For Personal Representatives, Collecting the Decedent's Assets Is a Critical Duty

• collect the assets of the decedent,

• pay any outstanding bills or creditors that need to be paid, and

• distribute the decedent’s assets to whomever is supposed to receive them under the Will (or, if no Will exists, under state law).

This article, which is an excerpt from our

Arizona Personal Representative Handbook

, focuses on the first duty:

gathering the decedent’s assets.

Initially, you (as the PR) must identify and collect the assets of the decedent’s estate and protect those assets from harm. For example, you may need to secure the decedent’s primary residence to protect it against vandalism or to prevent family members from removing items from the home.

Preparing an Inventory.

Identifying the decedent’s assets may not be an easy task, particularly if the decedent did not retain good records. You may also have to spend considerable time poring over the decedent’s bank and other account statements to determine where the decedent’s monies were kept. You will also need to inspect the contents of safe deposit boxes and locate life insurance policies and retirement plans. In many instances, copies of the decedent’s income tax returns can be a good source of information to identify assets and accounts that the decedent owned.

You must be able to account for all of the decedent’s assets as they existed on the date of the decedent’s death. You must then be able to determine what the value of the decedent’s estate was as of that date. For bank and investment accounts, determining value is easy. However, for many other kinds of assets, professional appraisals might need to be obtained.

This course of action is essential not only when you cannot determine how much a particular asset is worth; it may be required if an estate tax return must be filed. If the decedent’s estate has a value greater than that which can pass free of estate taxes ($12.06 million for an individual in 2022), an estate tax return must be filed, accompanied by professional appraisals of assets.

Informing Heirs.

In addition, regardless of whether an estate tax return is required, you must prepare and submit to heirs, within 90 days after your appointment, an inventory and appraisement of estate assets. The inventory and appraisement must identify each asset owned by the decedent and provide the fair market value of each asset as of the date of the decedent’s death.

In some cases, it will be impossible for you to ascertain that fair market value without a professional appraisal. Real estate is one good example of when a professional appraisal may be needed, but other types of assets (e.g., art, jewelry, antiques, and stock in a closely held company) may be particularly hard to value without a professional appraisal or valuation.

After the inventory and appraisement are complete, you must mail copies to all parties interested in the estate, including heirs and others named in the Will, as well as any creditors who have filed claims against the estate (see “

Notify Creditors

” in the Personal Representative Handbook). You must then file a pleading with the Court affirming that this requirement has been met.

Alternatively, you can file the inventory and appraisement itself with the Court and then mail a notice to all interested parties that you have done so.

The former option is almost always used because it preserves confidentiality, whereas the latter option makes the inventory and appraisement part of the public record.

Distinguishing Assets Subject to Probate.

Because not all of the decedent’s assets will need to go through the probate process, it will be important for you to distinguish between probate and non-probate assets.

Only those assets that at death were titled in the decedent’s name alone, without a beneficiary designation, will need to go through probate.

Most notably, this excludes from probate any assets:

• owned jointly by the decedent and another person;

• any assets held in a trust or held by an entity in which the decedent had an ownership interest; or

• any asset that had a beneficiary designation.

The first two types of assets are controlled by the terms of the joint ownership, trust or entity to which they belong. The third type of assets, which can include life insurance policy benefits, IRAs and retirement plans; “pay on death” (POD) or “transfer on death” (TOD) bank and brokerage accounts; and even real estate for which a beneficiary deed has been recorded, are considered “non-probate transfers” and never enter into the probate process.

Access to Assets.

As mentioned above, after the extent and value of the decedent’s assets at death are determined, you must secure valuable personal property, such as jewelry, artwork, guns, etc. If the decedent had a safe deposit box and you have access to it, you should inventory its contents and keep them in your custody. Especially important are any documents that may be helpful in administering the estate (e.g., the decedent’s original Will or other estate planning documents).

Access can be tricky. Upon the death of the last lessee of a safety deposit box, the box may be opened only by two employees of the bank in the presence of any person who presents himself or herself and claims to be interested in the contents. At that point, the bank employees may remove only any document that appears to be testamentary in nature and deliver it to the person nominated in the document as PR or deliver it to the clerk of the Superior Court. The bank employees may also remove any life insurance policies and deliver them to the beneficiaries named therein. At that point, all other contents of the box are retained by the bank and deliverable only to the person legally entitled thereto – typically, the court-appointed PR.

Be aware, though, that

you have no duty to inform the decedent’s banks regarding the decedent’s death

– at least not right away.

The preliminary information-gathering phase is also a good time to collect important documents, such as bank statements, tax records, deeds to real property, titles to vehicles, etc.

Along the way, you will need to apply to the Internal Revenue Service for a taxpayer identification number (EIN) for the estate (this simple step can be completed online at the

IRS website

). As you gather the assets of the estate, and after you receive the EIN, you will then open an estate bank account into which you will deposit all cash proceeds.

As we mentioned at the beginning, gathering the decedent’s assets is one of several important duties that the law imposes on a personal representative. You can undertake those duties directly, or you can rely on the services of an experienced

probate attorney

.