When a financially stable loved one passes away, and you’re named the executor of the deceased person’s estate, you’ll have to take the challenging job of acting as the executor for the loved one’s estate. Good for you! However, this role can be a lot of work. This blog will go over how to handle key non-tax financial issues when a loved one passes away.
The Executor’s Role
When a loved one passes away, someone has to take responsibility for the resulting financial fallout. That person is identified in the decedent’s will as the executor of the estate. If there’s no will, then the probate court will appoint an administrator. The administrator is often the surviving spouse or another family member.
The executor’s role is to identify the estate’s assets, pay off its debts, and distribute the remainder to the rightful beneficiaries and heirs. The executor is also responsible for filing necessary tax returns and arranging the payment of taxes.
Should I Hire a Professional Executor?
Hiring a professional executor can be helpful in certain circumstances. For example, if the wealthy decedent has complicated financial affairs, it can get knotty, and having one can be of great use for the executor. Also, it is not unusual for executors to face problems with uncooperative heirs. Having a professional executor can settle any disputes without you having to get involved.
Must the Estate Go Through Probate?
A majority of well-off individuals put their most valuable assets into a revocable trust, which can also be known as a family trust, living trust, or grantor trust. However, if the decedent fails to take that step, probate will be necessary.
Probate is the legal process that includes proving that the decedent’s will (if it exists) is valid. It also identifies the decedent’s assets, having them appraised, paying the estate’s debts and taxes, and finally issuing the remaining assets as specified by the will. If a will is not available, then the assets will be distributed according to the applicable state law. Probate can be a long and expensive process. It can also delay the winding up of the estate for an extended period of time. That is why we recommend that people have patience when going through this process.
Selling a High-End Home
If the decedent was widowed at the time of death, the heirs will likely want to sell the place. In many areas, there are different home selling-seasons. Your real estate agent will most likely encourage you to sell the estate during that season. You may be presented with a ready-for-sale deadline that could be much sooner than preferred. Time pressure is something executors will have to get used to! If the decedent was married, the surviving spouse might want to move closer to relatives, move to a low-tax state, or simply downsize. If the surviving spouse is elderly, they’ll probably want to move into an assisted living environment as well. The executor may feel morally obligated to arrange for the surviving spouse’s move on top of arranging to sell the estate. Be prepared to be busy!
Changing the Title of the Home
You might have to change the title of the home before selling it. This could be the case if the house was owned by a revocable trust in order to avoid probate. If the decedent was single, then the trust is now an irrevocable trust because the individual who set it up has died. If so, then the title will have to be changed to reflect that. There are many situations that require changing the title of the home, so keep this step in mind.
There are many circumstances executors will have to face when clearing up the affairs of a deceased financially comfortable loved one. When handling these affairs, remember that this is a process that can take months, so be prepared to put in time and effort. We hope this blog helped you get an idea of how to handle key non-tax financial issues when a loved one passes away. At MFI Works, we know these topics can be complicated, so don’t hesitate to contact us if you have any questions. To schedule a free initial business strategy session, click here.
