There are few responsibilities more emotionally trying than being called upon to settle the affairs of a loved one. If you have been selected to serve in the role of Estate Representative or successor Trustee, you have probably had no formal training for the steps that come next. Most people who have been asked to step up to the task have not had the opportunity to act in this capacity before.
No two situations are exactly alike.
There are helpful directions for the Executor and Trustee roles, and a complete discussion would fill many more pages than provided here. But this is a good start…
Materials and Information To Collect:
We recommend that you begin by gathering important and useful information, including:
- Decedent’s Identification Items, such as driver’s license, passport, Social Security Card; and
- Decedent’s personal and family records: Birth certificate, Death certificate (order at least 5, but more may be required depending upon the assets in the estate), marriage license, divorce judgment (including Marital Settlement Agreement), military service discharge documents; and
- Estate documents, including Last Will and Testament (and any Codicils), Trust Declarations and amendments, Land Trust records (if applicable), and insurance trust records (if applicable); and
- Life Insurance materials, including life insurance policies, and the identity of life insurance brokers; and
- Asset information, including real estate deeds or leases, timeshare interest documents and deeds, car and boat and other titles, financial information concerning bank and financial accounts, stocks, bonds, CD’s, annuities, retirement accounts, and information concerning any other assets (whether or not you can determine now whether or not there is a significant value); and
- Debt information, including mortgage documents, home equity loan documents, credit card statements for the past several months, personal loan information, student loan information; and
- Business information, including details about the operation of a business as a sole proprietor, the operation of a business corporation or limited liability company, and partnership interests in general or limited partnerships.
- Unique Issues: Are there royalties from the creation of art or published or other works? Are there rights to receive continued payments from installment or other sales? Are there payments available and uncollected from family or other estates or trusts? Are there refunds available from any source? Are there airline mileage accounts, rebate accounts or other sources that should be reviewed?
The types of assets and debts or obligations are not the same from person to person.
Next steps:
Securing property and assuring continued communication are often the first and most useful steps to take:
Secure the home:
Rental? Contact the landlord to be sure that they know who to reach in the event that access to the house or apartment is necessary. Find out whether rent has been paid current. If you haven’t located a copy of the current Lease, request that a copy be sent to you.
Who else has keys? Are there reasons to change the locks?
Are there others living in the home? If so, are the Decedent’s personal items secure or do they need to be removed from the premises to be sure that they can be handled appropriately?
If the home or apartment is owned, have you determined if there is a mortgage or home equity line of credit? When was the last payment made? Are the real estate taxes current? If they have not been paid for an extended period of time, taxes may go to sale and an attorney should be contacted.
Whether owned or rented, check that sump pump and HVAC systems are working and set to avoid freezing temperatures or hot weather extremes that may be damaging. Locate utility account information to make sure that accounts are not in jeopardy of being closed and utilities shut off. And check garbage/refuse removal, both in the home and at the street or alley. And, finally, assess the need for attention to clean-up. Do the fridge and freezer need to be emptied in order to avoid an unpleasant situation? Are bathrooms and other areas in need of attention?
Later, the Estate or Trust Attorney will review the listing of the owned home, the return of a leased home or apartment, and the importance of considering the date of death valuation of residential and investment property.
Make sure to also review other properties, timeshare interests, interests in real estate partnerships.
Secure Papers and Documents.
There is a value in having the opportunity to review both current and older documents. Some will be useful for tax filings, including consideration of Estate Tax issues. Other documents may be helpful to locate relatives and others of importance for the estate resolution process. If it’s a mess, then some time and attention may be necessary. But a wholesale clean-out, without considering the documents that exist, is often foolish.
Assess Financial Needs of Surviving Spouse and Dependent Children.
Does the Decedent’s family have access to funds for their day-to-day living needs? Is it possible that significant funds are going to be needed soon? Does the surviving spouse have his or her own source of income, credit cards, emergency funds? Should Social Security be contacted promptly in order to make sure that the surviving spouse has the benefit of an increase from the Decedent’s Social Security? And to assist dependent children in applying for Social Security benefits to which they may be entitled?
Funds may be more quickly available from life insurance proceeds, from jointly owned accounts or assets, or from other sources.
Set Up a Meeting with the Attorney and Accountant.
The two most valuable members of your team to assist with the resolution of the Decedent’s Estate or Trust, or both, will be the Attorney and Accountant that you retain to provide guidance.
The Estate Attorney will review your initial efforts, review the Estate and Trust documents that you have been able to locate, and will discuss the need for Probate Court involvement.
Probate is not always necessary. The value and the type of assets in the Estate, will determine whether it is necessary to take steps to open a formal Probate in the County where the Decedent lived at their passing. Often a Small Estate Affidavit can be a means for out-of-court resolution of the Decedent’s assets. Your Estate Attorney can make recommendations and discuss the alternatives available.
If the Estate Attorney recommends that a Probate Case be filed, they will discuss with you the timing, the steps required, and the issues to be handled.
Whether or not a formal Probate Court filing is required, a meeting with the Accountant selected for the Estate is a must. The Accountant will review concerns, if any, about prior tax and other filings. The Accountant will assist with a review of the need for filing an Estate Tax Return, which is not always necessary, but is still sometimes important depending upon the circumstances. And, the Accountant should also review whether there are tax consequences relating to distributions from insurance, from qualified accounts such as IRA’s and 401k’s, and other important issues.
Do not delay the first meeting with the Estate Attorney and Accountant. Of course, a lot is going on. But these professionals will promptly help you to determine whether there are things that should be done more quickly than others, and with more caution.
Marc Sherman is available to set up an appointment to discuss these steps.
