What to Expect When Administering an Estate or Trust

The administration of a probate estate or a trust generally takes six months to a year. The fiduciary can expect that time to involve a period of great activity at the beginning, followed by a long period of waiting with little activity and then a period of great activity at the finish. Complications such as disputes among beneficiaries, houses or other assets that are difficult to liquidate and insolvency (having more debts than assets) can extend the administration for years. The administration can sometimes be expedited if there are very few assets or only one beneficiary. The basic steps of administration are the same whether administering a trust or a probate estate, with or without a will.

TAKING CHARGE

The first step is for the fiduciary to assume his or her role and secure the paperwork necessary to show the world that he has the authority to step into the shoes of the decedent and act. This involves applying to the court for letters of authority as executor (if named in a will) or administrator (if not named in a will) or signing an affidavit of successor trustee if named in a trust. The new fiduciary will then need to secure a tax ID number from the IRS as the estate or trust is a separate entity and must file taxes for income received.

SENDING NOTICE

The fiduciary next notifies those interested in the estate or trust. This is an important step as formal notice limits the time an individual can object to the proceedings. Executors will notify everyone named in the will as well as those who would inherit if there was no will.

INVENTORYING ASSETS

The fiduciary must identify and list the assets of the estate or trust and send the list to the court or the beneficiaries of the trust. The fiduciary will then gather the assets together under his name and new tax number. Additional court authority or other paperwork requiring a notary seal or medallion guarantee may be needed to do this.

PAYING THE BILLS

Creditors have six months from the date of death to file their claims. The fiduciary should pay bills or dispute them. If there is any chance that the estate will be insolvent, no bills should be paid until six months have passed.


FILING THE TAXES

The fiduciary is responsible for the decedent’s final income tax returns. He or she must also file tax returns for income received by the estate or trust. If no income is received under the new EIN, the tax number can be canceled when the administration is finished. If taxes are due after the estate or trust is finished, income will be reported on the taxes of the beneficiaries in proportion to the share they received.

The fiduciary may also need to file Ohio Estate Tax for decedents who passed away prior to January 1, 2013 or for estates valued at more than $5.25 million dollars.

DISTRIBUTING AND ACCOUNTING

In order to finalize the administration the fiduciary will present an accounting showing assets received, bills paid and distributions made for approval by the court and/or the beneficiaries. Final distributions should not be made until any objections have been settled.

The administration of a probate estate or trust can be a daunting task undertaken at a very difficult time. A knowledgeable attorney can ease the way by letting you know what to expect, preparing the necessary paperwork and answering your questions along the way.

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