When it comes to estate planning and estate sales, the two topics might not be as closely linked as their names imply. While it is true that an estate sale might be part of the estate settlement process after someone dies, that doesn’t necessarily mean that every estate will hold an estate sale. It also does not mean that every such sale takes place because of someone’s death. To better understand what an estate sale is, how it works, and how it might play a role in the estate planning process, let’s take a look at some key ideas.
The estate sale industry, or the estate liquidation industry, is one that specializes in selling a lot of property in a short amount of time. When people die, downsize and move to a new home, divorce, or have to sell a lot of property to meet debt payments, the estate liquidation industry is there to help them sell the property quickly.
If you’ve ever been to an estate sale, you know how it works. Basically, estate sales are very similar to garage or yard sales in that they sell a lot of items quickly, and usually, these items are sold at a significantly discounted price.
Estate Sales and Estate Planning
Even though not all estate sales arise because someone has died, a significant number of them do. When someone dies, someone will have to step in and begin managing all the property and possessions that person left behind. This process is legally known as the probate process.
The person appointed to manage the estate property, known as an estate administrator, has a legal responsibility to ensure that property is transferred to the rightful new owners. The valuable assets, such as real estate, investment accounts, and other high dollar items, are usually disposed of through the terms of an inheritance planning vehicle, such as a last will and testament or revocable living trust, or under the terms of state inheritance laws.
Personal property, and other smaller items are not always directly addressed in the decedent’s estate plan. In such a situation, the estate administrator might determine that holding an estate sale would be the best way to liquidate this type of property.
So, when the administrator makes his decision, he or she will usually contact an estate liquidation company and have the company conduct the sale. In return for its efforts, the company will take a portion of the proceeds, while the remainder will be returned to the estate to be distributed as inheritances.