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Beneficiaries, Common Executor, Details of the Estate, estate, Estate Adminstration, Executor, Will
To have a smooth estate administration, it’s important for the executor to understand the details of the estate. In the article Understand the Task in Front of You, the article identified the steps needed to close an estate going through the formal probate process. However, it’s not enough to know just the steps. The executor must also know the details involved in those steps. Only then the executor can develop a coherent administration plan that will help close the estate smoothly.
Details of the Estate and the Administration Plan
When approved as executor, I thought I had the estate administration all planned. In the article You’re Approved as Executor | The First Steps, the administration started out well. However, as I proceeded to close the financial accounts, I realized I overlooked an important detail about the retirement accounts. In the retirement accounts, the assets were missing designated beneficiaries. Therefore, the proceeds from the retirement accounts went into the estate account as income of the estate. As a result, the proceeds became taxable to the estate. Consequently, I didn’t have an accurate estimate of the estate taxes.
When I realized this oversight, the CPA helped me come up with a new estimate. This time the estimate included the income from the retirement accounts. The CPA calculated an estimate that revealed a forty thousand dollar tax liability to the estate. After receiving the estimate, I drafted a mock distribution using the will as a guide. The mock distribution revealed a reduction in the distributions to the point that some beneficiaries would receive only pennies. So, this oversight forced a change to my administration plan.
Grasp the Details and Develop a New Administration Plan
Fortunately for me, with the estate well-funded, I could overcome some mistakes. However, my oversight came at the cost of the beneficiaries. The intent of the estate was that everyone named in the will receive something, which meant more than pennies. So, I became more apprehensive and changed the way I administered the estate after the oversight. Up until that point, I didn’t pay close attention to the details that weren’t obvious to me. So, once I realized the large tax liability, I became more focused on the details of each step. With the help of an attorney and a CPA, I developed a new plan.
The new plan worked well with only some minor skirmishes with a belligerent beneficiary. However, until the professionals helped, my original administration plan had some flaws. Fortunately, the attorney and the CPA put me on the right track, which allowed me to grasp the details. As a result, the estate closed without further costly oversights.
Conclusion
In the end, a common executor must develop a sound plan using professionals at points where the details seem confusing. Once the common executor has a firm grasp on the details, the possibility of a smooth administration comes into focus.
Note: To review how estate income tax rates impact the estate, read the article Estate Income Tax Rates and your Estate Plan.
Did you find this article helpful? If you have questions or comments, enter them in the comment area below.
Excuse me if I don’t use the proper terminology. The in-laws’ estate has been liquidated. There are a total 12 beneficiaries. Son of deceased eventually became executor through court order after daughter of deceased was supposed to be executor, did not say anything about will, and just kept living in the in-laws house for years. Everyone just assumed she had her father change the will before he died. That wasn’t the case. All of that has been settled, house sold, and all money is in one account. The daughter has gone through 2 to 3 lawyers or her end fighting everything, mainly with the sale of the house racking up her own lawyer bills with them, but also costing the estate money by having the executors lawyer address all these issues. This has all gone on for 4-5 years.
There is over $450k in the estates account with all but one bill paid. It’s a from a $35k pension overpayment. The final accounting is done, but the last thing to happen was the attorney requested the beneficiaries sign the petition to the court for this $35k payment to be made and then distribute all the rest of the money. This was 2 months ago. As you can guess, all signed immediately except for the daughter who nobody can get in touch with. She could be dead for all we know.
Everyone wants to put to an end, and it seems like the executors lawyer is dragging her feet, while racking up billable hours. I get it, the longer this drags, the better it is for lawyers, but this is ridiculous. How can we push this through faster. The last thing the executors lawyer said was we are still waiting on that one signature. What can we suggest she or the exucutor do the end this or atleast do a particial distribution money to the beneficiaries? What and how do we ask this of the executors lawyer exactly?
Hello D,
This sounds like an Executor’s nightmare. Unfortunately, the executor is going to have to find the sibling and explain to her that no one receives money until she signs the petition. First, you have to find her to do this. Does she have children or friends that you know of? Employers? If none of this is possible, the executor will have to sit down with the attorney and discuss other options, if any. One such option is to ask the attorney if there is a way to bring this matter to the probate court. As you can tell, I am not an expert on this type of behavior from a beneficiary, but I would definitely pressure the attorney for advice on the matter if I was the executor. It seems just sitting around waiting for the daughter to appear is not working.
The one question I have about this matter is why wasn’t the 35k payment made while the estate was open? Typically, all debts and taxes need settlement before a final accounting. If the final accounting was approved by all beneficiaries, including the daughter, this problem would of been avoided. So, I would suggest to the executor to discuss this matter with the attorney. Another fact to bring up for the executor is that since the final accounting includes the final amounts of money to be distributed, can we go ahead and distribute that money. Basically, if the 35k payment and the distribution amounts were in the final accounting, and the daughter approved of the final accounting with all the other beneficiaries, then the payment and distribution should be able to happen. Unfortunately, I don’t know the legal circumstances that happened to allow a final accounting with a debt remaining on the estate putting the distributions in question. These are the questions I would put forth to the attorney. One disclaimer I will make is that estate laws can have differences in many states. So, depending on the location of the estate, the laws may be different. My interpretation comes from the procedures set forth in Massachusetts estate law. Anyway, have the executor sit down with the attorney and find out what already has been approved in the final accounting. In my experience, once the final accounting was accepted by the probate court, I was able to make the final distributions and close the estate. Unfortunately, in your case, that remaining debt perhaps is allowing the daughter to remain belligerent.
I hope these thoughts help and give you another road to approach the matter.
Good luck,
Robert