ESTATE & TRUST ADMINISTRATION
Perhaps one of the most important tasks you now face is the disposition of a loved one’s estate. The “estate” consists of everything that the decedent owned during his/her lifetime. It is suggested that you obtain legal advice on the array of different matters such as the payment of debts, disbursement or conversion of assets, changing of property deeds and titles, and the disposition of bank account, stock, equipment and livestock. Contact an attorney who is well versed in Estate and Trust Administration and Estate, Gift and Income Taxes. Your job has six aspects as follows.
- Authority to Act. I you have been nominated in a will, you will proceed to have an attorney file the appropriate papers to have the Judge appoint you for this position (Probate). If the decedent had a Living Revocable Trust, affidavits will be needed to appoint you as Successor Trustee. If neither is available, someone can still be appointed as Personal Representative by the Judge.
- Collect information about the assets and their value. Look for recent statements from financial institutions, look at last year’s income tax return, make copies of auto titles, for real estate gather a copy of the deed, assessor’s statement and most recent tax statement.
- Pay the legitimate debts of the decedent. If a personal representative is to be appointed, the creditors will be notified and have 60 days to provide their bill. If no personal representative is appointed, the co-owners are responsible for the bills which may come in over the next year.
- Pay the taxes. There are between 7 and 11 tax returns that must be considered when a person dies. The last year that the decedent is alive an income tax should be filed or a letter sent to the IRS stating no return was necessary and enclosing a copy of the death certificate. Additional tax returns that may be needed include the Federal Estate Tax, State Estate Tax, Nebraska Inheritance Tax and for income after the date of death, a fiduciary income tax return should be filed. In addition be aware that differed income from an annuity or H Bond will also be taxed to the individual who receives the proceeds.
- Account to the heirs. You should keep an accurate legible record of all money and assets that you work with on behalf of the decedent. A separate checking account is usually used so that your personal funds are not co-mingled and so that you do not have to disclose your own personal information to others.
- Distribute the net value of the estate according to the decedent’s directions or by state law. Some assets will pass automatically to the beneficiary. Some of these include life insurance, annuities, P.O.D. (Pay on Death) accounts, joint accounts or property, beneficiary accounts, and life estates. Even though these may pass to the beneficiary without appointing a Personal Representative or Successor Trustee, they are still subject to several kinds of tax. Contact your attorney to have them determine which taxes apply to your situation. Other assets will be distributed by the Personal Representative or Trustee. In no event do the net proceeds get paid to the State of Nebraska. If an heir can not be found their money is sent to the State Treasure to hold until they can be found.
Nebraska Law has five avenues to distribute assets, as well as trust administration. Depending on the amount of assets and how they are held will determine which choice you will make. Legal advice to determine which avenue to use and to meet the deadlines set by the Nebraska Supreme Court and the IRS Code can be very helpful.
Nebraska has Living Will Statutes, specifying documents and how they are to be signed. Upon entering healthcare facilities you will be asked if you have “ADVANCE DIRECTIVES” in place. Advance Directives include a Durable Power of Attorney, Health Care Power of Attorney and Declaration or the appointment of a Guardian/Conservator by the Court.
- The Durable Power of Attorney. This document appoints someone to do business for you while you are alive (the attorney in fact) (Lawyers are Attorneys at Law). While the person who made the Power of Attorney is alive, he/she can have the person appointed do all manner of financial transactions, write checks, pay bills, deposit money, rent land, file income tax returns. The authority of the Attorney in Fact ends when the person who made the Power of Attorney dies. If no Power of Attorney has been signed the alternate route is to have a Conservatory appointed by the Court. The cost of this procedure if fairly expensive compared to having a Durable Power of Attorney drafted and signed.
- Health Care Power of Attorney. Like the Durable Power of Attorney document, you appoint someone to make decisions for you when you are not able to do so yourself. Entering a “swing bed” or nursing facility will require this document or the more expensive appointment of a guardian by the Court. The person that you appoint will make routine and life/death decisions for you. Providing this person with information on these issues is very important as well as discussing it with your family.
- Declaration (Living Will). In Nebraska our laws provide opportunities to individuals to state their wishes regarding “death with dignity” or “the right to die.” Advances in medical and scientific techniques have found ways to keep people alive by way of machines. As a result, more and more people are concerned with issues regarding the “quality of life.” Writing down your wishes in a Declaration relieves some of the burden when you family is faced with these decisions.
LIFE INSURANCE INFORMATION
Traditionally, life insurance companies require only two forms to establish proof for a claim; (1) a statement of claim, and (2) a certified copy of a death certificate. Please remember that this is a general statement. Your insurance companies reserve the right to request further information or proof that they deem necessary.
When filing a claim form, you should have available the following information:
- The policy number(s) and the face amount.
- The full name and address of the deceased.
- His or Her occupation and the last date worked.
- His or her date and place of birth and the source of the birth information.
- Date, place, and cause of death.
- Claimant’s name, age, address, Social Security Number, and date of birth.
FINANCIAL AND CREDIT OBLIGATIONS
You will want to gather all the bills together and make sure you are aware of all the credit obligations of the deceased. Many installment loans, service contracts, and credit cards accounts are covered by credit life insurance, which pays off the account balance in the event of the death of a customer.
You should contact any financial institution where the deceased had a loan, and inform them of the death. They will be able to inform you if the loan was covered by credit life, and what needs to be done to file the appropriate claim. A certified copy of the death certificate is often required to file a claim.
You will also want to contact credit card companies to notify them of the death. If the card is jointly held, find out what documentation is required to change cards into the survivor’s name. Ask the credit bureau to assist you in transferring your loved one’s credit into your name. They may be able to assist you in determining any outstanding obligations of the deceased.
Make a prompt request for the release from each bank in which the deceased and you held a joint account. This is necessary before you can withdraw funds from that account. A bank will usually stop payment on all checks as soon as a death notice is published. The bank must also have the account cleared by the state tax authorities.