Apathy Towards Estate Planning Can Lead to Adverse Consequences

16 Monday Oct 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Ademption, Administrator, Beneficiaries, Beneficiary, Court Appointed Administrator, decedent, estate, Estate Planning, Executor, Guardian, Intestacy, Intestacy Laws, Intestate, Judge, probate, Tax Authorities, valid will, Will

Presently, apathy towards estate planning is commonly brought on by perceptions people have about estate planning. Recently, during conversations about estate planning, the following perceptions surfaced:

Planning for your death is too morbid.

Estate planning is boring.

Estate planning involves a lot of work in which I have no time for.

Unfortunately, these negative perceptions lead to apathy that result in the following consequences concerning estate planning:

Some people will procrastinate for such a long time that estate planning is completely forgotten. As a result, their estate will fall into intestacy when they perish.

People will create a sloppy estate plan just to get through a process they detest. As a result, complications will arise that will confuse the executor and the beneficiaries.

Although there are people who take estate planning seriously, there are plenty of people who are apathetic. Thus, apathy towards estate planning can lead to adverse consequences for the executor and for the beneficiaries of the deceased.

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Grandchildren Inheriting Savings Bonds for Education

08 Sunday Oct 2017

Posted by Robert Dowling in Beneficiaries

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529 College Savings Investment Account, Beneficiaries, Common Executors, Distribute Savings Bonds, Education Tax Exclusion, estate, Executor, Financial Professionals, higher education, Inherited Savings Bonds, Interest Income, Medallion Signature Guarantee, Payable on Death, Redeem Savings Bonds, Reissuing Savings Bonds, Savings Bond Registration, Savings Bonds, Series EE Savings Bonds, Series I Savings Bonds, Tax Liability, Tax Professional, TreasuryDirect, TreasuryDirect Account, Will

Presently, many grandchildren find themselves inheriting savings bonds left for them by deceased grandparents. Although savings bonds can be problematic when it comes to inheritance, inheriting savings bonds for education can be helpful. In fact, with a correct registration, the savings bonds may qualify for the education tax exclusion. According to TreasuryDirect the following must apply, in part, to qualify for the education tax exclusion:

When using bonds for your child’s education, the bonds must be registered in your name and/or your spouse’s name. Your child can be listed as a beneficiary on the bond, but not as a co-owner.

Ultimately, the registration for the savings bonds must be in a parent’s name to qualify for the education tax exclusion. Unfortunately, many grandparents mistakenly register the savings bonds in their own name while designating the grandchild as the beneficiary. Consequently, complications arise when applying for the education tax exclusion after redeeming the savings bonds.

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Considerations for Choosing Your Beneficiaries

25 Monday Sep 2017

Posted by Robert Dowling in Beneficiaries

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Alternate Beneficiary, Assets, Beneficiaries, Designated Beneficiaries, Divorce, estate, Estate Plan, Estate Size, Life Circumstances, Marital Status, Married With Children, Primary Beneficiary, Residuary Beneficiaries, Single Never Married, Unintended Consequences, Will

Another important step in building your estate plan is choosing your beneficiaries. As mentioned in the article How Estate Size Will Influence Your Estate Plan, the estate size will influence the size of your beneficiary pool. Accordingly, along with estate size, here are a few more basic considerations for choosing your beneficiaries:

Consider your marital status.
Designated beneficiaries on assets.
Using additional types of beneficiaries along with the primary beneficiary.

Although there are many intricate considerations concerning beneficiaries, these basic considerations are more typical of a common estate.

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How Estate Size Will Influence Your Estate Plan

15 Friday Sep 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Abatement Process, Asset Management, Beneficiary, Bequests, Debts, Earned Income After Death, estate, Estate Income Taxes, Estate Obligations, Estate Plan. Common Estate, Estate Planning, Estate Size, Estate Taxes, Expenses, Large Beneficiary Pool, Net Worth, Order of Payment, probate, Probate Avoidance Strategy, Probate Court, Retirement Accounts, Simplified Probate Process, Small Estate, Tax Planning, Tax Professional, Unintended Consequences, Well-Funded Estate, Will

To properly plan your estate, it’s important to understand how your estate size will influence your estate plan. As explained in the article The First Step to Estate Planning: Estimate Your Net Worth, your net worth will determine your estate size. By calculating your net worth, some important questions will come into focus regarding your estate plan:

Are there enough assets to cover your debts and other estate obligations?

If there are enough assets to cover the estate obligations, are the remaining assets enough to cover bequests?

Do I need to plan for estate taxes or estate income taxes?

Do I need to plan for abatement?

Obviously, these are just a few basic questions as life circumstances can make estate planning much more complicated. However, the answers to these questions will influence how you begin to properly plan for your estate.

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Two Reasons Why a Beneficiary May Become Belligerent

11 Monday Sep 2017

Posted by Robert Dowling in Beneficiaries

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Abatement, Abatement Process, Ademption, Ademption by Extinction, Belligerent Beneficiary, Beneficiary, bequest, Claims, Common Estates, Contest The Will, Doctrine of Ademption, estate, Estate Assets, Executor, Expenses, Identity Theory, Probate Avoidance Strategy, Taxes, Threaten Lawsuit, Will

There are many reasons a beneficiary may become belligerent. However, according to the article How to Handle a Belligerent Beneficiary, one way a beneficiary acts out towards an estate is to exercise their right to contest the will or threaten a lawsuit. Moreover, there are two legitimate reasons why a beneficiary may exercise such a right: abatement or ademption.

