If you are a Personal Representative or Trustee, the chances are high that you will want to settle the estate and distribute the assets to the beneficiaries as quickly as possible. However, there is just as much work that goes into distributing the assets from your estate after your death as there is in setting up the estate plan.
Your loved one has spent a lifetime working hard for the assets they have earned and the time has come for the Personal Representative or Trustee to protect and distribute the assets with care. Typically, it will take a year to settle the estate, and sometimes longer if outstanding items still need to be addressed, such as the sale of real estate, addressing outstanding income tax issues, or working through beneficiary disputes. A national emergency such as the COVID-19 pandemic has also caused significant delays due to court closures and staffing changes nationwide.
At the beginning of the estate settlement process, we lay the foundation so the assets can ultimately be distributed. We read over the documents, apply for tax identification numbers, and work with the estate administrator to value, transfer and/or liquidate the assets. Once those duties are complete, it is time to distribute the assets. Below are some of the things you are tasked with as a Personal Representative (PR) or Trustee and some of the challenges or questions you may face administering an estate in these challenging times.
- Asset Verification – As Trustee/PR you will want to make sure that you have gathered and appraised the appropriate assets. Have you been able to schedule the appraisal, and how long until the appraisal can be completed? What date does the appraisal need to be? Have you verified ownership of the accounts? Are there forms to be completed? Are you able to get through to a company representative? Does the company have a backlog that they are trying to work through? As companies are re-opening their doors, they are combing through backlogs of previous claims.
- Have all taxes been filed? – The appropriate income and death tax returns should be filed and accepted. There are different types of income tax returns that may be necessary depending upon IRS rules and regulations. Any money owed to the government should be paid. Any money refunded to the estate should eventually be distributed to the appropriate beneficiaries. If taxes are not filed when they should be, depending upon the circumstance, the IRS may initiate an audit at any time. Are you waiting for a tax refund? How long until the IRS issues the refund? Have you received a stimulus check for a decedent? If you have received a stimulus check for a deceased person who was not entitled to it, then you must return the amount to the IRS. Due to the lingering effects of COVID-19, the IRS has service delays for live telephone support, processing paper tax returns, answering mail from taxpayers, and reviewing tax returns, even for ones filed electronically.
- Are there debts? – If there any debts you may receive notice from the IRS that a forgiven debt is income. This could mean additional income tax owed.
- Is there real estate? – There are expenses to maintain property for maintenance and upkeep. If the property is going to be sold, then there are selling expenses. Do you have a real estate agent who can assist? Are there options for a less formal settlement? Are there any capital gains taxes?
- Is Probate open? – Probate is the process of changing title to a solely titled asset upon death. The court probate process should be closed before distributing the assets. Is the probate court open? Are they working virtually? If there is a hearing, is it virtual or in person? Some courts will continue to use technology for remote proceedings.
- Communicating with a beneficiary – If a beneficiary is receiving an inheritance, are there forms that the beneficiary needs to complete first? Those forms may need to be notarized and some people are reporting difficulties finding a notary. There are also reports of delays or disruptions in the mail system. What are the legal duties as trustee/PR when it comes to responding to a beneficiary’s request? Responding to a beneficiary is important so that the beneficiary knows where things stand with the estate.
After you have completed all of the steps of the process, then the final step should be to distribute the assets to the beneficiaries and close the accounts. These are just a few of the things that should be completed to help administer the estate of a loved one. The pandemic has certainly resulted in more questions, delay, and difficulties. The attorneys at Sinclair Prosser Gasior are here to help you navigate through that process.