It’s hard enough to deal with the emotional grief when a loved one passes, however the “paperwork” and “red tape” can make a tough situation even worse. But frankly, it doesn’t stop there either does it? If you’re your lucky, your loved one left a detailed Will or Trust, specific instructions, lists, and guidance to help you divide up their assets. If not, the family drama begins and then it can take a lot of medication and therapy to bounce back months or even years later after the experience is over – Seriously.
The reality is, the handling of someone’s estate can be extremely difficult and emotionally draining, not to mention time consuming. Here are some important steps, considerations and issues to address when helping administer the estate of a loved one.
- Gather all the documents. This is definitely one of the most important steps and first on my list. Find the Will or Trust if one exists. Look for tax returns, bank statements, property tax statements, collect the mail, and find anything that will help you put together a ‘picture’ of the estate. Start listing assets and gathering not grabbing or dispersing. I have seen it myself and consistently hear of nightmare stories of families rushing into the house to take whatever they want because they deserve it. Please don’t. Protect the assets and gather documents. Lock things up if you have to. No one should be taking assets out until the ‘leaders’ of the estate make proper and informed decisions with full disclosure.
- Designate the Leader or Leaders. There can actually be several roles involved. A guardian for the children, the executor, the trustee, the custodian of a minor’s funds, medical power of attorney, guardians for pets, and even trustees for the firearms or specialized assets. If your loved one did a decent job of an ‘estate plan’, they should have chosen most if not all of these people. However, if they didn’t, you’re probably going to be dealing with probate and asking a judge to ‘appoint’ who these key people will be. In either case, you can help the situation by trying to create a team approach if possible or suggesting the best go-to person if there are too many cooks in the kitchen. Be realistic about who has the skills and the time to help out.
- Be a support and not a hindrance. You can help hold the family together and of course assist in things go much more smoothly by helping support those people chosen for specific roles in the estate closing or ongoing management of the estate or trust. Support the leaders appointed in the documents or by the judge, even if it’s not who you wanted to be in charge.
- Communicate with all the family members. By letting everyone know who the ‘players’ are and clearing up any misdirection or miscommunication can go a long way in reducing drama. Moreover, get copies of the Trust and/or Will in the hands of all the affected family members. It’s ok. It won’t hurt anything and it will all come out in the long run, or even short run anyway. By trying to hold information secret or playing your cards close to your chest can be disastrous for family relationships. I suggest you not feed into the problem with drama.
- Get a lawyer and accountant involved. I’m not saying you have to pay either of these parties a ton of money, but you will certainly need to lean on them for a little support and advice. The sooner you find the proper advisor, the better. This way, when there is a crisis or time crunch of any sort, you aren’t scrambling to find an advisor because you were trying to cut corners and go on the cheap. Pay for some good advice and I promise it will be worth it. Professionals are trained in this area and work in it every day. You don’t. Don’t think it’s easy. There are a lot of mistakes that can be made.
- Gather financial data and tax documents. Please know that you will have to file a tax return for your loved one that passed. Rich or poor, the IRS requires a tax return from the last year of your life. Even if it was just social security, all of it matters. Start creating a spreadsheet of all the assets, bank accounts, stocks, investments, retirement accounts – everything! Break them down by the most accurate value you can. This will be used in the distribution of assets, seen by the Court if applicable, and probably used on the tax return.
- Be fair and honest. Money isn’t worth breaking up a family with an estate fight. There will probably be someone in the family stepping on everyone trying to get the money…possibly even an in-law. But don’t get sucked into it. Take the high road and get legal representation ASAP if you see something fishy going on. The longer you wait, the harder it is to get the assets back and litigate it. Be kind, but not a pushover. If someone is pushing you or the estate around in an unethical manner, get a lawyer.
The older I get in my career, the more I work on projects on the back end of an Estate and almost as frequent as the ‘planning side’ of the equation. As you can imagine, this has actually made me more wise and insightful when helping clients plan – I have personally seen and dealt with the nightmare that can be on the other end of the spectrum. PLEASE do some estate planning for yourself and your loved ones. It will save you a lot more than money.
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Mark J. Kohler is a CPA, Attorney, Radio Show host and author of the new book “The Business Owner’s Guide to Financial Freedom- What Wall Street Isn’t Telling You” and “What Your CPA Isn’t Telling You- Life Changing Tax Strategies”. He is also a partner at the law firm Kyler Kohler Ostermiller & Sorensen, LLP and the accounting firm K&E CPAs, LLP.