At first glance, this may seem like a simple question. But maybe not. Have you considered what your personal representative (executor) will be required to do? Winding up the financial affairs of any individual’s lifetime is not a simple process. Many complicated tasks overlap or occur simultaneously. Consider the following:
- Upon your death, the personal representative (PR) of your estate will be required to complete an inventory of all your assets. Many types of assets can make this very difficult and problematic, such as life insurance, retirement plans, interests in real estate, other real property, and closely held businesses.
- Investments must be monitored and income collected. Insurance must be purchased or maintained. Property taxes will need to be paid. Appraisals may be needed for collections, jewelry or other hard-to-value assets.
- Debts you may owe at your death must be paid by your PR. The PR will need to make diligent efforts to collect all funds owed to your estate at your death. Tact will be needed when the debtor is a family member.
- Decisions will need to be made on what to sell and when to sell it to meet the estate’s cash needs for paying expenses and taxes. Funds should be raised without parting with the assets best suited for future family needs.
- The PR will need to file an income tax return for the individual and the estate. A Federal estate tax return may need to be filed. If property is owned in other states, a state tax return may be required for each state in which you own property, as well as potentially ancillary probate proceedings.
- After delivery of estate assets to beneficiaries, or to trusts for their benefit, all money and property that has been received and disbursed must be reported. Therefore, accurate and detailed records must be kept from the beginning of the process.
Please contact our Trust professionals for more details about estate settlement.
So, who should settle your estate?
I might suggest a trust department offering estate settlement services. A trust department should have the skills, experience, and knowledge to handle the job, the time to devote to estate and trust administration, and the facilities and systems for asset management individuals lack. Estate assets and trust funds are doubly protected, by both internal audits and regulatory oversight by state and federal officials. Trust departments never die or become incapacitated, as individuals do. There is usually a long experience and group judgment to go along with the job of investment management and estate administration. They will treat all beneficiaries impartially, and most beneficiaries will appreciate that.