Admirable Administration
 Question. If today were your
last, how would you be remembered regarding your estate planning? Would it be for leaving a mess for others to clean up, or would it be for leaving a thoughtfully drafted, thoroughly
implemented and carefully maintained plan your appointed fiduciaries could smoothly administer?
Finishing well regarding your estate plan includes making things as easy as possible for your appointed fiduciaries when the time comes for them to
administer your estate.
The Three Phases
Upon your death, the post-mortem (i.e., after death) responsibilities of your appointed fiduciaries continue through three phases of estate administration. Whether your estate
plan is will-based or revocable living trust-based, your fiduciaries must carry out certain responsibilities, including:
- Collect and manage your assets;
- Pay your debts, taxes and expenses; and
- Administer and distribute your assets for the benefit of your named beneficiaries.
Your fiduciaries should seek appropriate legal counsel throughout each of these three phases to ensure that all of the "i's" are dotted and the "t's" are
crossed.
Collection & Management
Without delay, the first responsibility of your fiduciaries is to protect and preserve your assets. This includes taking an inventory of the assets, insuring and safeguarding them, as
well as determining their values as of the date of death. Make sure your fiduciaries know where you keep your asset inventory, as well as the account statements, certificates and titles
for each asset.
If you have a funded Revocable Living Trust along with up-to-date records of the trust assets (and their respective values), then you will greatly ease this initial burden on
your fiduciaries.
Even if you do not have a Revocable Living Trust-based estate plan, maintaining current financial records can save your fiduciaries considerable time (and therefore money) in fulfilling
their Collection and Management responsibilities.
Debts, Taxes & Expenses
Once your assets have been collected and are under management, the fiduciaries must arrange for the payment of your just debts, your tax liabilities and any expenses associated with the
post-mortem administration of your estate. Again, time is of the essence.
Consider this: estate tax returns must be filed within nine months of death, and many post-mortem planning opportunities, such as disclaimers and certain elections (e.g., Qualified
Terminal Interest Property, alternate valuation, etc.), must be timely made or they are lost ... and with them potentially hundreds of thousands of dollars in estate tax savings.
The failure to comply with applicable legal deadlines can expose your fiduciaries to some rather unpleasant personal liabilities, to include tax liabilities of your estate, and lawsuits
from creditors and disgruntled heirs. Administering your estate can quickly become a lose-lose proposition for your fiduciaries.
Administration & Distribution
Whether your estate plan ultimately provides for the distribution of your assets to your beneficiaries in one lump sum, in multiple distributions or through ongoing trust administration
(to protect your assets for and from your heirs), your fiduciaries must ensure that accurate records are maintained and receipts obtained from each beneficiary. In fact, the failure
to account for all income, expenses and disbursements throughout each of the three phases of estate administration can result in civil and, potentially, criminal sanctions.
Final Thoughts
Post-mortem responsibilities can be very complex. Before you select and appoint fiduciaries for your estate plan, or agree to serve as a fiduciary for someone else, assess the situation
carefully with qualified legal counsel.
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