The Thirty-A Review July 2020

l e g a l e a g l e s

Admirable Administration b y F r a n k Wa t s o n a n d K i m b e r l y Wa t s o n S e w e l l

Q uestion. If today were your last, how would you be remembered regarding your estate plan- ning? Would it be for leaving a mess for others to clean up, or would it be for leaving a thoughtfully drafted, thoroughly implemented, and carefully main- tained plan so your appointed fiduciaries could smoothly administer your estate? Finishing well, in terms of your estate planning, is the focus of this article, as we review general responsibili- ties fiduciaries assume when administering an estate. Accordingly, you may want to share it with them while there is still time to discuss your wishes. THE THREE PHASES Upon your death, the postmortem (i.e., after death) responsibilities of your appointed fiduciaries fall into three phases of estate administration. Whether under your Revocable Living Trust-based plan or under your Will-based plan, these responsibilities are to: 1. Collect and manage your assets; 2. Pay your debts, taxes and expenses; and 3. Administer and distribute your assets for the benefit of your named beneficiaries. Note: Your fiduciaries should seek appropriate legal counsel throughout each of these three phases to ensure that all of the Without delay, the first responsibility of your fiduciaries is to protect and preserve your assets. This includes taking an inventory of the assets, insuring and safeguarding them, as well as determining their values as of your date of death. Make sure your fiduciaries know where you keep your asset inventory, as well as the account statements, certificates, and titles to back it up. If you have a funded Revocable Living Trust along with up-to-date records of the trust assets (and their respective values), then you will greatly ease this initial burden on your fiduciaries. Even if you do not have a Revocable Living Trust- based estate plan, maintaining current financial records can save your fiduciaries considerable time (and therefore money) in fulfilling their Collection and Management responsibilities. “i’s” are dotted and the “t’s” are crossed. Collection & Management

Debts, Taxes and Expenses Once your assets have been collected and are under management, the fiduciaries must arrange for the payment of your just debts, your tax liabilities, and any expenses associated with the post-mortem administration of your estate. Again, time is of the essence. Consider this: estate tax returns must be filed within nine months of death, and many post-mortem planning opportunities, such as disclaimers and certain elections (e.g., Qualified Terminable Interest Property, alternate valuation, etc.), must be timely made or they are lost...and with them potentially hundreds of thousands of dollars in estate tax savings. Failure to comply with applicable legal deadlines can expose your fiduciaries to some rather unpleasant personal liabilities, to include any tax liabilities of your estate, and lawsuits from creditors and disgruntled heirs. Administering your estate can quickly become a lose-lose proposition for your fiduciaries. Administration & Distribution Whether your estate plan ultimately provides for the distribution of your assets to your beneficiaries in one lump sum, in multiple distributions, or through ongoing trust administration (to protect your assets for and from them), your fiduciaries must ensure that accurate records are maintained, and receipts obtained from each beneficiary. In fact, the failure to account for all income, expenses, and disbursements throughout each of the three phases of estate administration can result in civil and potentially, criminal sanctions. FINAL THOUGHTS Post-mortem responsibilities can be very complex. Before you select and appoint fiduciaries for your estate plan or agree to serve as a fiduciary for someone else, you should seek appropriate legal counsel. You (and your fiduciaries) will be glad you did. ASK YOURSELF... These Questions Regarding “Admirable Administration”. 1. Have I thoughtfully drafted, thoroughly implemented, and carefully maintained my estate plan, so my appointed fiduciaries can smoothly administer my estate after death?

Kimberly Watson Sewell and Frank Watson

2. Have I created and maintained an up-to-date inventory of my assets to help ease the Collection and Management burden for my appointed fiduciaries? 3. Have I prepared my appointed fiduciaries for their responsibilities to pay my debts, taxes, and expenses in a timely manner; and are they aware of their potential personal liability for failing to do so? 4. Have I prepared my appointed fiduciaries for their responsibility to distribute my estate to the beneficiaries I have chosen as provided in my estate plan? 5. Have I prepared my appointed fiduciaries for their responsibility to accurately account for all income, expenses and disbursements through- out each phase of estate administration?

For more information, please contact: Watson Sewell, PL (850) 231-3465 -

4 6 | T H E T H I R T Y- A R E V I E W | J U L Y / A U G U S T 2 0 2 0

Made with FlippingBook - Online magazine maker