How to Liquidate Assets for a Will Settlement

By Christine Funk, J.D.

How to Liquidate Assets for a Will Settlement

By Christine Funk, J.D.

When someone dies, the executor is the person charged with handling the deceased individual's estate. If they had a will, the handling of the estate occurs during a legal process called probate. Typically, the will designates someone to act as the executor of the estate.

Man talking on landline phone at desk

In most cases, the deceased person previously asked the person named as executor to execute the estate, and the person named as executor agreed to perform the necessary duties. Sometimes, however, the named executor has died or can no longer perform the duties of executor. In this case, the court appoints a new executor. The following steps could assist an executor in determining how to approach the task of liquidating assets.

1. Review the duties of an executor in your state.

Executors have a fiduciary duty to manage the assets of the estate efficiently. You must not only comport yourself properly, you must avoid even the appearance of impropriety. As an executor, you should not, for example, liquidate any property of the estate by selling it to yourself. You should not transfer funds into your own bank account. Instead, you should set up an account for the estate and only use that account when dealing with money going into or out of the estate. Finally, determine whether, as executor, you may decide to sell assets and then proceed to sell the assets, or whether you need the approval of the court to sell an asset.

For instance, you could be the executor of an estate worth $300,000 that has the following assets:

  • $50,000 in cash
  • $100,000 in stock
  • $75,000 home
  • $75,000 in jewelry and art

Debts requiring repayment total $75,000, and two children are to split the estate equally. You must liquidate some of the assets to pay for the debt, as there is not enough cash in the estate to take care of it all. You have the option of selling some of the stock, some of the jewelry and art, or the whole house. Determining what to sell is an important decision that requires thought and consideration. Some wills have detailed bequests, such as leaving a specific painting to a certain child.

2. Obtain independent verification of value.

It is not appropriate for an executor to rely only on their own judgment when determining the value of assets. Instead, an executor should obtain an independent appraisal. Use a licensed appraiser; do not use an appraiser who is also a relative or friend. As an executor acting on behalf of the state, you must be impartial at all times. It might be a good idea to obtain more than one appraisal. Keep these appraisals for your records.

3. Locate a buyer.

You cannot liquidate assets without buyers. You may sell stocks through a stock broker. You may sell real estate through a real estate agent. A jeweler specializing in estate jewelry may take on the task of selling the jewelry. In each case, consider using a professional with experience selling the type of item you've decided to liquidate. Of course, if you need individual approval for the sale of each asset, obtain that prior to completing the sale.

4. Document the completed sale.

You must properly record the sale of any and all assets. Obviously, if you sell a house, the transfer of title reflects the sale. However, if you sell art, for example, take steps to protect yourself and the estate by obtaining written documentation of the transfer. Make certain you sign the documents as the executor of the estate. Deposit the funds from the sale of all items into the estate bank account.

Serving as an executor is a serious responsibility that requires acting in the best interest of the estate and the will's beneficiaries. If an estate is solvent, you can distribute the assets according to the terms of the will. Many times, however, executors are in charge of paying off debts. If there isn't enough cash to pay the debts and the will does not contain instructions for how to proceed, you have to liquidate assets. Choosing which assets to sell requires careful consideration of your duties, the will, the best interests of the beneficiaries, and any specific bequests seen in the will.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.