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.
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:
- Deney distributions for any specic bequests and beneciary actions.
- Ensure you will have enough cash to resolve the debts, planning to sell assets if necessary.
- Plan remainder of asset disposition
- Deney distributions so that each heir gets the proper items and overall estate value.
- Heir Estate Percentages
The will may specify the percentage of the net estate that each heir should receive. For example, if the will says that daughter Jill should get 40% of the estate, and the estate is worth $200K, then Jill is entitled to $80K of the estate’s assets and cash, or all of the cumulative distributions for Jill should add up to $80K.
Specic 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 However, not all such bequests can be honored: sometimes the asset is no longer part of the estate; sometimes the bequest conicts with local law (e.g., community property); sometimes the asset must be sold (as a last resort) in order to pay estate debts.
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Named Beneciaries #
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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 beneciary 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” identied as “Beneficiary”.
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 nal 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 conrms that he or she has received everything due.
