Following the death of a loved one, there are a large number of tasks that must be completed. Among the first is to determine whether there is a will or trust and to locate it. If the decedent has engaged in preplanning, there may even be instructions regarding burial or cremation in the documents. Depending on the planning done, there are varying moves that you may need to take. Probate administration may be required, trust administration, and more. In the midst of planning a funeral, especially in the wake of an unexpected death, dealing with administration can be an extremely daunting task. For this reason sometimes, some people, simply don’t do it.
Unfortunately, failure to properly administer an estate or trust can create substantial problems in the long run. Particularly when it comes to real estate, appropriate records are vital to ownership. However, individuals who are avoiding dealing with the legal ramifications of a death often wait for an event requiring the administration to arise, such as the need to sell a home or access a particular account. At this time, the process may be substantially more complicated and time consuming! Often the ownership discrepancy is discovered during escrow, which can hold up the sale or terminate it altogether. Additionally, if there are unrecorded deeds, multiple beneficiaries, or other issues, it is possible to have problems with title insurance if the property is not properly transferred.
If the surviving spouse or child is able to live in the home for an extended period, there is little incentive to act on fixing title. However, getting the names of decedents off all title documents as quickly as possible is important. If the surviving spouse or trustee dies before the deceased spouse’s name is removed from title, administering the surviving spouse’s estate could be more difficult. It is even possible that two simultaneous probate proceedings will be necessary! If multiple children own the home, while one lives in it, rent may be due from the person remaining in the home.
The more complicated the original estate’s administration would have been had it been completed in a timely fashion, the more complicated it will be at a later date. If there is an A-B trust, there could also be significant tax consequences resulting from avoiding administration for a prolonged period. Although there may not be estate tax implications, there could be income tax implications from the failure to fund the ‘B’ trust upon the first spouse’s death. Similarly, if a disclaimer trust was used, the surviving spouse has only 9 months to determine whether to disclaim any property and, if so, what to disclaim. Once that period has passed, the option for a disclaimer disappears. If an estate tax return is required, getting the appraisals, statements, and other information required to file ought to be done as quickly as possible. There are penalties for filing late as well.
When dealing with a death, there are a lot of tasks that must be completed in a timely way. Ignoring the complications of estate and trust administration, however, does not make them go away!
A Survival Guide for Those Left Behind: The Price of a Loved One’s Dying Done Right…
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