This is an article from Kulas Law Group (www.kulaslaw.com) in Port St. Lucie, Florida, that we thought others may find helpful.
For most people, the loss of a family member or close loved one is followed by a time of mourning and heightened emotions. For the person appointed to be the Executor of the estate, however, it can be a time when complex legal and financial issues must be resolved during the probate of the estate. If you recently lost a loved one, then found out that you’ve been appointed Executor of that loved one’s estate, you may be understandably worried about fulfilling your duties and responsibilities. The best way to avoid making a costly mistake as the Executor of an estate going through probate is to retain the services of an experienced estate planning attorney.
What Is Probate?
Probate is the legal process that is typically required following the death of a person. Probate serves several important legal functions, including:
- Authenticating the decedent’s Last Will and Testament
- Allowing interests persons to challenge the Will
- Identifying, locating and valuing estate assets
- Notifying estate creditors and allowing them to file claims
- Ensuring that federal (and “state” in some states) gift and estate taxes are paid
- Distributing estate assets to beneficiaries
Common Probate Mistakes
As a first-time Executor, there are a seemingly endless number of mistakes one could make, some of which could be very costly, both in terms of time and money. A few of the most common mistakes include:
- Missing assets – One of the first tasks you have as Executor is to identify and locate all estate assets. If the decedent was well organized, this can be an easy task. If not, it can be a laborious task. You are required, however, to make a good faith effort to identify all assets owned by the decedent at the time of his/her death. Along with searching through the decedent’s records, check county property records and bank statements for clues to less obvious assets.
- Improperly categorized assets – Not all assets are considered probate assets. Non-probate assets bypass the probate process altogether and, therefore, may be distributed to beneficiaries immediately after the decedent’s death. Trust assets, certain types of jointly held property, and proceeds of a life insurance policy are just a few examples of non-probate assets.
- Failing to recognize that the estate qualifies for small estate administration – Most states offer a small estate administration alternative to formal probate for estates that qualify. If the estate qualifies for small estate administration it will save both time and money.
- Underestimating gift and estate taxes – All estates are potentially subject to federal gift and estate taxes. In addition, some states also impose an estate tax. You should make an initial determination at the beginning of the probate process whether the estate is likely to owe gift and estate taxes so you know how to handle claims against the estate down the road.
- Poor organization and/or record-keeping – All expenses incurred during the probate process are potentially reimbursable from the estate. As Executor, you are also entitled to a fee for your services. If you fail to keep records, however, the court may not approve your request for payment or reimbursement. In addition, failing to keep detailed records of estate assets will ultimately make your job as Executor more difficult.