After the Final Inventory is completed for all of the deceased's assets and liabilities at the time of death, the Current Inventory section is used to produce a report of the remaining assets and liabilities at a given moment.
Liquidating an Asset
When the estate sells an asset, the transaction should be logged by liquidating the asset in this section. Our system will convert the asset into cash in the Estate Account and add an entry in the Estate Accounting section (which will be used later to produce documentation and reporting for the heirs). The original entry in the Final Inventory should not be edited, and it cannot be changed or deleted once the asset is liquidated.
Note that Cash on Hand and Bank Accounts can only be deposited to the Estate Account, and not liquidated. The executor should be transferring these assets over to the Estate Account (which can be used to pay bills and eventually distribute assets) rather than using the cash directly or making transactions from the deceased's accounts.
Distributing an Asset
Likewise, you can log the distribution of estate assets to beneficiaries using this function. However, assets should not be distributed unless the estate is manifestly solvent, ie, it has the cash to cover all of deceased's liabilities and the estate's debts. By distributing the assets of an estate that may be insolvent, the executor risks being personally responsible for amounts the deceased and the estate might owe the CRA.
Likewise, in Quebec, as a general rule heirs cannot be responsible for the estate's liabilities beyond the value of the assets they receive; however, if they accept an asset before the Final Inventory is published, or they allow the executor (liquidator) to not publish an inventory, they become liable for the estate's debts. Note that assets with sentimental value but little monetary value can be distributed to the heirs even if the estate is insolvent. Additionally, if the estate is insolvent, heirs can always purchase assets from the estate at fair market value.
When distributing an asset from this section, select the beneficiary (who must have been previously added in the Contacts section), the asset, and the percentage that the beneficiary is entitled to receive.
It's also important to note that some wills may dictate that rather than have the estate pay off a certain liability, it should instead be passed on to an heir along with the asset that secures it (eg, a mortgage is passed on to an heir along with the house it secures). If the heir accepts the asset and the liability, the liability can be distributed using this section, just like an asset. If the heir refuses the condition, the asset and the liability would become part of the residual estate value, with the debt being assumed by the estate and the asset being distributed among the Universal Beneficiaries.
Paying a Liability
As part of settling the estate, the executor will need to pay off the deceased's liabilities. These transactions should be logged in this section, indicating the amount paid.
Additionally, creditors may sometimes forgive the loans of the deceased, partly or wholly. If that is the case for a liability in the Final Inventory, select the Forgive option. This will remove the value of the liability from the Inventory while logging the original amount and the amount forgiven for accounting and reporting purposes.
Capital vs Income Account
Click here for more information about logging transactions to the Capital or Income Accounts.