ADMINISTRATION OF ESTATES & TRUSTS
When a loved one passes away, their estate may be subject to “probate”. Probate is the process of settling a person’s estate and concluding their affairs. This process can include collecting assets, ensuring income and estate taxes are filed, and and usually providing accountings to one's estate or trust beneficiaries. Probate is not always required, but can be in many circumstances, regardless of whether the deceased person had a will. If the deceased did not have any documents prepared, state law will govern who will inherit from the estate. The idea of one’s assets being automatically passed to the spouse or immediate family is a common misconception.
What is Probate?
Probate is a court-supervised method of administering an estate after someone has passed away, whereby the state reviews the probate assets that an individual owned at the time of death. This process requires the Personal Representative of the estate to determine the value of those assets as of the date of death. The procedure for paying the decedent’s bills, dealing with claims against the estate, and distributing the remaining assets are also governed by the probate process.
What is Trust Administration?
If a person uses a revocable living trust as their primary testamentary planning document, that trust may have to be administered by someone else in the event that the grantor becomes incapacitated (in which case the successor trustee must step in and manage the trust for the grantor’s benefit). Alternatively, the living trust will need to be administered at the grantor’s death. Either way, a successor trustee is able to access funds quickly so that he or she can take over management of the incapacitated or deceased grantor’s assets without first getting approval from the court. In administering a trust, however, there may be some notice requirements and will always be certain procedures that must be followed to properly discharge the duties and obligations required by the trust. So, although the court may not be involved in the process, it is essential to consult with a knowledgeable attorney, and sometimes to have him or her assist you in administering a loved ones’ trust.
What about Estate Taxes?
Much like how we prepare our income taxes every year, the decedent's family needs to file an estate tax return upon the passing of the decedent. It is essentially a balance sheet of the decedent's property which contains the value of each of the assets. Typical assets include: real estate, bank accounts, stocks and bonds, insurance, retirement account and anything else the decedent owned at the time of death. Since they are prepared individually, like are more likely to be audited and they are recommended to be prepared by a professional.
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An estate tax return is generally due 9 months after the decedent's death. So, 9 months after the date of death. Like other tax returns, it may be extended automatically.
FREQUENTLY ASKED QUESTIONS REGARDING ADMINISTRATION OF ESTATES & TRUSTS
How long does it take for a trust to be administered?
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If there are no complications, a standard trust administration can be closed within 6 months.
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Does all property need to go through probate?
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Not all property needs to be probated. "Non-probate assets" include:
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Retirement accounts that have listed beneficiaries
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Bank accounts that are designated "pay on death" (POD) or "in trust for"
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Property that is owned by a living trust or co-owned with "joint tenants with right of survivorship"
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Life insurance policies that have listed beneficiaries
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What are the first steps in the Trust Administration process after someone dies?
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Get the death certificate and speak to an attorney as soon as possible: time is of the essence.
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Find and thoroughly read the Trust and other estate documents
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Research the decedent's assets and gather documentation for the value of the assets - such as investments and properties-on the date of death.
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Obtain addresses for heirs and beneficiaries.
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Consider professional Trust Administration through a firm like Viner Law Firm PC.
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