Why Administration Is Important In Estate Planning
When someone meets with an estate planning lawyer, it's easy for the client to focus on what they want to become of their legacy. The administrative component of an estate, though, is just as important. You should care about your estate's administration for the following four reasons.
Settling Taxes and Debts
An estate can go off the rails without a structured approach to settling taxes and debts. Government agencies and creditors have the right to demand settlement of outstanding obligations. Ideally, you want the executor to have sufficient resources and power to identify and pay all creditors before proceeding with other parts of the estate.
Many people planning their estates include some unassigned assets that liquidate easily. This allows the executor to sell those assets and use the converted money for debt settlement. You want the executor to have the necessary administrative power and means to do this promptly.
Working with the Probate Court
An estate's administration doesn't just exist for the sake of the beneficiaries. It also exists to provide the court with a point of contact. If a judge has questions about the disposition of the estate, the executor should be available to answer those. Executors frequently provide updates to the court. When the executor completes the job, they also can provide the court with a detailed report.
For many grantors, this is the whole purpose of the estate. They want the executor to efficiently distribute their assets to beneficiaries as quickly as possible. Working with an estate planning attorney, you can create an administrative structure to accomplish this. You can empower the executor to deal with physical assets like real estate, art, collectibles, and vehicles by providing things like keys and access codes. Likewise, you can provide access to intangible assets like bank and investment accounts.
A legally strong administration is important in distributing assets. If a person approaches a bank about distributing funds from someone's accounts, the bank officials are going to have some questions. The executor should have the tools needed to assert the estate's administrative authority so they can obtain and distribute assets.
Finally, the executor may be liable under fiduciary rules for any damages to the estate. If you're going to ask an executor to take on such liability, you need to provide a strong administrative apparatus to protect them. An estate planning lawyer can help you to ensure that the executor will have sufficient power and protection to minimize their liability exposure.
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