Some testators know what assets they wish to leave for specific family members. Their children may have already requested certain resources or heirlooms, or testators may make choices based on meaningful memories that they share with their beneficiaries.
Others don’t want to assign property to specific people. Their loved ones might already have real estate, vehicles and personal property like furniture. They would, therefore, have very little interest in retaining the resources that the testator currently owns. Leaving instructions for the liquidation of assets is often the solution for those who believe their loved ones don’t want to inherit their property. There are a few important considerations for those ordering the sale of their property to address during the estate planning process.
Estate sales can trigger taxes
The more property from someone’s state they want their executor to sell, the greater the likelihood of estate income taxes. Any sale proceeds in excess of $600 will trigger a need to file an estate income tax return and pay taxes on those proceeds. The person handling estate administration will need to make sure they keep enough property to cover those tax responsibilities. Testators therefore need to factor in the loss of resources to taxes when planning to optimize what their beneficiaries receive from the estate.
Estate sale companies are sometimes manipulative
Certain property doesn’t have much value on the resale market. Even the assets that do have high resale value need to connect with the right buyers. Estate sale companies count on the lack of knowledge that many families have regarding the value of assets and their desire for a quick turnaround.
They often include clauses in their contracts allowing them to buy the most valuable property in the estate for pennies on the dollar if it doesn’t sell to members of the public. They then overprice everything when conducting the estate sale so that as much of the resources remain unsold as possible. It is important to ensure that the right business or individual takes control of the estate sale process to avoid such misconduct.
Testators who educate themselves about the potential pitfalls of selling their resources instead of gifting them to loved ones will have an easier time maximizing what people inherit from their estates. It is for this reason – and many others – that identifying and planning for certain challenges ahead of time can make a major difference during the estate planning process overall.