An Estate Administration Primer
Having to deal with the emotional devastation which comes from losing a loved on can be hard enough. But having to cope with the legal aspects of winding up a deceased person's affairs can be just as emotionally draining, and if you do not put the proper measures for your estate administration were put in place during your lifetime, those near and dear to you can spend months or even years trying to find their way through the financial and legal consequences of your lack of planning. What will your estate administration require of your administrator? First, your administrator will be the person whom you appointed as the executor of your will, or if you did not leave a will, a person appointed by the court. If you want your final wishes to be followed, you need to formalize them in a will.
Your executor will be responsible for filing your will and seeking a court appointment to act as your administrator. Once he or she is appointed, your administrator will begin collecting and inventorying your assets so that a list of them can be file with the probate court. Your administrator will also, as much as feasible, combine your estate's financial assets in a single account from which your estate debts can be paid, and keep a record of all the money spent from that account. The amount of money spent on your estate administration will depend on whether your probate assets, at the time of your death, require that an estate tax be paid. The US benchmark is $675,000. Your administrator should file the estate tax return within nine months of the day you die; otherwise your estate will be responsible for penalties and interest. But if there is good reason for a delay, your administrator can request and extension in filing the return as long as an estimated tax is paid on time. Estate administration also requires a filing of your final personal tax return and, if the estate is earning interest or dividends before it is settled, an estate income tax return. For that return your administrator will have to apply for a tax identification number to be assigned to your estate. Once all your assets have been collected, your administrator will have to place a public notice so that any unknown creditors which you may have had can within a legally specified period, place their claims against your estate's assets. But if your administrator is able to get a reasonably clear idea of both your estate's assets and any binding claims, he or she can begin distributing assets and simply hold enough in reserve to cover any unforeseen debts and the costs of closing your estate. The final step of estate administration is for your executor to submit a final accounting to the probate court, in which any income your estate has received since your death, and all the expenses of administering the estate, as well as all the distributions, are listed. The court will then approve the final accounting, the administrator can distribute any funds which remain, and the estate will be closed. |
