Earlier this summer, I took a big risk—I took on, and successfully completed, a DIY plumbing project. As often as I advise my clients to seek professional advice, my wife Heather (rightly) notes my hypocrisy in being a frequent visitor to Home Depot and Menards (11% discount!). In my case, the ramifications of an unsuccessful plumbing project would have been immediately obvious. In contrast, the ramifications of an incomplete trust or estate administration matter may have significant financial implications and even be hidden for several years.
In this month’s update, I provide a brief overview of three general tasks associated with post-death administration, and how our law firm can help with these tasks for even the most fervent do-it-yourselfer.
Debts, Expenses and Taxes
First, before assets can be transferred, expenses and debts must be paid by the named fiduciary. In general, the fiduciary must:
- Arrange for the payment of legitimate debts and expenses;
- File a final personal income tax return for the year of death;
- Determine if post-death income requires the filing of an income tax return on behalf of the trust or estate;[i] and
- Determine if any estate tax returns need to be filed.[ii]
Our blog includes a timeline for tax filings. If a federal or Minnesota estate tax return is necessary, our paralegals Dallas Jorgenson and Christine Harwood can assist with the preparation and filing of the necessary estate tax returns.
Inventory of Assets and Transfer of Assets
Second, the named fiduciary must gather a complete list of all assets and determine how assets must be legally transferred, as described in our post on the Five Vehicles for the Transfer of Assets. All fiduciaries must carefully inventory the assets and track expenses and distributions. For those assets that pass by Trust, the Trustee should engage Veritage Law Group to commence trust administration, which includes documents by which the Trustee accepts and certifies her role as trustee, and obtains a tax identification number specific to the trust. If real estate is owned in the trust, my attorney colleague Dan Leptuck would be able to prepare the necessary documents to convey the legal title.
Administer the Trust or Estate
Third, if an asset is a “probate asset,” the named Personal Representative must commence probate administration. (A summary of the probate process is available here). My attorney colleagues Jacob Grow and Angela Hjelle at Veritage Law Group would be in a good position to help.
I recently contemplated a different home improvement project that would have required me to risk life and limb to scale the height of our home, and also develop abilities I don’t have with feet on the ground, let alone standing on a ladder. I am pleased to report that I called a professional. Likewise, if you or your clients want to receive professional assistance with trust and estate administration matters, we are here to help, even if it means a review to confirm “no further action necessary.” We look forward to hearing from you.
Cory
[i] If income earned by the estate or trust exceeds $600 in the first fiscal year following death, a fiduciary return needs to be filed.
[ii] For Minnesota residents, if the total value of the decedent’s assets exceeds $3.0 million, a Minnesota and federal estate tax return needs to be filed, even if no taxes are due by reason of marital or charitable deductions.
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