Administering An Estate
When a
person dies, there are a great many issues that must be dealt with.
Obviously, there is the need to make funeral arrangements, to arrange
for organ donations, if applicable, and other "personal" matters. There
are also a number of legal and tax issues that must also be dealt with.
Fedele and Murray, P.C. can provide guidance through these complicated,
and often, very confusing issues. While no means exhaustive of all the
issues to be addressed, this summary will discuss a number of matters
that must be taken care of.
The Probate Process
If a person dies owning assets in their individual name, those assets cannot be accessed or transferred without authority from the Probate Court. This is true even if the decedent had a will. Having a Last Will and Testament in place does not mean that probate can be avoided, but it can sometimes make the process a little easier (at least as opposed to the situation that can occur when the decedent has no will.) Certain assets pass automatically and do not have to be "probated." For example, assets that are jointly held will pass automatically to the surviving joint owner(s), if any. Other assets can pass automatically by virtue of a properly completed beneficiary designation. Examples of this latter class of assets include life insurance policies, annuities, and retirement assets (including, but not limited to, Individual Retirement Accounts, 401(k) plans, profit sharing or pension plans, etc.). Assets held in trust can also "avoid" probate. For a more detailed discussion, see Probating An Estate.
Guardianship for Minor Children
If there are minor (generally under the age of 18) children who are left orphaned by the decedent's death, a guardian must be appointed for them by the Probate Court. If the decedent left a will naming someone to serve as Guardian, that person will generally be appointed by the Court. However, naming a person as Guardian in your will does not necessarily guarantee that this person will be named. Your will only nominates the person to serve as Guardian; it is up to the Probate Court to confirm the appointment. While, in most cases, the person nominated will be appointed by the Court, interested parties do have the right to object to the nomination. In such case, the Court will hold a hearing and make a decision based upon all the facts and circumstances. Such contests over who should serve as Guardian often occur where there has been a divorce and/or where other relatives believe the named Guardian is not fit to serve.
Estate Tax Returns
Federal and/or state estate tax returns may be required if the total value of the decedent’s assets exceed the applicable filing thresholds. As of 2018, if the total value of all the decedent’s assets is less than $11,200,000, no Federal estate tax return is required. For Massachusetts purposes, the threshold is $1,000,000. (See The "New" Massachusetts Estate Tax). If either threshold is met, a return will be required.
In the case of a married couple, the surviving spouse may want to file a Federal estate tax return even if the deceased spouse's gross estate is under the $11,200,000 filing threshold. Filing a return may be advisable to preserve the “portability” provisions of the current law. Under the current Federal estate tax law, to the extent a decedent does not use his or her entire $11,200,000 exemption, the unused portion can be used by the surviving spouse someday. Thus, for example, if the deceased spouse's estate is valued at $2,000,000, he or she would have an unused exemption of $9,200,000. That unused exemption can someday be used by the surviving spouse, effectively making the surviving spouse's exemption $20,400,000. To claim the deceased spouse's unused exemption, a Federal estate tax return must be filed for his or her estate (even if no return would otherwise be needed).
In
determining the total value of the decedent’s assets to determine
whether the applicable threshold is met, all of the decedent’s
assets must be considered. These include assets the decedent owned
individually, those owned through most, if not all, revocable trusts,
life insurance (the death benefit thereof if the decedent still
possessed any "incidents of ownership" over those policies), retirement
assets (even though the benefits thereof may pass directly to a named
beneficiary) and any other type of asset which the decedent possessed
some form of ownership or control over.
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