Estate Administration

Estate Administration in Ohio and Trust AdminsitrationWhen a person dies who has an estate or trust, there is usually much to be done. The planning the decedent may have done ahead of time may make the load less daunting, administrating a trust or estate is something that must be done right.

By law there must be someone to oversee or “administer” the formal probate process which is regulated by the probate court. With an estate, that someone is a “personal representative” or “executor” who may be named in the decedent’s will. If no one has been designated in the will, the probate court will name an executor.

If there is no will (the decedent is said to have died “intestate”), state law will be followed and an “administrator” will be appointed by the probate court to manage the estate. The administrator can be a person, or an institution.

Custody of any surviving minor children is often disputed if there is no will. A will can name the decedent’s preference for a guardian. This becomes especially important if there is no surviving spouse.

Administration of a Trust

A trustee is named by the person who creates the initial trust. That individual is called the trustmaker. The trustee oversees the day-to-day management of property owned by the trust for the benefit of trust beneficiaries. A trustee can be a person or a third party such as an institution like a bank or trust company. If the trustmaker becomes mentally incapacitated, or is physically unable to conduct his business affairs, or if he dies, then a successor trustee will need to step in to manage the property. The successor trustees are chosen before they are needed. Usually several are named in succession in case one or more cannot assume the duties. The successor trustee must continue to properly administer the trust and abide by all state and federal laws that govern trusts.

A trust is a legal arrangement drafted by an attorney that transfers property to a trustee. Assets in which the title has already been transferred within a decedent’s lifetime are non-probate assets– meaning they are not distributed according to the decedent’s will in probate court. A trust can be created during a person’s lifetime and survive that person. A trust can also be created by a will and formed after death. Once assets are put into a trust they belong to the trust itself, not the trustee, and remain subject to the rules and instructions of the trust contract.

Types of Trusts

There are many types of trusts, but a major distinction between them is whether they are “revocable” or “irrevocable.” A “revocable trust” is a trust whereby provisions can be altered or granted by the grantor (an individual who conveys or transfers ownership of property). During the life of the trust, income earned is distributed to the grantor, and only after death does property transfer to the beneficiaries. This is also called a “revocable living trust.”

An “irrevocable trust” can’t be modified or terminated without the permission of the beneficiary. The grantor, who has transferred assets into the trust, effectively removes all of his rights of ownership to the assets and the trust.

A trust may be a critical tool in estate planning because it helps protect assets and ensure their distribution according to the trustmaker’s wishes. A trust can also help protect an estate from potentially excessive taxation and transfer costs and can be used to create a detailed charitable giving plan. A charitable trust benefits a particular charity or the public in general. These trusts are typically established as part of an estate plan to lower or avoid imposition of estate and gift tax.

Some of the other types of trusts that can be set up are:

Spendthrift Trust

A Spendthrift Trust is established for a beneficiary and does not allow the beneficiary to sell or pledge away interests in the trust. It is protected from the beneficiaries’ creditors until the trust property is distributed to the beneficiaries.

Totten Trust

A Totten Trust is a type of revocable trust in which the gift is not completed until the grantor’s death or an unambiguous act reflecting the gift during the grantor’s lifetime. An individual or entity can be named as the beneficiary. Upon death, Totten Trust assets avoid probate. This trust is used primarily with accounts and securities in financial institutions such as savings accounts, bank accounts and certificates of deposit. It is regarded as a safer method to pass assets on to family than using joint ownership.

Asset Protection Trust

An Asset Protection Trust is designed to protect a person’s assets from claims of future creditors. These trusts are normally structured so that they are irrevocable for a term of years and so the trustmaker is not a current beneficiary. A Tax By-Pass Trust is a trust created to allow one spouse to leave money to the other, while limiting the amount of federal estate tax that would be payable on the death of the second spouse. Assets above the exempt limit would otherwise be taxable at a rate of 55% to the children of the couple. The Asset Protection Trust avoids this situation.

Special Needs Trust

There are also Special Needs Trusts which can be set up for a person who receives government benefits such as Social Security.

During their lifetime, some trusts provide the trustmaker with numerous financial services including insurance planning, risk management and management of investment portfolios.

14 Steps To Administering an Estate

When a loved one dies, the first thing you will need to do is to determine the decedent’s wishes regarding arrangements such as funeral and burial plans. This may have been taken care of by the deceased which will make things easier and make it more difficult for arguments to develop among surviving relatives. The following checklist should give one an idea of what needs to be done following a death in the family.

1. The funeral home can help you obtain certified copies of the death certificate. Try to obtain several copies as a death certificate will be needed as proof of death when transferring property. It is also required to apply for any benefits due.

2. Find out if the decedent had a last will and other estate planning documents and locate them. Notify anyone named as an executor or personal representative or trustee. Determine beneficiaries (those who inherit in the presence of a will) or heirs at law (those who inherit if the decedent did not have a will) and inform these parties. The executor or administrator should keep an open line of communication with the heirs and beneficiaries.

3. If there is a will, it must be filed with the probate court before any assets can be distributed. The probate court will name an estate administrator if no one has been designated. If no one has been named and you would like to serve in this capacity, you should notify the court or a family attorney.

4. Open an estate account with a financial institution. Keep records of all activity as an executor. This can be beneficial if anyone challenges your representation.

5. Apply for a federal Taxpayer Identification Number for the estate. There may be many types of tax forms to fill out including income the decedent had prior to death that was not reported; income earned by the estate or trust; assets of more than a certain amount; gifts given by the decedent totaling more than a certain amount; tax refunds due the decedent; forms for any trust or estate that maintains bank or brokerage accounts and report of payments made by the estate or trust to attorneys.

6. Figure out where the decedent lived for probate purposes. It is possible the estate will be probated in multiple jurisdictions if there is real property in another state or outside the decedent’s domicile. Determine if temporary administration of the estate is necessary.

7. If there is any surplus cash that obviously belonged to the decedent, put it in a safe, or the estate account.

8. Decide if it appears that you will need professional guidance such as an attorney or CPA, or perhaps both.

9. Locate any safe deposit boxes and inventory the contents. Collect information regarding the type, value and manner of holding for all assets. Address any issues regarding family-owned businesses and partnerships.

10. If you are administering the estate, change the mailing address with the post office. Invoices and statements will come to you and help you determine bills to be paid and potential assets. Cancel subscriptions as you don’t want to indicate a home is empty. Cancel any automatic bill payments.

11. Change the locks on the decedent’s residence. Take possession of the decedent’s checkbook and credit cards and notify the bank and credit card company of the decedent’s passing. Notify the homeowner’s and auto insurance companies and determine if coverage is adequate, especially if there are items of unusual value.

12. To apply for death benefits, you will need a social security number—a marriage license if you are a spouse of the deceased. Surviving minor or disabled children will need a birth certificate to apply for any social security benefits.

13. Contact the life insurance company regarding any possible benefits. Life insurance, bank accounts which are payable on death (POD) or indicate a joint tenant right of survivorship (JTROS) should not be subject to probate and will belong directly to the parties indicated.

14. Check for any stocks, bonds, investment accounts or other assets, or Civil Service or veteran’s benefits. There may also be some life insurance or death benefits from an employer or former employer of the deceased and you should check on this if it is a possibility.

Remember that a properly administered estate can prevent costly and divisive legal disputes among children of the decedent, and other heirs or creditors of the estate.

Contact Us and Learn More

To learn more about estate and trust administration, please contact us for a free consultation with one of our experienced attorneys. Please call 1-888-467-5105, chat with one of our 24 hour live chat operators or send us a message here from our website.

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