As a trustee or executor, you have a fiduciary duty to properly handle the administration of the estate–but how? The prospect is often overwhelming, both logistically and emotionally, and every detail of the responsibility is of the essence. Gardiner Koch Weisberg & Wrona guides families and their businesses through the arduous process and relieving them of the worry and confusion it can cause.
Trusts are often established during the life of the person establishing the trust. Trusts can be structured to minimize estate taxes, to eliminate the need for probate proceedings in court, and to provide protection against creditors, among other reasons. To obtain the full advantage of a trust, a trust needs to be properly funded—all assets intended for the trust must be titled in the name of the trust. Trust administration involves the process of transferring assets into trust—often a daunting task because of the requirements of corporate bureaucracy. To transfer stock held in one company, you must comply with the requirements established by that company. Our firm is experienced in making stock and asset transfers that are necessary to obtain the protections and advantages of the trust. Trust administration also involves the filing of income tax returns relating to trust assets. Our firm handles tax returns for trusts.
When a family is faced with the death of a loved one, the very last thing they want is to deal with are the legal details of estate administration and probate. First, let’s define the terms we’re using: “estate administration” and “probate.”
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“Estate administration” is the process by which the assets of the decedent (deceased person) are gathered, valued, sold or transferred to the appropriate beneficiaries; the appropriate tax returns are prepared and filed, and any claims are dealt with and paid. Because the decedent is no longer available to deal with the assets, a personal representative (or executor) is appointed by the Court to have the authority to manage the assets under review. In its larger sense, estate administration can refer to the entire administration of the decedent’s affairs after death, including administration of a Revocable Trust and the assets titled in that trust, filing of the U.S. Estate Tax Return (Form 706) if necessary, and administration of Irrevocable Trusts created by the decedent during lifetime.
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“Probate” refers to the process by which the court admits a valid will. Alternatively, the court determines that the decedent left no will (“died ‘intestate’”) and appoints the executor or personal representative. If the decedent left a valid will, the probate court will follow the will. If the decedent left not will, the assets will be distributed according to state law—sometimes at odds with the way the decedent would have preferred assets to be distributed.
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Assets subject to probate administration are those titled in the decedent’s name alone. Proper planning and titling of assets to a trust help to avoid probate entirely.
What issues need to be addressed when someone dies? Here’s what needs to be done. (As a note: We handle this full list of responsibilities on behalf of our clients.)
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Address immediate matters. Some examples: who will take custody of minor children? Who will manage the client’s business? Who will take care of any pets? Must the home be secured?
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Find and execute the deceased person’s funeral instructions.
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Obtain the client’s original documents (such as the will, any trusts, insurance policies, annuity policies, etc.).
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Contact an estate administration attorney to assist the nominated personal representative. (Usually, the first meeting does not occur until after the funeral, unless there are immediate issues that must be addressed–or family members wish to meet the attorney before leaving town.) If all assets were placed in trust prior to death, there may be no need for probate.
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Contact Social Security, if the client was receiving benefits, as well as any companies paying pensions.
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Forward the decedent’s mail to the personal representative so that bills and information about assets will be received.
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Gather asset information.
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Gather information about debts and claims (including medical bills).
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Prepare and file the deceased person’s personal income tax returns. (This may include federal and state income tax returns, the Federal Estate Tax Return and state estate or inheritance tax returns.)
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Prepare and file the fiduciary income tax returns for the estate and any trusts.
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Keep careful track of all receipts and disbursements. (It is key not to commingle estate assets with personal assets.)
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Give information to beneficiaries regarding estate assets, receipts, and disbursements.
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Pay valid claims, then make distribution to the appropriate beneficiaries.
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If there are continuing trusts, arrange for trust administration. Simply put: If the decedent didn’t ensure that all assets are titled in the name of the trust, the decedent’s intended beneficiaries may not reap the benefits of the trust–and the assets will end up in probate. These transfers are notoriously tricky, especially in situations involving stock options in large corporations.
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Close the estate.