Probate, Estate and Trust Administration

Sometimes people inadequately plan, or do not plan at all, for their death. This can result in a judge determining how a deceased person’s assets will be distributed in probate court. Without proper planning, a deceased person’s estate must go through the probate process wherein a personal representative is appointed to gather and distribute the decedent’s assets. This can be a very time consuming, laborious process. Also, the personal representative is governed by strict rules that they must adhere to in administering and distributing the estate. In some cases, the probate process, if not handled correctly, can subject the matter to expensive and unnecessary litigation. Not only can litigation stem from the probate administration process, but also, a person can initiate what is known as a “Will Contest” action wherein the person tries to get the decedent’s will thrown out of Court or deemed invalid.

Some grounds that people may contest wills on are:

• Certain legal formalities were not followed when the will was signed;
• The will was allegedly replaced by more recent document in which the deceased’s property was to be distributed in a different way;
• The deceased lacked the required level of mental capacity when the will was signed; or
• The deceased was coerced or subjected to undue influence when the will was created.

The prospect of probate litigation suggests why it is a good idea for a person to do proper estate planning to help avoid future family problems. It is also a good idea to consult with an attorney if you have been appointed as personal representative of someone’s estate in order to protect yourself from liability that may be incurred in connection with the administration of the estate. If you need legal representation in this area, you can be assured that our lawyers will be strong and knowledgeable advocates on your behalf to assist you.

Making Wishes a Reality, in Law and in Fact. . .

There are generally three main responsibilities that occur upon someone’s death with regard to their estate assets. Someone, generally a person appointed by the decedent as personal representative, will be responsible for ensuring that 1) The decedent’s assets are collected and managed; 2) All debts, taxes and expenses of the decedent are paid, or properly dealt with; and 3) Administering and distributing the assets for the benefit of the named beneficiaries.

Without delay, the first responsibility of the personal representative is to protect and preserve the decedent’s assets. This includes taking an inventory of the assets, insuring and safeguarding them, and determining their fair market value as of the date of the decedent’s death. Once the assets have been collected, any debts, taxes and expenses must be paid. Keep in mind that there are special rules in Colorado governing how creditors in an estate must be dealt with. Failure to abide by these rules can lead to personal liability on the part of the personal representative. After all debts have been dealt with accordingly, it is then time for distribution of the estate assets. The personal representative must ensure that accurate records are kept of all estate assets and receipts must be obtained from any beneficiary receiving a distribution under the estate. In fact, failure of a personal representative to account for all money and property managed under the estate can subject him or her to civil liability.

The person appointed to undertake these responsibilities must be detail oriented and most importantly, must be willing to take the time to perform these responsibilities in accordance with the law. Administering an estate is not a quick process. It takes a great deal of time away from the person appointed to handle the decedent’s affairs, which may cause conflict within the family or unnecessary pressure to be placed on such a person. In order to prevent this, our attorneys can help with:

• Estate administration before the proper courts
• Life insurance and retirement annuity distribution planning and implementation
• Fiduciary income tax services
• Death taxation compliance (federal estate, state inheritance, state estate, generation skipping and foreign taxation)
• Trust administration

We use our knowledge of Colorado and federal laws and our practical experience to help estate administrators and trustees marshal and distribute assets in an economical manner that maximizes assets for the deceased person’s intended beneficiaries. Under our guidance, we also ensure that the personal representative fulfills his or her legal duties including, but not limited to the following:

• Locating the will;
• Making funeral arrangements;
• Protecting the estate’s assets:

o Arrange for safekeeping of valuables;

o Cancel subscriptions, credit cards, club memberships, etc.; and

o Make sure that the decedent’s property remains insured.
• Valuing the estate:

o Assessing a value for the decedent’s property, such as household goods, furniture, automobiles, and other personal effects;

o Determining the benefits payable under insurance policies and pension plans; and

o Preparing a detailed inventory of assets and liabilities.
• Handling tax issues:

o Determine capital gains taxes, if necessary, at the date of death;

o Make elections, if any, under state and federal law; and

o Prepare and file final income tax returns, and if applicable, an estate tax return.

• Administering and distributing the estate:

o Filing the necessary documents with the Court to carry out probate;

o Settle all claims and debts of the decedent;

o Investing surplus cash and managing investments to ensure that enough money is available to pay income tax and other liabilities;

o Delivering personal property to the heirs and obtaining receipts for the delivery;

o Discharging any bank or private loans, mortgages or other liabilities;

o Paying all bequests pursuant to the decedent’s wishes;

o Distributing assets to the beneficiaries;

o Preparing a full accounting of the estate’s administration and submitting it to the beneficiaries; and

o Filing all of the necessary paperwork in order to close the estate.

Not only do personal representatives have legally required obligations to fulfill, trustees must also comply with certain requirements in administering trusts. Some examples of a trustee’s duties are as follows:

• Remaining apprised of the powers that they have been given under the trust, including but not limited to:

o The power to retain property that is left in the trust;

o The power to vote stocks and maintain business interests and real estate held in the trust;

o The power to hold stock and securities in nominee name in order to simplify sales and facilitate transactions;

o Investment powers

o Power to allocate income among beneficiaries’

o Power to sell or exchange trust assets;

o Power to set up reserves for repairs, maintenance and replacement of certain trust assets;

o Power to settle claims or pursue claims on behalf of the trust; and

o Power to borrow money, if necessary.
• Assisting the beneficiaries and making distributions as needed;
• Maintaining confidentiality;
• Exercising discretionary power to distribute principal, if applicable;
• Keeping proper records of trust assets and providing accountings to beneficiaries;
• Ensuring that all taxes are paid on behalf of the trust and supplying tax information to the beneficiaries; and
• Abiding by the terms of the trust agreement.