Proper estate planning can provide immeasurable reassurance in the present, and a smooth transition in the future. At Stock, Carlson, Flynn & McGrath, LLC, our attorneys are equipped to offer the best in estate planning advice. Our attorneys remain abreast of current changes in tax and probate law, and, in turn, are better able to set up your estate to maximize the preservation of your assets for your heirs or other loved ones. Listed below is some general information regarding estate planning; please review it at your leisure. For a detailed evaluation of your estate planning needs, do not hesitate to call our office immediately.

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Probate and Estate Administration - An Overview

Estate administration refers to the process of probating the estate of a decedent, which generally includes collecting, inventorying and appraising assets; paying and collecting debts; filing and paying estate taxes; and distributing any remaining assets to beneficiaries. An attorney experienced in probate and estate administration can help simplify this complicated process. If you need help in the administration of an estate, call an attorney in your area today.

Probate

The estate is the total amount of property owned by the decedent at his or her death. Once a person dies, the estate is submitted to the probate court. If there is a will, the probate court will determine if the will is valid and then oversee the administration of the estate by the executor (the person appointed in the will by the decedent to oversee the estate). If there is no will or the will is determined to be invalid, the probate court will appoint an administrator and the decedent's property will be distributed according to the state's laws of inheritance.

Executor's Duties

The executor is the person named by the decedent in the will to administer the estate. The executor has many important functions to complete, including:

• Gathering and inventorying all assets of the estate
• Appraising the assets
• Collecting any payments or debts owed to the estate
• Paying any debts owed by the estate
• Filing and paying local, state and federal taxes
• Distributing assets to the beneficiaries as stipulated in the will

The executor owes fiduciary duties to anyone who has an interest in the estate. This means that the executor owes a duty of loyalty and must act in the best interests of the estate. For example, if the executor mismanages estate assets and causes the estate to lose value, he or she can be held liable for these actions and may have to repay the estate the amount of the lost value.

Preserving Estate Assets

An important but sometimes neglected responsibility in administering an estate is to look for opportunities to preserve assets for distribution. Reducing estate taxes is one way that an estate can retain more of its wealth for the decedent's heirs. Some of the ways to accomplish this are:

• Consider whether administration expenses and casualty losses should be reported on the estate tax return or on the estate's income tax return
• Consider whether there are income tax savings opportunities on the decedent's final return (such as whether or not a joint income tax return should be filed with the surviving spouse)
• Consider whether assets should be valued at the date of the decedent's death or six months later (or, if assets have been distributed prior to six months after the decedent's death, the date of the disposition of the assets)

Avoiding Probate

Probate can be an expensive, drawn-out process, especially for beneficiaries who may have to wait any where from one to two years to receive the property left to them in the will. There are certain types of assets that do not have to go through probate and become available to the beneficiaries upon death of the decedent. These generally include:

• Property owned in joint tenancy with rights of survivorship
• Payment on Death (POD) bank accounts
• Transfer on Death (TOD) securities
• Life insurance proceeds
• IRAs, 401(k)s, and other tax-deferred retirement plan proceeds

Revocable Living Trusts

Revocable living trusts are similar in form and substance to wills. These instruments allow the creator (the testator) to transfer the title of ownership of property to the trust. During life, the testator can remain in control of his or her assets, with the ability to sell, buy or transfer property as he or she wants. The trust also can be changed or terminated at any time by the testator.

Upon death, the property in the trust does not become part of the probate estate because title to the property is owned by the trust, not the decedent. The trustee designated in the revocable living trust will then be in charge of administering the trust and distributing property to the beneficiaries in accordance with the terms of the instrument.

Many people use revocable living trusts as a way to limit the amount of property subject to probate. Revocable living trusts are often advertised as a way to avoid probate all together, but often they are coupled with a will that disposes of any property not specifically named in the trust.

Conclusion

Guiding an estate through the probate process and effectively administering that estate requires a keen understanding of probate and tax laws. If you need help in administering an estate, contact an attorney experienced in probate and estate administration to ensure that the most effective administration of the estate.

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