trustee? If the beneficiaries consented, could the trustee retain unauthorized investments? 4. How may trustees be relieved from the restriction to investments yielding low returns? 5. May a trustee loan trust funds? May a trustee buy in real estate sold by him as trustee? Why not? 6. May a trustee carry on a business with trust funds? May he make money for himself incidentally out of his handling of the trust funds? If trust property had to be sold, could the trustee have a friend buy it in? CHAPTER XIII MAKING AN INVENTORY § 102. Objects of Taking Inventory An inventory is "a detailed, descriptive list of articles with the number, quantity and value of each." It is the first step in dealing with the assets that constitute the estate. It is evidence for: (1) the probate court, (2) the personal representative, (3) creditors, and (4) the legatees. It gives the basis for the accounts and furnishes data for the opening entries. As inheritance taxes are now generally levied, an inventory is essential for the purpose of ascertaining their amount. The executor or the administrator must charge himself with whatever value is shown by the inventory. This charge is not conclusive as against the personal representatives, as it may be over or under the actual value, and on sale of chattels or collection of claims there may be variations from the inventory values. It answers though as a prima facie charge to be corrected later if necessary. In some cases a will may express the wish of the testator, that his executor be excused from filing an inventory. If an estate is undoubtedly solvent and the executor is also a residuary legatee, this might have been allowed before the days of inheritance taxes, but even then if there was any risk to creditors or legatees, the court would insist that an inventory be filed. Where an inheritance tax is to be paid, an inventory cannot be excused. In New York, as a rule, and particularly in the counties around New York City, an inventory is seldom required, the transfer tax affidavit taking its place. In such cases, the matter is of much importance and it is treated more fully in Chapter XXXIV, "Inventories." § 103. How an Inventory Is Made It Pursuant to the definition, a list is prepared of all personal property. It should give number, quantity, and value. should be conveniently classified so as to group like articles, as: Household furniture (by rooms) Books, pictures, rugs, and works of art Loans and any other chattels Certificates of stock, etc. Each item of any considerable value should be listed separately. Articles of small value may be grouped. Where there are many articles of a kind, as books, an average value per volume can be given. The value should be the market or sale value at the time of death. If any stock or notes or claims are of dubious and uncertain value, that fact should be stated. (See also § 260, as to inclusion of real estate for inheritance taxes.) § 104. Appraisement Appraisers and the formalities of their appointment are commonly prescribed by statute, the usual number being three. After being sworn, these agree on the values affixed to the inventory. The inventory should be signed by both the executor and the appraisers, then verified, and then filed with the clerk of the probate court. In New York the only appraisals required are for fixing the taxable values for purposes of transfer. No definite num ber of appraisers is prescribed. Usually not more than one is appointed. He, however, may have the assistance of more. The executor usually has appraisals made, which in the transfer tax proceedings are submitted to the state appraiser designated by the surrogate. The transfer tax affidavit is signed only by the executor, not by the appraisers. Supplemental affidavits, appraising certain specific property, are sworn to by whoever appraises them, not by the appraiser designated by the surrogate. Real property is included in these appraisals even though it does not come into possession of the executor. § 105. Time for Filing The inventory and appraisement should be made and filed within three months, though each state prescribes the time by statute. An inventory filed after the specified time would not be invalid on that account. If an executor failed to discover assets within the time set, he would be excused for failure to file inventory, but it would be his duty after receiving assets to file an inventory without unnecessary delay. In New York, however, as stated in § 102, an inventory other than for transfer tax is not required. An inventory may be waived by all the parties in interest where it is not required for ascertaining the inheritance taxes. It would be unnecessary if no assets came into the hands of the personal representative. In such case it would be necessary for the representative to-file an affidavit stating the reason for not filing an inventory. In those cases where all those interested in the estate pay all debts and then distribute the property, no inventory would be required. This would not apply where the inventory was needed for inheritance taxation. Failure to return an inventory is on its face culpable negligence on the part of the representative, which he may be able to explain. It is a breach of his bond, and if loss were caused to anyone by his omission the representative would be respon sible. If an inventory is not filed the representative must usually show good cause for the failure. Anyone interested may complain of failure to file an inventory or may ask to have any error or omission corrected or amended, and the judge of probate will compel the representative to file an inventory or to correct any error. § 106. How Far Inventory Is Conclusive An inventory is presumed to be correct, and the burden of proving it otherwise would be on the person objecting. Objection could be made by affidavit to any material error and in such a case the court would make an appropriate order. As a whole, the inventory is conclusive, and while the valuations may later appear to be over or under the real value, all of this may stand until corrected by the final accounting. Generally, the correctness of the inventory and of the valuations by the appraisers cannot be attacked until the accounting. When the accounting is made, failure to include all the estate, or failure to value at its worth at the time or any overvaluation may be shown, and such action can be ordered as will meet the situation and correct the error. REVIEW QUESTIONS I. What is an inventory? What is the object of the inventory taken by an executor or an administrator? .2. How should an inventory be prepared as to classification? As to itemization? The value should be as of what time? 3. What is the law as to appraisement for taxation in your state? 4. Where should an inventory be filed in your state? When may an inventory be waived? Who is responsible for any damage caused by failure to file an inventory? Who can compel filing or the correction of error? 5. Who may object or show incorrectness of inventory? When may errors in valuations be corrected? |