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Common Estate Management Mistakes to Avoid

 

Being asked to be the executor of an estate is a big deal. People you love (and some you don’t) are counting on you to create order in a tough time. Often the person asked to serve as executor is trusted, but inexperienced with this type of undertaking.

 

There is a very long list of ways one could mismanage an estate, and if the only thing on the line were reputation, that would be very different. But probate and disbursements are governed by law, which makes this an area that needs accuracy and compliance. As a result of many factors, estate management solutions are often needed to prevent mismanagement.

Things that can go wrong include:

 

Not Officially Recording the Will

After a death, the most recent known will must be submitted to the court so that the executor can be certified by the court. This must happen before anything else, so it’s important to find the most recent will quickly and schedule an appointment with the probate court.

 

Ignoring Creditors

There is an order to events with disbursements. Until the creditors have been paid, none of the estate assets can transfer hands. This means that beneficiaries must be patient, and the executor of the estate cannot buckle under pressure. It’s their legal obligation to hold all assets until the last creditor has been paid, and then disburse the remaining assets next.

 

Not Finding & Protecting Assets

It’s the executor’s obligation to identify, locate, and protect the assets of the estate. This can take some research, and you may need to pay storage facility fees, or retrieve things that are in someone else’s possession. It’s the estate manager’s duty to take care of these things so that they lose no value between the passing of the decedent and their eventual disbursement.

 

Flunking at Finances

Many times estate manager’s mismanage funds. One easy way to do that is to fail to collect debts owed to the deceased, like back pay, social security, or pension income. All of that must be collected and taxes must be filed on it.

Most states also allow executors to receive “reasonable” payment from the estate for their services. What this amount is will be decided for you by the court. Keep impeccable recordkeeping, and don’t mix estate funds with any other funds. You cannot live on property owned by the decedent without paying market rent.

 

Giving Stuff Away

Many times the small things that aren’t mentioned specifically in a will are given away. This goes for things that you assume won’t be mentioned specifically in the will, too. They tend to go casually to friends and family members who might like them. This may seem okay, but it’s not. Assets of the estate can only go to named beneficiaries, or legal heirs. If you disburse outside of those groups, you may owe out-of-pocket money to the beneficiaries, who are the legal owners of that property.

 

There are far more opportunities to bungle being an executor than we can outline here. If you need guidance or estate management solutions, we’re here for you. We offer probate and trust administration services to make sure that your bases are covered and the process is carried out smoothly, legally.

Filed under Probate Tips

Review Your Estate Plan to Prevent Conflict

 

If you already have an estate plan, that’s great! Whether you have a will or a living trust, you’ve taken steps to ensure your assets are distributed smoothly. Although that first step is admirable, many people don’t realize that creating an estate plan is not the end.

Once your decisions are made and documents are in order, they are amazing resources! For a while. But there’s a shelf life to these plans.

It may help to think of your will as a first aid kit: once it’s put together it’s ready to handle an emergency! And it stays ready to handle an emergency for a while! But the remedies inside start to expire, bandages get stiff, and adhesives lose their stick. Although you may keep the same first aid kit, you’ll need to rifle through it and replace the items that can’t help anymore with new ones, and add things that are missing. Because you when the you need the kit, it’s all got to work!

Some things that may influence the effectiveness of your will to provide proper structure:

Laws May Have Changed

The plans you made were probably the perfect way to handle tax liability, inheritance laws, real estate transfer laws, and anything else that applied when you wrote it. As time goes by, though, every year small changes happen. The ways you’ve planned to handle assets may either not make good financial sense anymore, or they may not even be options due to legal changes.

Your Family May Have Changed

If you’ve named beneficiaries, as most people have, then it effects your will if anyone important to you has passed away, married, divorced, or if any babies were born into the family. Without your guidance, your estate executor won’t know how you want this handled, and their decisions may cause strife.

Your Assets May Have Changed

Have you accounted for what happens to the new properties or funds that have come into your life since your last estate planning review? Real estate especially can become a sticky situation to distribute when no clear plans are in order. You also may need to change you will because you no longer have assets you used to.

Your Wishes May Have Changed

In the event that you’ve had a falling out, fallen in love, or had other relationship changes, plans may need to be updated to reflect that. There are few things as hurtful to families as seeing someone forgotten or the wrong person inheriting an estate.

Common advice recommends reviewing your will every 5 years. It’s unwise to wait that long if any of the above factors aren’t what they were last time you verified that your plans were current. The uncertainty caused by an outdated will is a common setting for litigation and unrest, and is completely avoidable.

Contact Lewman Law today to get help reviewing and updating your will.

Filed under Estate Planning Tips