Top 10 Blunders in Probate & Trust Administration
Posted on: April 26th, 2013
By: Hallie Zobel, Esq.
Probate and trust administration isn’t for wimps. It also isn’t for people who aren’t ready to shoulder the burdens associated with being named as a fiduciary. A fiduciary is the person who gets the laborious task of holding assets in trust for a beneficiary. In Florida, trustees of trusts and personal representatives of estates are classified as fiduciaries.
While taking on such a role may be a labor of love for those who are named by their deceased loved ones, mistakes can be made which can quickly get the fiduciary into significant trouble. And whether they mean to or not, the law states that, “it is illegal for a fiduciary to misappropriate money [or other assets] for personal gain.”
Here are the ten blunders in probate and trust administrations:
1. Failing to have an appropriate estate plan: Beneficiaries cannot change the fact that some decedents did absolutely no estate planning. Some estates only require only minimal planning (i.e. Durable Power of Attorney, Designation of Health Care Surrogate, Living Will and the proper titling of assets).
2. Assuming everyone will want the same things you do: A fiduciary should always look to any available written documents to direct how the administration shall proceed.
3. Not running the administration like a business: The way in which the Personal Representative or Trustee conducts himself/herself will be reflected in the way others react to the proceedings.
4. Failing to communicate with beneficiaries: A Notice of Administration is required in all probates and a Notice of Trust is required in trust administrations. For both types of administrations, inventories and accountings are required.
5. Waiting to get started for years: Waiting longer means more legal fees.
6. Not filing the required tax forms: Tax, tax, tax – welcome to America, right? The required tax forms are as follows: A final 1040 return for the decedent, a 1041 return for administration entity, Form 706, Form 56. You get the picture.
7. Not moving assets into the administration: Let’s say your deceased grandmother left a car behind. Who has any interest in the car? Who is willing to pay for the car’s maintenance? These are just two of many problems that can arise from failing to move assets into the administration. In a probate administration, re-titling is done under court supervision. In a trust administration, the trustee has the responsibility to distribute the assets as directed.
8. Not discussing plans with those who carry them out: While discussing end of life issues is difficult for many people, it will make the future proceedings much more efficient for everyone. Share copies of critical documents with the responsible party, discuss who trusted advisors are and disclose where original documents are kept.
9. Allowing unmonitored access to decedent’s home: Some items in a decedent’s home may have a great financial value and some may just be of sentimental value. Whatever the case, protect untitled personal property such as art, furniture, coin collections, stamp collections, guns, clothing, etc.
10. Trying to handle the administration by yourself: Would you prefer to have brain surgery performed by an intern doctor fresh out of medical school or the surgeon who has performed 5,000 procedures? Hire a professional for any estate administration as it is a highly complex legal issue.
The most important lesson to take away from these ten possible mistakes is: Unless you are currently an expert in regards to probate and trust administration, you should probably seek an expert. You will need competent legal advice to administer an estate properly and legally, while providing you with comfort and peace of mind.