The Nuts and Bolts of Estate Administration
After signing wills, many of our clients ask us "What should I tell my children or spouse to do when I die?" After the death of a person, it is often necessary to hire an attorney and probate a will or administer a trust. Below are some important terms to know:
Executor - person appointed in will of decedent to carry out the terms of the will and to administer the estate of the decedent.
Trustee - person or institution appointed by the person creating the trust to collect trust assets, manage trust assets, and make distributions to the beneficiaries in accordance with the terms of the trust.
Probate - the process through which title to assets are transferred from the decedent to a beneficiary when the transfer is governed by a will or intestacy statutes.
Letters Testamentary - document issued by the court giving executor or administrator authority to act on behalf of the estate.
The executor and trustee have a fiduciary duty to the beneficiaries of the trust or estate and must exercise loyalty and care in managing and distributing the assets of the estate or trust. Frequently, probate of a will is required if the decedent owned real or personal property in his or her name. If the probate of a will is necessary the following steps would be taken with an attorney’s assistance:
Day 1: Meet with attorney to deliver will, discuss fees, review duties of client, clarify scope of attorney’s employment.
Day 7: Attorney sends client a fee agreement itemizing actions necessary for the completion of administration.
Day 7: Attorney files with the local county or probate court an Application to Probate Will and for Issuance of Letters Testamentary along with the Last Will and Testament of the Decedent.
Day 21: Attorney accompanies client to hearing on the Application to Probate Will and for Issuance of Letters Testamentary. Attorney prepares all paperwork for hearing. Attorney asks client to sign Form SS-4 Application for Employer Identification Number for the estate.
Day 28: Attorney sends client a letter enclosing Letters Testamentary and Employer Identification Number for the estate, enabling the client to open a bank account and begin collecting assets. Attorney assists client in filing claims to obtain life insurance proceeds.
Day 51: Attorney must have published and filed notice to creditors within thirty days of the hearing date. Additionally, if the estate has unsecured creditors, the client may wish to send the creditors a permissive notice to creditors.
Day 111: Attorney must have filed with the court an Inventory, Appraisement, and List of Claims (Inventory) within ninety days of the hearing date. The Inventory is prepared by the attorney with the assistance of the client.
In addition to probating the will when necessary, the attorney coordinates the administration of the estate or trust by providing the following services:
1) Assist in determining the value of assets. Sometimes, assets in an estate or trust should be evaluated by an appraiser and the attorney will make recommendations and work with the appraiser.
2) Assist the client with determining the liabilities of the estate and advise regarding the priority of payment of the liabilities.
3) Assist in the transfer of title to beneficiaries or the setting up and funding of trusts in accordance with the terms of the governing document or law.
4) Prepare and file a 706 Estate Tax Return and Inheritance Tax Return for the estate, if appropriate, and coordinate the deductions on 706 and income tax returns with client's CPA.
