When a close relative or friend passes away, it can be devastating, regardless of the age or health of the decedent. Learning to coping with the loss can be difficult and can take time.
When we prepare estate plans for our clients, one important goal is to get their legal and financial affairs in order to simplify the process for settling their estate at their death. In this way, they can minimize the stress on the family or friends who are responsible for settling their estates.
If a decedent owned assets in his or her name, individually, without designated beneficiaries, those assets must pass through probate before they can be used to pay funeral and administration expenses and ultimately be distributed to the beneficiaries named in the decedent’s Will, if the decedent left a Will, or to the decedent’s heirs at law if the decedent did not leave a Will. Certain assets do not have to pass through probate; jointly owned property passes to the surviving joint owner, assets with a designated beneficiary, such as life insurance, retirement accounts, and annuities, pass to those beneficiaries, and property which is held in trust passes in accordance with the trust document.
A proceeding for probate is commenced by the filing of a Petition for Probate of Will, a Military Affidavit indicating whether or not any of the decedent’s heirs are in the military service and a Fiduciary Bond, for the faithful performance of duties by the Executor or Administrator. After the Petition and other documents are filed, along with the filing fee, the Death Certificate, and the Will (if any), the court issues a Citation, which gives notice to all of the decedent’s heirs that a Petition for Probate has been filed. The Citation is typically required by the Court to be published in the newspaper serving the locality in which the decedent lived. The notice states that interested parties who wish to object to the appointment of the Executor or Administrator have an opportunity to do so by filing a notice with the court by a certain date chosen by the court, often referred to as the return date. If no objections are filed by that date, the Executor or Administrator will be appointed.
Once the Executor or Administrator is appointed, an Inventory must be prepared on the form provided by the court. All of the decedent’s individually owned property must be listed, valued as of the date of the decedent’s death. The Inventory is signed by the Executor or Administrator and filed with the court.
The Executor or Administrator must also determine whether Massachusetts and Federal estate tax returns must be filed. If the decedent’s gross estate exceeds certain limits, Federal and Massachusetts estate tax returns may be required. In order to make this determination, it is necessary to gather information concerning the date of death value of all assets in which the decedent had an interest, including individually owned assets, jointly owned property in which the decedent had an interest, the decedent’s life insurance policies, retirement plans, annuities and interest in trusts. Additional information will be necessary to take advantage of permissible deductions, which may include funeral expenses, estate administration expenses, anticipated legal, accounting and Executor/Administrator fees, outstanding debts of decedent, mortgages and liens. If real estate is involved, a copy of the deed and an independent appraisal must also be provided, so that a release of the statutory Massachusetts Estate Tax Lien can be obtained. If it is not released or expired, sale or mortgage of the property would be subject to the lien.
Creditors have one year from the date of the decedent’s death to file a claim against the estate. For this reason, typically the estate assets are not distributed to the heirs until at least one year from the decedent’s death.
At all times while administering the estate, the Executor or Administrator must keep detailed records of all amounts received, expenditures, and distributions. These records are necessary for preparation of any fiduciary income tax returns which may be required to be filed and for preparation of accountings to be filed with the court. In many instances, only one accounting must be filed with the court, one year after the appointment of the Executor or Administrator. In some cases, the period of administration of the estate lasts longer than one year. In those cases, annual accountings must be filed, with the first accounting due one year after the appointment of the Executor or Administrator. When the final account is allowed, final distributions as reflected in the account may be made and the estate can be closed.
Although settling an estate can involve a significant amount of work, the process can be accomplished one step at a time. If you work with legal counsel, it can be even simpler.