While it is never easy to lose a loved one, the legal demands of trust and/or estate administration can make a loss even more arduous. With the administration of an estate, the executor or administrator will be required to identify and collect the decedent’s estate assets, those assets of the decedent that may not otherwise pass directly by beneficiary designation or through an existing trust. The executor or administrator is required to file for probate of the estate through the Circuit Court which shall include filing an inventory of the decedent’s probate estate assets, notice to any heirs of the estate, and annual accountings may be required to be filed with the court. The process can be daunting and requires identification and payment of the decedent’s debts and obligations including any outstanding tax obligations and possibly filing delinquent decedent individual income tax returns. The firm of F. Hunter Hampton can guide the executor or administrator through the complex probate process and assist with any one or more of the following duties:
- Probate wills and file probate for an intestate estate when decedent passed without a will
- Ancillary probate proceedings for assets outside the decedent’s domiciliary (residential) state
- Identify and locate probate estate assets including any unclaimed funds held by the state
- Preparation of the decedent’s final individual income tax return and/or any delinquent income tax returns
- Preparation of the fiduciary income tax return
- Preparation of accountings for the estate
- Litigation for contested wills including a spousal elective share for the decedent’s augmented estate – portion of decedent’s estate for which spouse otherwise entitled
Many unwelcome tasks associated with trust and estate administration, as well as disputes among beneficiaries and litigation, may be avoided with advance estate planning and periodic reviews and updates. Alternately, post-mortem planning can provide the opportunity to negotiate agreement among the beneficiaries to settle a dispute through a binding Nonjudicial Settlement Agreement.
Post-mortem planning also includes planning for filing Fiduciary Income Tax Returns. Whether the income tax return is required for a trust or the estate of a decedent or an election is made to file the return for the combined trust and estate of a decedent, these returns can be complex and result in unnecessary income taxes without proper guidance and planning. Fiduciary income tax returns have compressed accelerated income tax rates which also apply to the 3.8% net investment income tax as compared to those that apply to the individual beneficiaries of an estate and/or trust. Planning includes making distributions of income including investment income, out to the beneficiaries for which the trust/estate is given a deduction for these distributions and which income is passed through to the beneficiaries and thus taxed with more favorable thresholds for increased rates.