Q: I am the executor of my mother's estate. The sale of their home and belongings will be split evenly between their surviving children. I've had the interior of the house appraised and I'm preparing it for sale. What if some items are not sold? Or if they are selling for far less than estimated value? As the executor, would I be personally liable for any defects and have my siblings pay the difference?
A: As the executor of the estate, your job is to manage your mother's financial affairs and divide her property among her heirs according to the will. It is not your job to pay your siblings if the estate is ultimately not as valuable as you think it will be. However, you are expected to make prudent decisions about how to liquidate it.
"What is prudent depends on the nature of the property," said Douglas F. Allen, Jr., a trust and estates attorney with the Manhattan office of Seyfarth Shaw law firm.
For example, if the estate owns a valuable 19th-century closet and you sell it in a yard sale, your siblings could blame you for neglecting their inheritance. Your job is to figure out how to rate it and find the best place to sell it, whether it be at auction or at an antique dealer. However, if the piece is valued for a modest amount, you can choose to sell it on a property sale. If it sells for far less than its estimated value, then it was only worth that much. And if nobody buys the huge piece of furniture, the costs for disposal will be incurred from the estate.
Same goes for the house. Contact a real estate agent for advice on listing the property as it is or spending money on the property on upgrades or staging. If the broker suggests listing it for $ 750,000 but sells it for $ 700,000, then that's all the money you need to split minus the costs you've incurred, such as hiring cleaners or paying the brokerage fee, said Robert D. Steele, an associate at Schwartz Sladkus Reich Greenberg Atlas law firm in Manhattan, where he heads the firm's trusts and estates division.
To avoid sibling conflict, speak to them now before heirlooms are sold or shared. Explain the process and guidelines set out in the will. "Make sure you set the rules in advance," said Mr. Steele. "Make sure you understand."
Sign up here to receive weekly email updates on residential property news. Follow us on Twitter: @nytrealestate.