Estate Administration

Are you getting older, in poor health or simply desiring to make smart estate planning decisions now? If so, than it is necessary that you have a thorough understanding of estate administration and what this process encompasses. Every state allows for different types of estate administration. For example, in California, there is court supervised administration and independent administration. For the first, you must commence proceedings for administration of the estate of a decedent by petitioning the court.

As you craft your estate plan, one of the most important decisions you will have to make is who the executor of your estate will be. An executor is a personal representative who acts for you after your death. You nominate an executor to settle your estate. After you have died, this person will act in your place to make decisions. An executor's responsibilities usually last from nine months to three years.

In order to properly administer an estate, you need an experienced and effective trustee or executor who adheres to the duties of fiduciary. Most people choose a family member, friend or business partner as an executor.

Keep in mind, however, that a professional trustee can provide for succession and will focus his/her energies exclusively on the role of fiduciary. Choosing a legal professional to help your family through this process can be a very smart decision as an expert will have the administrative capability, competence, experience, reliability, investment management expertise and objectivity that can be trusted. No matter whom you choose to represent you, you should make sure that they possess the following attributes:

  • Ability to serve
  • Willingness to serve
  • Trustworthiness
  • Technical expertise
  • Impartiality
  • Permanence
  • Accountability
  • Cost-effectiveness

When a family estate is small, family conflict is minimal and someone is willing to assume responsibility, a family member could be more effective than a corporate fiduciary. Before making any decision, however, you should weigh both options, do your research and make an informed decision after speaking with an estate planning legal expert.

What does an executor do?

Have you been named as an executor, personal representative or trustee under the will or trust of a family member or friend? If you do not understand how estate administration works, you will likely be overwhelmed and confused. Most people only have a rudimentary knowledge of investments and tax laws. Estate administration can be time-consuming so you should know ahead of time what you are getting yourself into.

What is estate administration? After a person dies, their estate must be collected and managed. Estate administration is the process of gathering assets, paying the decedent's debts and distributing his/her assets. Managing numerous assets and beneficiaries can get quite complex, which is why legal assistance is always advisable. Beneficiaries can be demanding and during this time, tension can run high.

Your role as an executor is to act exclusively in the best interest of the estate and exercise a high degree of care at all times. You will be accountable to the court and to the decedent's beneficiaries until the completion of your duties.

If you are the personal representative, you will have to administer the estate properly and in some instances you could even be financially penalized for mistakes. Some of the steps you might have to take include the following:

  • Locate and probate will
  • Martial all the assets (inventory and collect, sell when necessary)
  • Have the assets appraised
  • Seek court approval
  • Notify creditors of probate
  • File the decedent's income tax returns
  • File estate tax returns
  • Prepare a formal accounting of the estate's assets and expenses

There are several requirements that a personal representative must meet before qualifying to serve (these vary according to state as well). Because various factors vary according to state, you should consult a legal professional near you; however, the following steps are basic and applicable guidelines that you can heed no matter where you live:

  • Find information in decedent's will, trusts, deeds, account statements and beneficiary forms. You should then review all files and check safe deposit box and mail.
  • Notify Social Security, pension providers, annuity payers, Medicaid, DMV and so forth
  • Create a complete list of assets owned and debts owed. Answer were the assets sole owned? Jointly owned? Community property? A trust or a trust for/pay in death?
  • Value all assets as of the date of death (this needs to be done for estate taxes and income taxes purposes)
  • Transfer depends on the type of asset, how it was owned, whether beneficiaries are named and the value of the assets included in the estate. Methods of transfer include direct survivorship, spousal property petitions, small estate affidavits and probate. A disclaimer is an irrevocable and unqualified refusal by an individual to accept ownership of a property. Each asset must be transferred to heir/beneficiary by the proper method for that asset. Heirs and beneficiaries are determined by wills, trusts, ownership forms, etc. If none of these exist, the intestacy rules created by the state legislature will determine what should happen.
  • You must make arrangements to deal with a decedent's debts, whether that is through probate or another method.
  • An estate tax return must be filed within nine months of the date of death. Income tax returns must also be filed. You will need to keep payment on property taxes current as well.

When an individual does not leave a will, does not name an executor in his/her will or if one's executor refuses or fails to serve then the probate court steps in and appoints an administrator (also known as a curator). For more information about estate administration and to explore what options are best for you, your family and your future, consult with a local estate planning attorney immediately. You can also check out our Gathering and Appraising Assets, Paying Debts and Distributing Remaining Assets for more details.