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Estate Administration & Evaluating Your Assets


A Legacy of Efficiency

Blended Families    Decisions you make today can determine whether your family is provided with a thoughtfully prepared, efficiently implemented and effectively administered estate plan that lays the groundwork for the smooth (and cost-effective) administration of your estate … or a disorganized disaster that creates time-consuming and costly problems.

Three-Pronged Responsibilities of Estate Administration

    The duties of those who serve as your fiduciaries after you have passed away fall into a three-tiered hierarchy of responsibilities. While the precise manner in which these duties are carried out will depend on whether your estate plan is based on a Will or a Revocable Living Trust, tasks that must be handled include:

  • Gathering and managing your assets
  • Settling your financial liabilities: unpaid debts, tax obligations and estate administration costs
  • Efficient administration and distribution of your estate assets
This process will typically be smoother and more efficient if your designated fiduciaries have access to legal advice from an experienced estate planning attorney.

Gathering and Managing Your Assets

    The top priority among the responsibilities that fall to your fiduciaries is the preservation and safeguarding of the assets that comprise your estate. This process involves conducting a careful inventory of your assets, protecting these assets and establishing an appropriate valuation for the assets at the time of your passing. It is important to advise your fiduciaries regarding the location of your asset inventory and accompanying supporting documentation, such as account statements, title documents and certificates.

Typically, a fully-funded revocable living trust will make estate administration much easier, especially if you have maintained current records of the assets contained within the trust. Even if you have relied on a will instead of a revocable trust-based estate plan, you can save your fiduciaries considerable time and headaches by keeping accurate and current financial records that identify and provide values for your assets.

Settling Financial Liabilities: Unpaid Debts, Tax Obligations and Estate Administration Costs

    After all of your assets have been gathered, inventoried and valued, the next step in the administration of your estate involves settling outstanding financial obligations owed by your estate. These may include items such as unpaid debts, tax liabilities and estate administration-related expenses. Just as with the process of gathering and protecting your assets, this stage of the administration process must be handled promptly.

Estate tax returns must be filed within nine months of death. Many post-mortem planning opportunities, such as disclaimers and certain elections (e.g., QTIP, alternate valuation, etc.), must be timely made or they are lost … and with them the opportunities for significant estate tax savings.

Failure to comply with applicable legal deadlines can expose your fiduciaries to some rather unpleasant personal liabilities, including tax liabilities for your estate and lawsuits from creditors and disgruntled heirs.

Efficient Administration & Distribution of Your Estate Assets

    Your estate assets are to be distributed according to the instructions in your will or trust and your fiduciaries are responsible for adhering to those instructions, and for maintaining accurate records and receipts when making distributions to beneficiaries. The importance of this recordkeeping responsibility cannot be overstated because failure to maintain accurate records of income received, expenses paid and disbursements to beneficiaries during the entire estate administration process can result in civil liability and even criminal penalties in certain situations.

The Final Word

    The duties that fall upon a fiduciary can be complicated. The weight of these duties should be carefully considered when selecting your fiduciaries, or when deciding whether to accept responsibility to serve as a fiduciary.

Searching Without A Treasure Map

Estate Equalization    Can you identify all of your assets and determine their value? Have you prepared an accurate inventory of these assets, and is that inventory preserved in either a written or digital format? If someone had to locate this inventory and valuation information, could they do so or would it be the equivalent of trying to locate hidden treasure without a map?

Common Unintended Scenario

    Responsible people meet with legal counsel and prepare comprehensive estate plans. Their plans may even include cutting edge techniques implemented through proven legal instruments. Then, an injury or illness strikes and they become incapacitated. Eventually, they die. Sometime thereafter, the successor decision-makers appointed in the legal instruments meet with the legal counsel who prepared the estate plans. Too frequently, they make a shocking discovery: there is little, if any, information available regarding the property they are now legally required to identify, locate and value. They are adventurers on a quest with a map that is missing huge sections.

Misconceptions about Estate Plans

    The fundamental problem is a misconception many have about what constitutes an estate plan. There are many that presume an estate plan amounts to drafting and signing legal documents. Nothing could be further from the truth. In fact, signing legal instruments without identifying, locating and valuing the property is like signing documents to open a bank account but leaving the money tucked under your mattress. Although you have a bank account where your money can be safely guarded and accumulate interest, it does no good because you have not taken the critical step of making a deposit.

An Ounce of Prevention vs. A Pound of Cure

    While your designated fiduciaries may be able to locate and value your assets, you are better equipped to handle these tasks. After all, you likely are identified as the owner on any deed, title certificate or account regarding each asset you own. The process of identifying and determining the value of these assets will be aided by the fact you receive tax bills, account balance statements and similar documents that provide a reminder of the assets you own along with information regarding their current value. These documents and an inventory that includes estimated values should be kept and maintained with your estate planning documents.

There are some assets that are hard to value, such as heirlooms, antiques and collectables. In these instances, a professional appraisal is essential to establish their value for estate distribution and death tax planning.

Carrying Plans into Actions

Even the most careful estate planning is only effective if you take action to implement the plan. When it comes to avoiding an unpleasant treasure hunt for your loved ones, maintaining accurate records is essential to the success or failure of your estate plan. And do not forget to communicate this information to your successor decision-makers.

This publication does not constitute legal, accounting or other professional advice. Although it is intended to be accurate, neither the publisher nor any other party assumes liability for loss or damage due to reliance on this material.

Content Copyright 2011 Integrity Marketing Solutions