How Estate Size Will Influence Your Estate Plan

15 Friday Sep 2017

Posted by Robert Dowling in Planning Tips

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Abatement, Abatement Process, Asset Management, Beneficiary, Bequests, Debts, Earned Income After Death, estate, Estate Income Taxes, Estate Obligations, Estate Plan. Common Estate, Estate Planning, Estate Size, Estate Taxes, Expenses, Large Beneficiary Pool, Net Worth, Order of Payment, probate, Probate Avoidance Strategy, Probate Court, Retirement Accounts, Simplified Probate Process, Small Estate, Tax Planning, Tax Professional, Unintended Consequences, Well-Funded Estate, Will

To properly plan your estate, it’s important to understand how your estate size will influence your estate plan. As explained in the article The First Step to Estate Planning: Estimate Your Net Worth, your net worth will determine your estate size. By calculating your net worth, some important questions will come into focus regarding your estate plan:

Are there enough assets to cover your debts and other estate obligations?

If there are enough assets to cover the estate obligations, are the remaining assets enough to cover bequests?

Do I need to plan for estate taxes or estate income taxes?

Do I need to plan for abatement?

Obviously, these are just a few basic questions as life circumstances can make estate planning much more complicated. However, the answers to these questions will influence how you begin to properly plan for your estate.

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Two Reasons Why a Beneficiary May Become Belligerent

11 Monday Sep 2017

Posted by Robert Dowling in Beneficiaries

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Abatement, Abatement Process, Ademption, Ademption by Extinction, Belligerent Beneficiary, Beneficiary, bequest, Claims, Common Estates, Contest The Will, Doctrine of Ademption, estate, Estate Assets, Executor, Expenses, Identity Theory, Probate Avoidance Strategy, Taxes, Threaten Lawsuit, Will

There are many reasons a beneficiary may become belligerent. However, according to the article How to Handle a Belligerent Beneficiary, one way a beneficiary acts out towards an estate is to exercise their right to contest the will or threaten a lawsuit. Moreover, there are two legitimate reasons why a beneficiary may exercise such a right: abatement or ademption.

Unfortunately, the executor must inform each beneficiary named in the will that they are part of the estate. If the beneficiary understands the bequest they may receive, the beneficiary will expect that bequest at some point. So, if abatement or ademption affected a bequest, the intended beneficiary may become belligerent. As a result, the belligerent beneficiary may contest the will or sue the estate.

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Paying Debts and Honoring Bequests through the Abatement Process

21 Monday Aug 2017

Posted by Robert Dowling in Probate

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Abatement, Abatement Process, Administration Expenses, Administration Plan, Attorney, Beneficiaries, Bequests, Claims, Common Executor, Creditors, decedent, Estate Assets, Estate Expenses, Estate Planner, Executor, Expenses, Funeral Expenses, Intestacy, Personal Property, Real Property, Will

When an executor realizes the estate lacks the assets to meet estate obligations, including bequests, an abatement process occurs. The abatement process allows for the proportional payment of obligations using limited assets that result in reducing or eliminating bequests to beneficiaries.

Initially, to determine the need for abatement, the executor will build an administration plan as described in the article The Administration Plan: A Necessity for the Executor. If the plan reveals that the estate lacks the assets to meet estate obligations, then abatement will result. Additionally, if the will excludes abatement instructions, estate law will handle the abatement process. This article will provide an overview of how estate law in Massachusetts handles abatement.

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Close the Temporary Home Office

14 Monday Aug 2017

Posted by Robert Dowling in Record Keeping

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Acting Executor, Amended Returns, Beneficiaries, Death Certificate, Distributions, estate, Estate Administration, Estate Tax Returns, Executor, Executor Approval Letter, Expenses, Filing System, Formal Probate Process, Former Executor, probate, Storage Boxes, Temporary Home Office

After closing an estate, the most gratifying task for an acting executor is to close the temporary home office. Typically, after satisfying all the rules of probate in a formal probate process, the executor will close the estate. As a result, the executor becomes an acting executor responsible for closing tasks as described in the article Estate Income Tax Returns: Review and File the Returns. In the end, the one closing task an acting executor likes is the final task: the task to close the temporary home office.

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The Estate Income Tax Returns: Prepare the Tax Documentation

24 Monday Apr 2017

Posted by Robert Dowling in Estate

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1099's, Belligerent Beneficiary, Beneficiary, Estate Income Tax Returns, Expenses, Federal Estate Income Tax Return, Final Tax Returns, Income, Inherit, Rental Property, Social Security Numbers, Tax Documentation, Tax Planning, Tax Professional

In May 2013, soon after meeting with the belligerent beneficiary, my focus turned to the estate income tax returns (returns). After reviewing the tax documentation used for the final returns, I became uncertain about the tax documentation needed to prepare the estate income tax returns. That uncertainty gave me reason to pause. This is when I realized that this chaotic estate was going to close on time. After months of worrying about the run-down rental property, the tenants, and associated expenses, the estate would actually settle on time. So, with the returns not due until December 15^th, there was no need to rush. Furthermore, instead of wallowing in uncertainty, I called the tax professional for some guidance on the tax documentation.

