- Time. Many estate administration duties have deadlines. Some must be carried out immediately following the testator’s death, while others must be addressed nine months, a year, or even two years from the date of death, depending on the circumstances of the estate. Filings associated with the probate process, final individual and fiduciary income tax returns, estate tax returns, and other matters each have unique deadlines. In addition to completing and filing documents on time, executors must ensure error-free paperwork. It is important that executors understand the time involved in researching, understanding, and applying appropriate tax regulations and other legal requirements to the estate. If a mistake is present, another downside of serving as executor presents itself…
- Liability. Executors may be personally liable for unpaid taxes if returns are not properly and timely filed. This includes final individual and fiduciary taxes as well as estate tax, although it is important to note that out of the states our estate planning attorneys serve (North Carolina, Florida, Tennessee, and New York), only two impose a state estate tax: New York and Tennessee. Tennessee’s estate tax will be repealed in 2016. A resident of a state with no estate tax might still owe state estate tax in another jurisdiction. Executors must assess all of the decedent’s assets, which might include out-of-state property. Depending on how the decedent structured assets, probate documents might need to be filed in each state where property is located.
- Legislation changes. Errors are possible if executors fail to stay current with state and federal tax law changes. In 2015 alone, several changes were made to federal taxation legislation. One such change resulted in the government stopping automatic release of estate tax closing letters; this is an important document that is required to close the estate on the state level, and might be required to distribute assets to beneficiaries and to help remove tax liens on the decedent’s property. In addition, the government also changed the requirements for estate tax basis reports.
- Locating the decedent’s will. If an individual tells a close friend or family member they are named as executor, this is an important time to notify the potential executor of the will’s location. Will contests could arise if the most current will is not accessible. The testator should clearly communicate with the executor where the most recent will is located. The testator should supply the executor with their estate planning attorney’s contact information and notify the attorney whenever the will is moved to a new location so that the attorney may keep an updated record. The testator may also add the executor as a co-signer on a safe deposit box where the document is kept to ensure the executor can quickly and easily access the document upon the testator’s death.
- Digital assets. Some financial accounts are paperless, which makes locating and identifying some assets challenging during estate administration. Although the Terms of Service vary with every digital account provider, executors should encourage the testator to maintain a list of usernames and passwords for their various online accounts. This should span the range of assets, from insurance, retirement, frequent flyer services, and online banking to Netflix, social media, and more.
Our attorneys offer estate administration services for executors or fiduciaries who need assistance in carrying out their duties. Depending on the degree to which an individual feels comfortable serving as executor, our legal team can simply consult on special tax or other legal matters or take on for a more involved role in settling the estate. This alleviates the stress an executor might experience navigating probate and estate issues, especially those challenges noted above.
By Attorney Samantha Reichle
By Attorney Samantha Reichle