What is Asset Distribution?
Asset distribution in probate involves paying off creditors and taxes, and transferring remaining assets to heirs and beneficiaries. It’s the final chapter in settling a probate estate. The goal is to ensure that all estate debts are paid and that heirs and beneficiaries receive a fair and equitable distribution of assets.
Asset Types
Probate assets come in various shapes, sizes, and values. These can include:
- Real Estate: Properties like homes, land, or commercial buildings.
- Personal Property: Items like jewelry, vehicles, or household goods.
- Financial Accounts: Bank accounts, investment accounts, or retirement accounts.
Determining Asset Value
The first step in ensuring a fair distribution of assets is ensuring an accurate valuation of those same assets. It’s crucial to value assets accurately, which may require hiring professional appraisers to render an opinion of value. If real estate is involved, it is imperative that a probate real estate specialist be brought on board very early on in the probate process.
Debts and Taxes
Before any assets can be distributed, the personal representative must give notice to creditors and settle all valid creditor claims. Also, tax returns may need to be filed, both for the decedent individually, and for the estate itself. Doing this ensures the estate is clear of liabilities, after which heirs and beneficiaries can receive their rightful shares.
Prioritizing Beneficiaries
When distributing assets, some beneficiaries might have priority over others. It’s important to understand who gets what and in what order to ensure fair distribution. Factors like the terms of a will or state laws play a role in determining the priority.
Distributing the Remaining Assets
Once debts and taxes are paid, and after a proper accounting and the approval of the court, all remaining assets can be distributed. The personal representative is responsible for following the will’s instructions or, if there’s no will (intestate) the state’s intestacy laws.
Finally, Common Mistakes in Asset Distribution
Common mistakes in asset distribution include:
- Overlooking Assets: Missing out on valuable items.
- Misinterpreting the Will: Misunderstanding the decedent’s intentions.
- Ignoring Beneficiary Designations: Overlooking specific designations on accounts or policies.
- Failing to Settle Debts: Distributing assets before clearing liabilities.
Follow the correct procedure, keep in close consultation with your probate attorney, and you should have no problems distributing assets in the settlement of a probate estate.
