehicles.
Preparing a full inventory may call for some investigation. At minimum, it will involve examining deeds, titles, account statements and tax returns in the deceased person’s desk, filing cabinets and safe deposit boxes. It may also be necessary to search the person’s home and even interview relatives and friends to make sure every financial and physical asset is accounted for.
While completing and filing the inventory for a small and simple estate can be done in a matter of a few months, more extensive and complex estates may take years for the executor to fully evaluate. This process can be significantly delayed and complicated if the estate includes real property in several states, each of which is likely to have different rules for handling the property in probate.
It is not enough to provide a bare listing of items such as “house” or “car.” For instance, an inventory entry for real estate will include the address, legal description and a copy of the deed as well as an estimate of the fair market value, perhaps prepared by a professional appraiser. Bank account listings will include the name of the bank, account number and cash balance. Other assets will be identified with similar detail.
After all the assets are located and the necessary information has been gathered, the executor can fill out the inventory. Many states have specific inventory forms that must be used for probate inventories. The probate court where the estate is being settled will provide online or hard copies of the appropriate forms as well as instructions for filling them out.
How to File an Estate Inventory With the Probate Court
When the probate inventory is completed, the executor files it with the probate court. As is the case with the entire probate process, the precise details of how to file will vary according to the laws and policies of the jurisdiction where the court is located. In most jurisdictions, the probate court charges a fee for filing the probate inventory. The assets in the estate can be used to pay this fee.
In addition to different forms, states also have different deadlines for filing the inventory. This is often approximately nine months after the death of the person whose estate is being settled. However, the deadline may be much shorter, depending on the state. Again, it’s important to know the local rules.
The probate judge may grant an extension of the deadline if the executor is having trouble completing the inventory. And some states have no deadlines for completing the inventory. However, the executor’s fiduciary duty to the beneficiaries of the estate likely means the inventory filing should not be delayed without a good reason.
Handling the inventory is just one of the executor’s responsibilities. In addition to this, the executor must file the will with the probate court, pay off any debts or taxes the estate owes and oversee the distribution of any remaining assets to the beneficiaries.
Preparing and filing the probate inventory is one of the most complicated and potentially time-consuming parts of the probate process. It involves collecting details on every asset owned by the decedent, recording the information in an approved format and submitting it to the probate court along with, usually, the required fee. Each state has somewhat different rules for doing this, including different deadlines. Since the inventory will be used to determine the financial value of the estate and how and whether it will be subject to estate tax, it’s vital that the executor perform it competently.
Tips on Estate Planning
- The assistance of a professional financial advisor can be invaluable for the executor of an estate. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you have a sizable estate, estate taxes on either the state or federal level could be hefty. However, you can easily plan ahead for taxes to maximize your loved ones’ inheritances. For example, you can gift portions of your estate in advance to heirs, or even set up a trust.
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