Unfortunately, the executor must inform each beneficiary named in the will that they are part of the estate. If the beneficiary understands the bequest they may receive, the beneficiary will expect that bequest at some point. So, if abatement or ademption affected a bequest, the intended beneficiary may become belligerent. As a result, the belligerent beneficiary may contest the will or sue the estate.

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Close the Temporary Home Office

14 Monday Aug 2017

Posted by Robert Dowling in Record Keeping

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Acting Executor, Amended Returns, Beneficiaries, Death Certificate, Distributions, estate, Estate Administration, Estate Tax Returns, Executor, Executor Approval Letter, Expenses, Filing System, Formal Probate Process, Former Executor, probate, Storage Boxes, Temporary Home Office

After closing an estate, the most gratifying task for an acting executor is to close the temporary home office. Typically, after satisfying all the rules of probate in a formal probate process, the executor will close the estate. As a result, the executor becomes an acting executor responsible for closing tasks as described in the article Estate Income Tax Returns: Review and File the Returns. In the end, the one closing task an acting executor likes is the final task: the task to close the temporary home office.

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Estate Income Tax Returns: Review and File the Returns

07 Monday Aug 2017

Posted by Robert Dowling in Estate

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Attorney, Beneficiaries, Distribution Checks, Distributions, estate, Estate Closing, Estate Income Tax Returns, Estate Reserve, Executor, Fiscal Year Returns, Massachusetts Schedule 2K-1, Record Keeping System, Schedule K-1(Form 1041), Short Year Returns, Tax Professional

The time to review and file the estate income tax returns occurred simultaneously with closing the estate. According to the article Closing the Estate: Final Tasks to Close the Estate, on October 29, 2013, I was dealing with the professionals to send a final invoice. On that same day, the fiscal year returns, both federal and state, arrived in the mail for my review. Since the tasks of closing the estate and reviewing the fiscal year returns weren’t burdensome, the timing was fortunate. The arrival of the fiscal year returns would allow me to review and file the returns while closing the estate. So, the only task remaining after closing the estate would be dealing with the short year returns.

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Closing the Estate: Final Tasks to Close the Estate

31 Monday Jul 2017

Posted by Robert Dowling in Estate

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Acting Executor, Attorney, Belligerent Beneficiary, Beneficiaries, Close the Estate, estate, estate account, Estate Income Tax Returns, Estate Reserve, Executor, Final Distribution, Fiscal Year Return, Massachusetts DOR, Massachusetts Schedule 2K-1, Schedule K-1, Short Year Return, Tax Professional

After making the final distribution to the beneficiaries, final tasks remained to close the estate. As mentioned in the article Closing the Estate: Send Assent Forms to Close the Estate, distributing all the funds in the estate account was necessary to close the estate. Unfortunately, after the final distribution, the $5000.00 estate reserve was still part of the estate account. As a result, the final tasks to close the estate were as follows:

Make the final payments to the professionals.

Distribute the remaining funds in the estate reserve to each beneficiary.

Close the estate account.

Although eager to complete the tasks, making another tedious distribution dimmed the mood.

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Closing the Estate: Send Assent Forms to Close the Estate

24 Monday Jul 2017

Posted by Robert Dowling in Estate

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Assent Forms, Attorney, Attorney General, Belligerent Beneficiary, Beneficiary, Close the Estate, Distribution, estate, estate account, Estate Resesrve, Executor, Final Account, Final Accounting, Final Distribution, Inventory of Assets, Massachusetts Probate Court

On October 1, 2013, after completing the final accounting, it was time to get approval to close the estate. As mentioned in the article Closing the Estate: Complete the Final Accounting, the attorney would send assent forms along with the final Inventory of Assets and the Final Account to each beneficiary. If the beneficiaries approved of both documents, they would sign and return the assent form. Moreover, if all assent forms returned signed, this would allow me to start the closing process. Otherwise, any beneficiary wanting to contest the Final Account would notify the attorney of their intentions. So, sending the assent forms for approval from the beneficiaries was really a referendum on the estate administration. As a result, this was an anxious time for me as an executor.

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Track the Bank Fees in the Bank Statements

03 Monday Jul 2017

Posted by Robert Dowling in Record Keeping

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Bank Fees, Bank Statements, Bookkeeping System, Common Estate, decedent, estate, Executor, Income and Expense Report, Record Keeping, Record Keeping System

When dealing with the decedent’s bank accounts, the executor must track the bank fees, if any. Typically, in a common estate, an executor will close a decedent’s bank account without knowledge of any associated bank fees. Consequently, without examining the bank statements, bank fees may go unnoticed by the executor. If this happens, the oversight may carry through to the final accounting. Therefore, to avoid errors in the final accounting, the executor must look at the bank statements.

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The Common Executor

~ A Journey into Estate Administration

Tag Archives: estate

Apathy Towards Estate Planning Can Lead to Adverse Consequences

Grandchildren Inheriting Savings Bonds for Education

Considerations for Choosing Your Beneficiaries

How Estate Size Will Influence Your Estate Plan

Two Reasons Why a Beneficiary May Become Belligerent

Close the Temporary Home Office

Estate Income Tax Returns: Review and File the Returns

Closing the Estate: Final Tasks to Close the Estate

Closing the Estate: Send Assent Forms to Close the Estate

Track the Bank Fees in the Bank Statements