Today’s blog was written by Jessica Butler, Law Clerk at Fasken LLP.

Managing and distributing household contents in an estate can be a daunting task, filled with both emotional and practical challenges. In this blog, we’ll explore the essential steps and considerations for handling household items in an estate, from creating an inventory and appraising items, to distributing them among beneficiaries, to dealing with sentimental belongings. Whether you’re an estate trustee or simply looking to understand the process better, this guide will provide you with the knowledge and tools you need to navigate this important aspect of estate administration (but is definitely not legal advice!).

Inventorying Items: Start by creating a comprehensive inventory of all household contents. This includes furniture, electronics, jewelry, artwork, and any other personal belongings. Prioritize cataloging items of value or significance. Daily-use kitchen items, utensils, used clothing, and general household items of no value do not need to be included. Use your judgment to decide which items to inventory, and when in doubt, it is better to include an item than omit it. Document included items with photos and descriptions.

If the Executor is also family or friend, the first visit to the deceased’s home may be emotionally difficult[1]. The Executor should start with looking for the most important items (such as the deceased’s wallet for personal ID and bank card, keys, passport, chequebook) and take steps to secure them. These sorts of items will need to be dealt with as part of the initial administration. For example, cancelling their health card.

A second visit to begin taking a more detailed inventory should follow in a timely manner. If the deceased rented a residence, you often have to clear it out by the end of the month or pay additional rent. Executors may choose to use spreadsheets or a simple notebook and pen, depending on the estate’s size and complexity.

While creating the detailed inventory, Executors should identify and secure particularly valuable items. Smaller items of considerable value should be stored in a safe with larger items being moved to a secured location.

Let me know in the comments if you’ve found success with any kind of inventory management app! I’d love to hear your recommendations.

Appraising Items: Executors should obtain professional appraisals for certain items identified as valuable during the inventory process to determine their fair market value as of the date of death. This is especially important if: (i) a certificate of appointment of estate trustee is needed; (ii) valuable items will be sold; or (iii) valuable items will be distributed in-kind among beneficiaries.

In these cases, there may be certain considerations to be made with respect to tax and the equalization of value among beneficiaries. Values of assets are needed in all cases in which a certificate of appointment of estate trustee is applied for.

Not every item requires an appraisal or justifies the associated cost. When valuing items, consider their current condition and what someone would realistically pay for them. A useful approach is to think about the price the item might fetch at a garage sale or on platforms like Kijiji or eBay. Appraisals are often used for insurance purposes and typically provide the replacement value, especially for jewelry. This replacement value represents the cost of buying a new item, which is usually higher than what a jeweler, business, or individual would pay for a pre-owned item from the estate. You can expect that the cost of a new ring from a jewelry store would be significantly higher than what a retailer or individual buyer would offer for a used ring of the same quality.

Another option to consider is hiring companies or professionals who specialize in inventorying, appraising, and selling household items. This can be particularly helpful if the task is too large or challenging for the executor to manage alone.

Distributing Items: Executors should follow the provisions in the Will to determine how items will be distributed. Sometimes, the deceased may leave a memorandum or letter of wishes with specific instructions. This may involve dividing items in-kind among beneficiaries, selling items and adding the proceeds to the estate, or donating items to charity.

Donated items may be used for the estate to claim a donation tax credit, where applicable.

Clear and open communication with the beneficiaries when distributing items is crucial. Personal items can be sentimental and emotionally charged, so there is always the chance for conflict to arise.

Legal and Tax Considerations: Executors should consult professionals regarding the implications of distributing household contents. This may involve reporting item values for estate tax purposes or ensuring that any sales comply with local laws.

There may be legal restrictions or requirements associated with the sale or distribution of certain items such as firearms, cultural artifacts and wine. See Holly LeValliant’s blog on this topic: https://www.allaboutestates.ca/collections-as-estate-assets/

Documentation and Record-Keeping: Lastly, Executors should keep detailed records of all actions taken, including inventories, appraisals, and distributions. This documentation can be essential for legal, tax and personal liability purposes, as well as for maintaining transparency with beneficiaries.

In conclusion, managing and distributing household items in an estate requires careful planning, clear communication, and a compassionate approach. By following the steps outlined in this blog, Executors can navigate the complexities of inventorying, appraising, and distributing items while honoring the wishes of the deceased and maintaining harmony among beneficiaries. Remember, taking the time to document and keep detailed records will not only ensure transparency but also provide peace of mind during this challenging process.

[1] In these circumstances, Executors should be encouraged to take their time – not everything needs to be done right away and only securing the most important documents and assets on the first visit is perfectly ok. Trying to do otherwise may be needlessly overwhelming.