There is a saying about the only two things that are certain in life are death and taxes. That may be true, but for people with any assets, there is a third to be concerned about. That third issue is the resolution of the estate of the decedent.
The loss of a loved one is tough enough to deal with. But for those close to the decedent, this ending is just the beginning of something else. Where do you start?
I may be biased, but I’d start with a professional who understands financial and estate planning, too many people run to the family generalist lawyer whose first inclination is to see a lot of billable hours in front of them. A not so subtle warning to all is that this isn’t a service that can be casually served by just anyone with a law license. You should work with professionals who specialize in this type of work and do it every day.
The first thing you want to do is to see if the decedent had a will or trusts. Unfortunately, most people pass without a current will and don’t have trusts. If there is no will, the assets of the decedent will be decided by the laws of intestacy in the state where the decedent lived. If there is a will, it would be wise to file that will and get the appointed people officially appointed by the court ASAP.
Next, create an inventory of assets. This may be amongst your toughest tasks. Many old timers were very private with squirrel like stashes of assets all over the place. Start by looking at any statements that you may find. Remember, today many opt out from receiving traditional mailed statements only to receive them electronically. Be sure to get the decedents e mail address and find a way to get in there to see if you can find anything.
One of the most valuable assets that is rarely documented are your inventory of passwords and electronic accounts. Please don’t go creating a book that lists all these confidential addresses and passwords and keep it around the house. This could be your favorite criminal’s best treasure. But you need to find a way to get to the decedents electronic accounts.
You may need to scrutinize prior year’s tax returns. Sometimes you’ll find assets by seeing where the 1099’s came from in the prior years. Also look at any IRS notices or other correspondence from a taxing authority on anything.
Remembers this, as an executor or appointed person, you are personally responsible for getting all of this right. All of this means the final income tax return for the decedent, and any estate tax returns that may be due along with supervising or actually making the distributions to beneficiaries. You may be entitled to reasonable fees as the person settling the estate, and don’t be shy – You’ll be spending a lot of time on this job. Any fees that you pay to a professional advisor will also be deductible and could save you a lot of time and heart ache.
John P. Napolitano CFP®, CPA, PFS, MST is Founder and Chairman of Napier Financial in Braintree, MA. Visit napierfinancial.com for more information. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Investment and financial planning advice offered through US Financial Advisors, a Registered Investment Advisor.
