What Options Exist for Selling or Auctioning Personal Property to Reimburse Estate Expenses and Equalize Distributions Among Heirs?
Detailed Answer
Under Hawaii law, a personal representative (also called an executor or administrator) may sell or auction estate personal property to pay debts, administrative expenses and to ensure fair distribution among beneficiaries. The primary governing provisions appear in the Hawaii Uniform Probate Code (HRS Chapter 560).
1. Authority to Sell Property
HRS §560:3-709 grants a personal representative broad powers to sell personal property of the estate:
- Public auction, private sale or sealed bids.
- No prior court approval if sale terms are reasonable and in good faith.
- If sale price is unusually low or circumstances are uncertain, the representative may petition the probate court for an order authorizing sale. (HRS 560:3-709).
2. Duties and Limits
HRS §560:3-711 lists duties and powers, including:
- Obtain appraisals when needed to show property value.
- Provide notice to interested persons before public sales.
- Maintain accurate records of auctions, sale proceeds and expenses.
See HRS 560:3-711.
3. Reimbursing Estate Expenses
Proceeds from sale first cover legitimate estate expenses, including:
- Funeral and burial costs (HRS §560:3-703).
- Administration fees, court costs and attorney fees.
- Taxes, creditor claims and other liabilities.
After payment of debts and expenses, net proceeds become part of the residue of the estate.
4. Equalizing Distributions
When beneficiaries receive specific personal property items of unequal value, the personal representative can:
- Sell high-value items and divide cash evenly.
- Auction items so all beneficiaries can participate in bidding.
- Allocate property to certain heirs and distribute equivalent cash shares to others.
If the decedent made advances or gifts in contemplation of death, those amounts can be added back into the estate pool (“hotchpot”) to achieve equal shares under HRS §560:3-1001. (HRS 560:3-1001).
Helpful Hints
- Obtain professional appraisals for antiques, collectibles or artwork to ensure fair market value.
- Compare quotes from at least two auction houses or estate sale companies.
- Notify all heirs of your sale plan in writing; aim for consensus to avoid disputes.
- Keep detailed records of notices, bids received, sale contracts and distributions.
- Consult an attorney if the estate includes unusual assets, taxing authorities or potential beneficiary conflicts.
- Consider online auctions for specialized items to expand bidder reach.