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Selling the Estate Rental Property: Accepting an Offer

30 Monday Jan 2017

Posted by Robert Dowling in Estate

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Accepting an Offer, Beneficiaries, Contract to Purchase Real Estate Form, Estate Rental Property, Executor, Expenses, Home Inspection, Investors, Mortgage, Negotiate, Offers, Open House, Realtor

On the day after the open house, I never thought I would be negotiating and accepting an offer so soon. In the article Selling the Estate Rental Property: Listing the Estate Rental Property, I set the listing price to $225,000.00 and agreed to an open house scheduled for April 1, 2013. So, on April 2nd, I became anxious when the realtor called me at work. Then, I became elated when the realtor told me about three offers made at the open house. The realtor described the offers as follows:

The first offer was for $225,000.00 pending a home inspection. The realtor went on to explain that this couple will have difficulties obtaining a mortgage.
Next, the second offer was for $240,000.00 pending a home inspection. The realtor made it clear that this couple should easily obtain a mortgage.
The last offer was for $195,000.00 cash. The offer was from investors that agreed to waive the home inspection.

The third offer caught my interest and I told the realtor as much. In response, the realtor agreed with me since the house structure had some problems that a home inspection would reveal. However, I thought the price was too low. So, I wanted to discuss the offers with a few beneficiaries, including my sister. The realtor understood but told me that investors made the offer and need an answer by noon tomorrow. I told the realtor that I would call the next morning with a decision.

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The Implications of Redeeming Savings Bonds that are the Property of the Estate

12 Monday Dec 2016

Posted by Robert Dowling in Taxes

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1099-INT, Beneficiary, decedent, estate, Executor, Expenses, Final Return, Formal Probate Process, Interest Income, IRS, IRS Publication 550, Redeem Savings Bonds, Savings Bond Registration, Savings Bonds, Series E Savings Bonds, Series EE Savings Bonds, Series I Savings Bonds

When redeeming savings bonds that are the property of the estate, reporting rules from the IRS can make the transaction a little complicated. As depicted in the article Redeeming Series E Savings Bonds of the Decedent, redeeming savings bonds isn’t a difficult process. However, reporting the interest income on the savings bonds are where the complexities exist. Moreover, since most common executors are unaware of these IRS reporting rules, implications may result.

Note: Savings bonds in this article refer to series E, series EE, and series I savings bonds. Reporting rules from the IRS for these three series of savings bonds are similar. Also, savings bonds become property of the estate in one of the following ways:

The savings bonds registration is only in the name of the decedent.

The co-owner or beneficiary pre-deceased the owner.

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Commit Enough Assets to Cover Expenses in Your Estate Plan

22 Monday Aug 2016

Posted by Robert Dowling in Planning Tips

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Asset Class, Assets, Avoiding Probate, Beneficiaries, Estate Assets, Estate Plan, Estate Planning, Expenses, Life Insurance, Liquid Assets, probate, Probate Avoidance, Tangible Assets

When planning your estate, make sure you commit enough assets to cover expenses in your estate plan. Unfortunately, when you die, your expenses live on. Furthermore, your executor and beneficiaries are not responsible for payment of these expenses. In most common estates, the expenses your executor will most likely handle are some of the following:

Unsecured debt. This includes credit cards, medical bills, and utility bills. Other types of expenses for homeowners are home repairs, property tax, and home insurance.

Secured debt. These debts include car loans and mortgages. Typically, these expenses pass to the beneficiary that inherits the asset if they accept the bequest.

Administrative expenses. These expenses include funeral costs, estate administration costs, attorney fees, and other professional services needed to administer the estate.

Depending on the complexity of your estate, not all expenses listed above will arise. However, for the expenses that may occur, it’s necessary to set aside assets to cover expenses in your estate plan.

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The Administration Plan: A Necessity for the Executor

19 Tuesday Jul 2016

Posted by Robert Dowling in Planning Tips

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Administration Plan, Assets, Beneficiary, Details of the Estate, Executor, Expenses, Inventory of Assets, Will

Once approved as executor, the executor needs a coherent administration plan before closing the estate assets. Without such a plan, costly oversights occur as described in the article Understand the Details of the Estate.

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The Common Executor

~ A Journey into Estate Administration

Tag Archives: Expenses

How Estate Size Will Influence Your Estate Plan

Two Reasons Why a Beneficiary May Become Belligerent

Paying Debts and Honoring Bequests through the Abatement Process

Close the Temporary Home Office

Selling the Estate Rental Property: Accepting an Offer

The Implications of Redeeming Savings Bonds that are the Property of the Estate

Commit Enough Assets to Cover Expenses in Your Estate Plan

The Administration Plan: A Necessity for the Executor