Although the most common way to avoid costs related to Administering an Estate is with the use of a Revocable Living Trust, here are some warning tips to help you watch out for so that your family might minimize many of these Estate Administration or Probate Related Expenses. Click here for more information on How To Administer an Estate in Maryland.
Liquidating an Individual Retirement Account (IRA) may create unexpected tax consequences as a result of being distributed. Work with an Attorney and Accountant to determine the best way to distribute this asset, preserve the stretch-out period, and minimize income taxes.
When inheriting Real Property, a step-up in basis is rendered and if the Estate fails to sell the house in a timely manner a market change could eliminate the advantages of this tax savings and avoid capital gains during the administration of your estate.
Although we help to educate the public as often as possible about how to administer an estate, there are many details and rules that which the Personal Representative is personally responsible for. These details and lack of experience can inadvertently lead to delayed or rejected filing or costly litigation. We always recommend that you hire an Estate Law Attorney to assist with administering an estate.
Unclear directions or a lack of Estate Planning documents leave the responsibility to your children or family to divide your property fairly. Not all beneficiaries are likely to agree and surprisingly may result in the petitioning to the court to remove the representative appointed in the documents or contest the final accounting.
Often times a representative will immediately begin to pay all creditors. To determine the appropriate liabilities of your Estate, it may be recommended to wait for claims of debt after the notification of the estate has been published in a local paper.
Due diligence is important when administering an estate. For this reason it is important to have all personal property appraised the ensure that there is no specific items of a surprisingly high value such as jewelry, coins, books, or antiques. Additionally, many will either turn over all firearms to local police or get a bulk offer from a local gun dealer out of fear from handling these difficult items. This could result in the loss of hundreds of thousands of dollars in an Estate.
A great way to avoid potential disputes and in-fighting with your children is to sit down with them and your Estate Planning Attorney and review the distribution plan in your documents. This way that all know what to expect and can rest assured that these documents are reflective of your intentions.
All of these difficulties may be avoidable by putting in place a well designed and well funded Estate Plan including the use of a Revocable Living Trust.
Administering an Estate is difficult enough, even more so when I large number of individual accounts must be managed. Consider consolidating small accounts such as CDs, Bonds, Various Savings Accounts if it fits your financial goals or at least seek the counsel of a trusted Financial Advisor to organize your assets in a management and safe manner.
Be sure to double check your Life Insurance policies, Bank Accounts, and Investment Accounts to ensure that they are updated to designate the proper beneficiary per your wishes. Often times, people forget to update these designations after a divorce, marriage, intention to disinherit, or after an Estate Plan is updated causing unintended distributions of your assets.