Ultimately, the executor must distribute the estate's net assets to the heirs (see Making Distributions for an explanation of the overall distribution planning and execution process).
A distribution represents the assignment of cash or an asset to a given heir. Before creating a distribution, you must first have defined one or more heirs, and if an asset distribution, one or more assets.
When you create a distribution, you are "allocating" something to an heir. When you mark the distribution "Done", it is considered to be actually distributed.
The reason for the particular distribution may have tax and other distribution implications:
- Allocation - A normal distribution that you decided
- Beneficiary - A distribution controlled outside the will (such as an IRA beneficiary)
- Bequest - A distribution specified by the will
- Heir Request - A normal distribution that you decided, trying to honor a request by an heir
Note that if you are filtering the Distributions table, you can select "Discretionary" and the table will include both standard allocations and heir requests, since both are in the same legal category, under the executor's discretionary control.
Heir Distribution Percentage Targets
It's common to have to distribute certain percentages of the estate to particular heirs. This is easy enough if the estate is simply a pool of cash, but gets a little more challenging when there are assets that will not be liquidated before distribution.
To help monitor and achieve distribution percentage goals:
- Enter target distribution percentages for any relevant heir on the Heirs tab.
- Create distribution allocations as desired (as described above).
- Check the Heir Target Allocation chart on the Overview tab to see how well you are meeting the targets, and adjust the distributions accordingly. Note that some assets might need to split among heirs, and others might need to be liquidated in order to make everything work out.
You can also see everything you've allocated for a particular heir by going to the Distributions tab and filtering the Heir column by the desired name. You can see how much you've actually distributed to that heir by further filtering the "Done" column with "Y" (for "Yes").
A charitable donation is really just an estate distribution to a special type of heir (a charity). To record a charitable donation:
- Create a new heir which is the charity.
- Create a distribution in the normal way, as explained above.
You can do some very helpful things with EstateExec tables. For example,
- To see everything you have allocated to a given heir, simply go to the Distributions tab and type that heir's name in the filter cell for the Heir column.
- To see all the assets you have not yet allocated, simply go to the Assets tab and type a small value (e.g., 1) in the filter cell for the Distributed column, and a small value (e.g., 1) in the filter cell for the Value Now column.
- Note that when an asset has been allocated, but not yet actually distributed (i.e., marked "Done"), the Assets table shows the allocated amount in gray.