The Passing Of A Loved One: Part Two
January 2021 | Marianne Rantala, Esq.In part one of this series, we discussed what processes need to be taken immediately after the passing of a loved one. In part two, we will look at what an Executor or Administrator needs to know, what is involved in Trust Administration, and planning your own estate.
What does an Executor or Administrator need to know?
The job of an Executor or Administrator can be daunting and sometimes very complicated, especially in the case of a large estate or contests among the beneficiaries or those left out of a Will.
Complicating the job is that the Executor or Administrator can be held personally liable should something slip through the cracks. It is important for an Executor or Administrator to do the following:
What does an Executor or Administrator need to know?
The job of an Executor or Administrator can be daunting and sometimes very complicated, especially in the case of a large estate or contests among the beneficiaries or those left out of a Will.
Complicating the job is that the Executor or Administrator can be held personally liable should something slip through the cracks. It is important for an Executor or Administrator to do the following:
- Obtain a tax ID number from the IRS for the estate, after receiving the appropriate “letters” from the Surrogate’s Court, and then open a bank account in the name of the estate. Never mix your own funds with those of the estate. Use the estate bank account to pay any costs incurred during the estate proceeding.
- Have and maintain a good accounting system to keep track of everything you do for the estate. An Executor or Administrator has the duty to keep accurate financial records, such as expenses and a detailed inventory of estate assets and debts right from the beginning. Sometimes it will be necessary to employ a professional accountant or probate attorney (or both) to effectively handle the estate.
- In addition to a good accounting system, maintain detailed notes and written correspondence pertaining to all communications you have with anyone involved with the estate, including beneficiaries, opposing attorneys, financial institutions, etc. You may find that sound advice from a probate attorney will be very helpful in this regard, in order to avoid you being held responsible for any inadvertent mistakes.
What is involved in Trust Administration?
If your loved one prepared a Revocable Living Trust, an Irrevocable Trust or any type of trust during their lifetime, and all assets were properly titled to that Trust, it’s most likely unnecessary to deal with the Surrogate’s Court.
If your loved one was a Trustee (like a manager of the Trust) while alive, someone must now take the reins as a Successor Trustee and continue to manage the Trust. This Successor Trustee must follow the rules contained within the Trust to either continue to manage the Trust’s assets and distributions or to distribute what remains of the Trust.
Sometimes, the Trust will be split into two or more separate Trusts or Trust Shares, which the Trustee must understand and manage. If your loved one had a Revocable Living Trust, it is likely that at least a part of the Trust will become irrevocable and cannot be changed.
Whatever the type of trust, the Successor Trustee must pay any existing creditors and beneficiaries, file any necessary income and/or estate tax returns, pay funeral expenses, and adequately account for the trust’s assets.
This area of post-death administration can be very complicated at times and fraught with possible liability for the trustee if he or she doesn’t follow the rules of the trust with care.
Wrongful death claims & litigation
What if your loved one’s death was caused by the negligent actions of someone else? Surviving family members can file a lawsuit against that negligent person, company or other entity. Some of the claims may include automobile accidents, consumer products liability, medical or pharmaceutical negligence, or workplace negligence. The Executor or Administrator of your loved one’s estate must handle that litigation.
The Law Firm of Feldman, Kramer & Monaco, P.C., can make a free referral to the best wrongful death litigation law firms in your region. Keep in mind there is limited time in order to file any wrongful death claims or they will be lost forever, so this should be pursued shortly after your loved one’s funeral.
What about your own estate?
Estate planning really should be considered as soon as you acquire your first asset, have a child or step into adulthood in any truly meaningful way. However, many of us put it off for too long, leaving ourselves and our families at risk of getting stuck in the court system in the event of an unexpected accident, illness or injury.
If your loved one had little to no estate planning, you are no doubt feeling the effects of that right now. Now may be a good time to review your existing estate plan or have one put into place that will work for your loved ones when something happens to you.
Ask yourself the following questions to see if you’re really prepared for when something happens to you:
- Who will manage my affairs when I pass away or become incapacitated?
- Who do I want to leave my property and possessions to when I pass away?
- What happens if I need long-term care such as an assisted living facility or nursing home?
- Will my estate have to pay estate taxes, income taxes or capital gains taxes unnecessarily when I die, thereby reducing distributions to my loved ones?
- Do I have enough life insurance to take care of my loved ones, and are my beneficiaries properly listed on the policies?
- What happens to my bank accounts when I pass away?
- What happens to my retirement accounts (TDA, 403(b), IRA and 401(k), etc.) when I pass away?
If you have any questions about the matters discussed in this article or would like a consultation regarding your estate planning matters, please contact your Legal Service Plan’s National Legal Office at 800-292-8063.