Back to Basics: Receiving Bequests Distributions | Sharpe Group
Posted July 1st, 2004

Back to Basics: Receiving Bequests Distributions

Question: A donor made a charitable bequest to our organization in her will. How long after her death can we expect to wait for the distribution from her will?

Answer: For simple estates, plan for a one-year timeline.

The executor of a will is expected to administer the estate in a “timely fashion” in accordance with the terms of the will. A nonprofit organization waiting to receive a bequest may consider one year to be painfully slow, but given the executor’s wide range of responsibilities, settling an estate in one year is actually very “timely.” A large estate with complex bequests may take two years or longer.

Under normal circumstances, your organization should plan to be in contact with the executor of a will over the initial one-year period. For a simple, uncontested estate, you can usually expect to receive the bulk of your organization’s gift within one year. This calculation is based on two months to open probate, another six months for appraising and converting assets and notifying creditors and a few additional months to accept and approve claims from creditors and distribute the remaining estate property. If the will is contested, this timeline may be prolonged considerably.

Contact the executor at two months to see if probate has been applied for and again within six months of beginning the probate process for an update of how the estate is progressing. If you still have not received a distribution at one year, it is reasonable at that point to contact the executor to determine when they expect the distribution of the estate to take place.

The executor’s role

The executor has the legal responsibility for the administration of the decedent’s estate.

Administration tasks include:

  • Initiating probate
  • Managing estate assets
  • Preparing an inventory and appraisal of all the decedent’s probate assets
  • Notifying creditors of the decedent’s death and paying valid claims
  • Distributing the remaining assets in accordance with the terms of the will
  • Providing the beneficiaries with an accounting under state law of all actions taken that involve estate property
  • Closing the estate
  • Initiating probate

Filing for probate is the executor’s first responsibility. This process can involve locating the will and potential heirs, providing a copy of the will to beneficiaries, compiling a list of assets and liabilities, and filing the proper paperwork with the courts.

Managing assets

Following the court’s grant of probate and formal appointment of the executor, the executor must manage the decedent’s probate assets. For example, the executor may need to sell or rent estate property or make financial decisions regarding stock portfolios, business holdings, etc. Ideally, assets that are being sold should be converted within six months. However, if real estate is involved, longer time periods are not unusual.

Preparing an inventory and appraisal

Another principal duty of the executor is the preparation of an inventory of all of the decedent’s probate assets and to indicate the fair market value of each as of the date of the decedent’s death. Most states allow the executor to value the assets without assistance, but many executors will hire appraisers to value the estate property. This inventory and appraisal helps creditors to determine which assets are available to pay their claims, and allows beneficiaries to determine the property to which they may be entitled.

Notifying and paying creditors

The executor must alert the decedent’s creditors that the decedent has died. This permits the creditors to take the proper steps to present their claims for payment. Each state has varying requirements regarding how the executor must give this notice (usually by mail, publication, or in person), and how long the creditors have to present their claim for payment (typically six to nine months).

After receiving these claims, the executor will then evaluate the claim and either accept it as valid or reject it. If the executor rejects the claim, the creditor may file suit against the estate to recover on the claim.

At the appropriate time specified by state law, the executor then pays the accepted claims as well as any taxes that are owed from the estate. State statutes provide the executor with a priority order for paying the accepted claims if the estate assets are not sufficient to satisfy all creditors and other claims, such as family allowances. Due to the complexities involved, an executor will often hire a professional to advise him or her on payment of taxes and other estate claims.

Providing beneficiaries with an accounting

An executor will normally be required to provide all beneficiaries, including charitable legatees, with a copy of the estate accounts. These accounting records will likely be very detailed and require the executor to justify every expenditure and report all income the estate has received. The accounting records are one of your opportunities to identify any problems with the estate. For example, it is prudent to look for asset sales that appear to have been made at less than fair market value, since this may diminish the size of the gift to your organization, especially in the case of residuary bequests.

In some cases, it may be necessary to request that the court hold a hearing to review particular transactions and determine if the accounting records should be approved. In rare cases, an executor may be required to pay back any losses, but this does not typically occur if the executor was acting responsibly and in good faith.

Distributing and closing the estate

If estate property remains after paying creditors and other claims, the executor will then distribute the balance to the appropriate beneficiaries, including your organization. If there is insufficient estate property to satisfy all of a donor’s devises and bequests, the executor will determine which beneficiaries are prioritized by following applicable state law that provides for “abatement” of bequests if insufficient funds remain after payment of taxes and other claims. Once the executor distributes all of the decedent’s property, the estate will be closed and the executor will be relieved of further responsibilities.

Communicating with a difficult executor

A number of problems can naturally arise when dealing with a bequest from an estate. While it is advisable to keep your institution’s advisors apprised of potential issues as they arise, when at all possible try to resolve the issues with the executor without resorting to legal process. Where possible, assume the best and maintain open, positive, and ongoing communications, and express gratitude wherever possible to the executor. Remember that the executor may be in a position to influence future gifts from friends or relatives of your benefactor.

As one can see, the responsibilities of an executor can be daunting, so while it is proper to be clear at the outset about your expectations, it is important to be patient and understanding as well.

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The publisher of Sharpe Insights is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Sharpe Insights may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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