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Thursday, June 9, 2011

What does an executor do with an old house full of papers?

This is another reader question that I think will interest many of you. I have been asked this question at seminars as well, so I know some of you wonder about the logistics of an executor's job. Here's the question:

My elderly father lives alone in his house [in another city]. The house is dated (1960s) and is cluttered with furniture from my Grandmother plus paper and files from dabbling in the stock market. He has engaged a financial institution to act as Executor of his estate. How does an institutional Executor typically handle a cluttered house where the paper may be valuable? If it falls to me, will I be compensated? At what rate?

And my answer:

I've heard that corporate executors (i.e. trust companies) don't actually go to a deceased person's home to deal with their effects, and am happy to tell you that information is completely wrong. When a trust company is acting for a person who passes away, a specific trust officer is assigned to that family. The trust officer himself or herself will go out to the house as many times as needed to determine what is in the house and what needs to be kept or discarded.

Trust officers don't take paperwork lightly. They will examine it to make sure that they have accounted for all assets such as bank accounts, investments, titles etc. They will also look for papers that mention liabilities such as mortgages, loans, bills, lines of credit etc. The executor must prepare a full, accurate inventory of the deceased's assets and liabilities, and that can only be done if paperwork is looked at carefully.

Other items may turn up during this process, such as another will, stock certificates, or Canada Savings Bonds. The trust officer will also try to locate credit cards, identification cards, previous tax returns and birth certificates.

Any valuable assets such as cash in the house or jewelry will be documented and taken by the trust officer to put into the trust company's vault. Also taken are documents with sensitive information such as the deceased's social insurance number and bank account numbers. The trust officers keep a full, complete log of everything they remove from the house, garage, shed and vehicle.

At this time, the trust officer also takes a good look around to see what else needs attention. For example, is there a pet in the home? If it is winter time, is the heat on and the heating bill paid? Is the house insured? Are there any broken windows that need repair? You simply never know what you might find.

Before dealing with the "clutter", the trust officer will read the will and discuss with the Manager of Trust what steps should be taken. The will may contain instructions to give certain items to certain people. Gifts like that are not necessarily gifts of monetary value, so the trust officer has to be careful not to assume that anything in the house is worthless.

Once the trust officer has a clear idea of what is in the house and has removed essential paperwork, valuables and specifically gifted items, he or she will make arrangements for the house to be disposed of. Depending on what's in the will, the house must either be transferred to a beneficiary or sold. Most of the time the house is to be sold.

Before that can happen, the house has to be cleared out and cleaned. If a house is full of antiques or good items of furniture, there may be an estate sale or garage sale, with the money going into the estate. In most homes though, there is not a sale of this kind because the items have little monetary value. Items that are in good shape might be given to a charity.

Normally a cleaning company is hired for the actual cleaning work. Sometimes a family member wants to do that rather than have a company come in, and that can often work out just fine. If you took on that role, you would be compensated for your work at the rate that you and the trust officer agreed on before you started the work. It's a bigger job than most people realize.

You mention that the house is very dated, which is certainly common among homes where seniors have lived for many years. You don't mention whether it's in good repair. If the house can't be sold in its current condition, there may have to be repairs or even renovations done before it goes on the market. Sometimes updating the kitchen and replacing worn carpeting, plumbing or windows can increase the price of a home by many thousands of dollars. Those decisions will be made by the trust officer as he or she tries to realize the best possible price for the house.

The trust officers work closely with family members who are named as beneficiaries of the will. Beneficiaries are kept up to date on what steps have been taken. Where family members should be involved in a decision, they are brought in. For example, many wills say that personal items are to be divided among the children "as they agree". The trust officer will arrange a day for the children to come to the house and choose the items they want.

The trust company does everything that an individual executor would do, except that the trust officers have experience at it and rarely make mistakes.  I notice that your Dad is in the same city as I am. If you are visiting him one day, feel free to come by our office to meet our trust officers for a chat. I believe you'll feel reassured that a trust company really is made up of caring individuals who are ready and able to look after your Dad's needs.

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