Making Distributions

A distribution is the delivery of cash or an asset to a given heir. After resolving all debts and paying any taxes due, the executor should distribute the remaining estate to the heirs in accordance with the instructions in the will (or as dictated by the court).

General Plan

Before making any distributions, it's best to come up with an overall plan for estate: how you plan to resolve debts, which assets you plan to sell, which assets you plan to distribute directly, which heirs will get what, etc.

EstateExec allows you to define distributions as you work through planning overall estate settlement, so you can get everything allocated just the way you want it, then mark the distributions Done when you actually make them.

Your goal is to allocate 100% of the net value of the estate (after considering estate expenses, taxes, and debt resolution) and have each heir scheduled to receive the proper items and total value. It's usually easiest to try to do things in this order:

  1. Define distributions for any specific bequests and beneficiary actions.
  2. Ensure you will have enough cash to resolve the debts, planning to sell assets if necessary.
  3. Plan remainder of asset disposition (the Assets tab enables you to mark your intention for each asset in its Plan column; see Managing Assets).
  4. Define distributions so that each heir gets the proper items and overall estate value.

Heir Estate Percentages

The will usually specifies the percentage of the net estate that each heir should receive. For example, if the will says that Sally should get 40% of the estate, and the estate is worth $200K, then Sally is be entitled to $80K worth of assets and cash, and all of the defined distributions for Sally should add up to $80K.

Tip: You can enter these target percentages on the EstateExec Heirs tab, and as you define distributions, see how you you are doing in reaching these targets in the Heir Target Allocation chart on the Overview tab (for additional tips, see EstateExec Reference: Manage Distributions).

Specific Bequests

Note that wills sometimes specify that certain assets or dollar amounts are to be distributed to certain heirs. You can mark these bequests via the Distribution dialog (see Manage Distributions). However, not all such bequests can be honored: sometimes the asset is no longer part of the estate; sometimes the bequest conflicts with local law (e.g., community property); sometimes the asset must be sold (as a last resort) in order to pay estate debts.

Named Beneficiaries

Certain items are not passed through a will, such as life insurance, property held in joint tenancy or community property with the right of survivorship, funds in an IRA or 401K for which a beneficiary was named, stocks held in a transfer-on-death account, and so forth. You can choose to list these items as assets to help you keep things organized, but remember to create a Distribution for each with the "Reason" identified as "Beneficiary".

Charitable Donations

A charitable donation is really just an estate distribution to a particular type of heir (a charity). The executor does not have the right to give away items of value to charities unless specifically authorized by the will or the court.

Distribution Completion and Receipts

Actually making distributions to heirs is usually one of the last things the executor does in settling the estate. Although it is best practice to make all the distributions at the end of the process, it is usually permissible to make some distributions earlier if desired (be especially careful of restrictions if the estate is going through probate). Once you have actually made a given distribution, you should mark it Done.

It is good practice to require all heirs to sign a receipt for any distributions (the receipt can cover multiple items). When making final distributions to an heir, it is also good practice to have that person sign a document (perhaps prepared by an attorney), stating that he or she approves of your actions as executor and confirms that he or she has received everything due.

Discount $$:  EstateExec users can access significant discounts on third-party shipping services (see Task: Make all distributions).

See also EstateExec Reference: Manage Distributions for specifics about using EstateExec to organize, plan, and document distributions that satisfy the directives of the will (and/or the court).

Copyright © 2014-20 EstateExec