§ 278. Articles Reserved for Decedent's Dependents

Where the appraisers are empowered to reserve the necessary household articles for the use of the decedent's dependents, it has always been the rule that these be included in the inventory but that no value be assigned, the articles being marked "Reserved." This rule too is vitiated by the transfer tax, for such articles are not always an allowable deduction.

§ 279. Summary of Inclusions

By letting the inventory include everything belonging or accrued to the decedent at midnight on the date of death, and nothing else except assets of doubtful ownership (on which the court will pass), the inventory will include the gross corpus of the estate (see Chapter XXXV, "Corpus and Income"), and will contain the data needed for both state and federal reports as to the amount of the estate at the date of death. This is the best practice where the state law is not mandatory to the contrary.

All bonds, whether federal, state, or municipal, and whether or not containing a tax free covenant, should be included.

Unless the law of the executor's state requires him to file, together with the inventory, a statement of the debts due by the decedent, the inventory should make no mention of such debts. A separate schedule such as that described in § 281 is usually available for the ascertainment of debts.

§ 280. Forms of Inventory

The inventory should always be prepared under the general guidance of an attorney, unless the executor is thoroughly familiar with the local probate law or has employed an accountant who is. The rules vary in different states, but the form of the inventory is, except as to the certificates accompanying it, not usually specified in the law. In each state the clerks of the probate courts are usually supplied with blank

forms following the special statutory provisions of the parAn outline of the form used in Maine is given.

ticular state.

(See Form 17.)

§ 281. Schedules

Each of the classes into which the inventory is divided should usually be made the subject of a separate "schedule." The schedules should be numbered serially for convenience in reference.

When the statute does not specify the classes into which the property is to be divided, judgment should be used as to the degree of segregation. For example, while in a very small estate it might be well enough to lump bonds and corporate stocks, or secured and unsecured notes, in a large estate it might be desirable to separate each of these into several classes, as perhaps : bonds taxable; and bonds non-taxable. The schedules most commonly used are:

Household Chattels

Bonds

Stocks

Cash in Banks and on Hand

Real Property

Interests in Businesses and Partnerships

Debts Due the Decedent

Under Household Chattels are usually included furniture, carpets, pictures, ornaments, jewelry, silverware, chinaware, pleasure vehicles and horses, clothing, and similar articles.

The schedule of Debts Due the Decedent should classify the items into: (1) Sperate Debts (from the Latin word for hopeful), (2) Doubtful Debts, and (3) Desperate Debts (from the Latin word for hopeless), each being valued at the time of appraisal on the basis of probabilities of collection. Sperate debts are those on which 100 per cent is expected to be realized;

desperate, those on which nothing is expected. Others are doubtful. Secured notes receivable, such as mortgage indebtedness, are sometimes excluded from sperate debts receivable and listed in a separate schedule. In any event the security should be specified.

$282. Amount of Description Required

The description given of the assets should be such as will identify them reasonably, not as against all other similar articles everywhere, but as against other articles in the inventory. "Four chairs" would not be an adequate description in an inventory which listed many other chairs, but "four diningroom chairs" might.

A room by room appraisal is desirable; and all the articles should be named specifically, except those of small value, such as common bric-a-brac or cheap books. A separate value should be given for each article named, except that the values of a number of articles contained in the same room may be grouped. The value of an article worth more than $50 should be stated separately. Such an entry as the following would be acceptable:

Dining room: Table, six chairs, three pictures (common print), value $75; sideboard, $60; total, $135.3

The federal regulations require also that the description of articles having marked artistic value, such as paintings, engravings, etchings, statuary, oriental rugs, or antiques, be fully given.

Where paintings having artistic value are listed, the size, subject, and artists should be named. In the case of oriental rugs, the size, make, age, etc., should be given. The weight in ounces of each article of silverware should be stated.*

This is part of the general rule. The remainder is that the description of articles which can be appraised without a

Article 17 of Regulations 37.

Article 18 of Regulations 37.

physical examination of the articles, such as stocks and bonds, should be sufficient to give the information necessary for such appraisal, such as: name of issuing company, numbers of certificates, par value, rate of fixed dividend, life, etc.

A business owned solely by the decedent should be inventoried in detail; a business in which he held a partnership interest is entered in different ways, depending somewhat on the partnership agreement as to winding up the affairs in case of death of a partner. In each case the inventory should conform to the facts and should be based on an accountant's statement.

§ 283. Certificate

The certificate as to the accuracy of the inventory and appraisal should always be prepared by the attorney unless there is a form given on the probate blanks issued by the clerk of court, as the requirements vary in the different states. substance is, however, the same in all.

The

REVIEW QUESTIONS

1. Why is the inventory important? Who must account for the inventory valuation? What weight has the inventory as evidence? How does the accounting depend on the inventory? Why does an inheritance tax necessitate an inventory?

2. Who is charged with the inventory valuation? To whom does any increase in the value of assets belong?

3. How soon must the inventory be filed? In your state, who prepares the inventory? If additional assets are discovered, what is done?

4. Why was the real estate formerly excluded from the inventory? Why has this been changed?

5. To what date should accrued rent, interest, etc., be included? 6. What is the rule as to securities of uncertain value? Wha should be done with items, the title to which is uncertain?

7. Can the same inventory be used for both state and federal tax? 8. As of what date should the inventory be taken? What should

be excluded? Should debts of decedent be scheduled? What is the rule as to articles reserved for the use of the family? 9. What general effect have the transfer tax laws had on the taking of inventories? What items must now be included? How are allowances to the family entered? Will the same inventory do for both state and federal tax?

10. Who is qualified to prepare an inventory? What is the form? Where may forms be secured?

11. What is a schedule? What schedules are usually prepared? How should debts be classified?

12. How much description is required? What is the rule as to objects of art? How should securities be described? How should

a partnership interest be entered? How should a business owned solely be inventoried?

13. Who should prepare the certificate? What is its substance?