This blog post was written by: Derek Hambly, Estate and Trust Consultant, Scotiatrust London
When it comes time to administer an estate, the value of personal belongings is often overlooked.
There are many reasons why the chattels and belongings of a deceased person are undervalued. Whether it is in the interest of clearing out the house of the deceased to get the property on the market, or because the estate trustees do not understand what they are dealing with, or simply because there’s too much going on and so handling an estate, item by item, seems too daunting. Whatever the reason, it seems that on many probate applications the value of personal belongings is estimated very low, and this often prompts estate trustees to disregard the true value of the items and regard the disposition of personal belongings as an exercise in taking out the trash.
I will certainly admit that there comes a time during the estate administration when the dumpster needs to be brought in, and there are certainly times when dialing 1-800-GOT-JUNK is the prudent thing for the estate trustee to do. However, before getting to that point it is worthwhile to go through the belongings of the deceased and take stock.
Estate administrations take months, sometimes years, and the misconception that the personal belongings of the deceased need to be distributed as soon as possible is false. Patience on the part of the beneficiaries can pay dividends if it means that the estate trustee has time to maximize the value of the estate. Now, I am not suggesting that every item in every sock drawer should be carefully cataloged and auctioned at Sotheby’s, but I am suggesting that there are items in many estates that are discarded when there could have been value.
There have been a plethora of sensational news stories about estates where old dishware turns out to be valuable antiques or artwork hanging in a bathroom turns out to be a priceless piece by a renowned artist. Those are great finds, but even without these windfalls there are many items that are still worth a portion of what the deceased paid for them. An estate trustee can choose to sell items themselves and arrange an auction, or hire professional help such as estate sale companies, certified appraisers, or estate galleries. With so many auctions being held online there is a wide net cast to find potential buyers, collectors or people looking to furnish their own homes. Keep in mind that auction houses and estate liquidation companies often charge around 25-30% for their services, but there can still be great value in working with experienced auctioneers and appraisers. It can certainly feel discouraging when the dozens and dozens of Royal Doulton figurines that Grandma bought for $150 a piece are only fetching $25 or $30 a piece these days, but those amounts still add up and, if nothing else, can cover the cost of disposing of everything else.
There is the flip side to undervaluing an estate. I should say that sometimes it is easy to see dollar signs when instead the assets in question are worth less than the hassle of handling them. News stories such as the recent estate auction for famous actress Diane Keaton, wherein her nail clippers sold for $960 USD at auction is unusual to say the least, and for more reasons than the price tag. For many estate trustees it is safe to dispose of similar personal items belonging to the deceased. The estate of another famous actor, Matthew Perry, the witty Chandler Bing from the show “Friends,” recently auctioned off many pieces belonging to Perry including scripts, props from the show, and memorabilia. The proceeds from the auction were donated to Perry’s charitable foundation in support of addiction recovery and ending the stigma of addiction. Most of us reading this blog are not famous actors, however Perry’s estate highlights an opportunity. When estate trustees are faced with a house full of belongings of difficult to discern value, consider a donation to a local thrift or value store. While there won’t be an exchange of cash, there are often charitable receipts issued which may help offset tax owed by the estate and the items of the deceased can be appreciated, piece by piece, for those who are in need. For those drafting Wills, this can be written directly into a testator’s Will or simply done at the discretion of the estate trustee.
No matter the specific items that comprise an estate, it is always worthwhile for estate trustees to take a diligent look through the drawers, cupboards and basements before calling in the budget bin.
