Broker Check

Estate Administration

December 06, 2019

After a loved one passes away the list of tasks that need to be done can be daunting. Most people start by dealing with the immediate priorities of working with medical providers, making funeral arrangements, and notifying friends and family. But after that they often feel lost when it comes to the job of administrating the decedent’s estate. For this reason, it is often advisable to make a list of the tasks that need to be done and enlist others to help so that the burden does not all fall on one person.

These first step to estate administration is to read the estate planning documents carefully. This includes reading the decedent’s will and trust (if they have one) for guidance on how they want their estate administered. In some cases, it is advisable to do this with the help of a financial planner or estate planning attorney who can give some context to the legal language in the documents and clarify what actions will need to be taken.

Often an attorney should be retained to help prepare legal notices. Many states require that certain heirs be given legal notice by a certain deadline. These legal notices must contain specific language required under the probate code and often make the heirs aware of their legal rights. In addition, there are legal requirements to give creditors notice of an individual’s death so that they can bring claims against the estate. This notice is important because it limits the time period that creditors have to bring claims against the estate in order to avoid claims coming in months or even years later. Finally, the county assessor’s office may require notice if the decedent owned property in the county and the will may need to be filed with the courts.

It is also important to gather all important documents such as tax returns, investment statements, insurance policies, and credit accounts. The tax return can be a great source of information to determine the decedent’s financial resources to determine the institutions that should be given notice. If the decedent was receiving a pension, annuity payout, or Social Security benefits those institutions should be notified to stop the payment of benefits and determine if there are any survivor benefits that may be paid to a surviving spouse or other beneficiaries. Insurance companies should also be notified to change the name of the insured for home and auto policies as well as claim any death benefits on life insurance contracts.

The credit agencies should be notified so that the decedent’s credit account is frozen and all revolving credit lines, such as credit cards, should be cancelled. Arrangements should be made with creditors to settle the decedent’s liabilities before any assets are distributed.

Next, it is advisable to make an inventory of the decedent’s assets. Accounts that have beneficiary designations, such as retirement accounts, may require paperwork to distribute the assets to the beneficiaries. Non-retirement accounts and real property, such as a home, may need to be re-registered into the name of the estate or a trust for further administration by the executor or trustee. Often this requires setting up a separate taxpayer ID number with the IRS.

It is also important to make a list of the monthly bills, such as utility bills, that are in the decedent’s name. These bills will need to be cancelled or the name on the account may need to be changed. This also goes for digital subscriptions and accounts including entertainment subscriptions and social media accounts.

Lastly, the decedent’s final income tax returns will need to be filed with any tax liability paid. In addition, the estate or trust may be required to file a tax return if there is income reported to the entity after the date of death.

Once all of these steps are completed it may be time to distribute any assets remaining on the estate or trust to the listed beneficiaries and close the estate or trust.