Probate is the name of the legal process that is required to administer your estate after you pass away. One of the best reasons to have at least a basic estate plan in place is to ensure that your assets will be handled how you want them to be handled during the probate of your estate. Sometimes, however, it becomes necessary to sell estate assets during probate even if your wishes included passing those assets down to a loved one. To decrease the likelihood of it happening to your estate, an Indianapolis attorney at Frank & Kraft explains why your Executor might have to sell some of your estate assets during probate.
Probate Basics
At the time of your death, you will own assets that may include things such as cash and financial accounts, real property, securities and investments, and personal property. These assets make up your “estate.” To make sure that your estate assets are properly accounted for, valued, and eventually distributed according to the terms of your Last Will and Testament or the state intestate succession laws, the law requires your estate to go through a process known as probate. Probate is also where your Will is authenticated or challenged and provides creditors of your estate to file claims against the estate. It is this last function of probate that can lead to the sale of estate assets.
Creditor Claims and Estate Liquidity
Shortly after your Executor initiates the probate process, notice must be given to creditors of the estate. Along with notifying known creditors personally, your Executor is required to publish notice in a local newspaper. Creditors then have a specified amount of time within which to file claims against the estate. Your Executor reviews claims that are filed and approves or denies the claims. Approved claims must then be paid using estate assets. If your estate lacks sufficient liquid (cash) assets to pay all approved claims, your Executor will be faced with the need to sell assets to raise the necessary funds.
Why Your Executor Might Be Forced to Sell Assets during Probate
Your Executor is legally required to pay all approved claims and expenses, according to the order of priority set forth under Indiana law, before any assets can be distributed to the beneficiaries named in your Will. When sufficient liquid assets do not exist, your Executor may be legally required to sell some of your estate assets. For example, imagine that you leave behind an estate valued at $500,000 and your estate has approved claims and expenses totaling $200,000. That leaves $300,000 for your beneficiaries, right? The problem is that $400,000 of the total value of your estate is in your home. That only leaves $100,000, or half, of the funds needed to pay claims and expenses. In that case, your Executor may have no other choice than to sell your home and use $100,000 of the proceeds to pay claims and expenses.
In some cases, the sale of estate assets is not something that matters to you; however, if you have assets that you do not want to be sold, you need to make sure that your estate includes sufficient liquid assets to cover expenses and debts after you are gone. The best way to accomplish this goal is to work closely with an experienced estate planning attorney when you create or update your estate plan.
Do You Have Additional Questions about Estate Planning?
For more information, please join us for an upcoming FREE seminar. If you have additional questions about estate planning, contact an experienced Indianapolis estate planning attorney at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.
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