We had just completed the signing of our Clients’ estate planning documents – Revocable Living Trusts, Pour Over Wills, Healthcare and Financial Powers of Attorney; we had a beautifully prepared asset spreadsheet listing out their assets along with our detailed recommendations on titling changes/beneficiary updates to align those with the ultimate dispositions reflected in their estate planning documents. We had a ton of other useful information like flowcharts, funding instructions etc. when our clients ended the meeting with a very thoughtful question – “All of this is great but what is the first thing our children should do if something happens to both of us? How does the Will get “probated”? Can our children follow your guidelines and take care of the estate themselves or do they need your help? Our kids will no clue as to where to begin!!”
That question got us thinking and has been the inspiration for this Consumer Guide which we hope will inform and educate clients both existing and potential on what exactly families should consider if both spouses die leaving behind children and/or other beneficiaries.
Important Disclaimer: while this guide is meant to provide general advice to all individuals (both single unmarried as well as married couples with or without children), this guide was not meant to be exhaustive, capturing every nuance that may be unique only to your particular situation. Our hope is that for those of you whose situation does not fit squarely within the assumptions noted below, then you will give us a call so we can further discuss. Below are the assumptions:
- that some type of foundational plan is already in place (Will/Revocable Trust) etc.
- that there are 2 parents leaving behind assets to their children
- all individuals and their fiduciaries are United States’ citizens
- if the children are minors, then the named fiduciaries have close ties to the family
Fiduciaries: these are your trusted individuals appointed to serve as Executor of the estate, Guardian of minor children or Trustee of any trust assets. These individuals sole function is to ensure that any action taken is done in line with the best interests of the beneficiaries of the estate and/or minor children
- Executor: we call this person the manager or representative of the estate. His or her job is to go through the court formalities to get appointed, then marshal up all of the assets in the estate, pay of debts & expenses if any, then distribute the assets pursuant to the Will
- Trustee (or guardian of the property): this individual is appointed to serve as the guardian of property either for a limited duration or for the long haul (a/k/a lifetime trusts). They usually can appoint successors in case they cannot serve and they can also be removed by all the beneficiaries if they are not doing a good of managing the trust assets on behalf of the beneficiaries
- Guardian (of the person): these individuals are normally close family members or friends who are willing to step in and take physical charge of the minor children and take care of their day-to-day needs. If the child(ren) lives in a dorm or boarding school, then the Guardian’s role becomes more like that of a Legal Representative for that child(ren) and one who can make legal, financial, social, and healthcare decisions on the child(ren)’s behalf.
Decedent or Deceased: the individual who has just passed away
Testator or Testatrix: the individual who has executed/signed his or her Last Will & Testament
Grantor: of a Revocable Living Trust who established this trust during his or her lifetime.
Probate: the process of admitting the Will to probate so that there is court oversight from start to finish
- Probate Assets – are assets that are part of the decedent’s estate and therefore disposed of by Will ex. If the deed to the family home was titled in parents’ joint names, then upon simultaneous death, the home becomes a probate asset
Non-probate: assets that pass outside of the Will either directly to a joint owner or via a beneficiary designation (including “Payable/Transfer on Death” or POD/TOD designations)
So let’s begin:
Let’s presume this was yesterday, and your children have just been dealt with the news that both parents are no more. What is the first thing that needs to be done? Well, nothing … at least for the next ten days as New Jersey law requires everyone to give grieving families a 10-day period during which time no one is expected to do anything with regards to the Will. The public policy rationale behind this is to give families a chance to grieve and mourn and not have to worry about attending to the legal affairs of the estate.
Once that 10-day period is over, then here are some recommended steps for beneficiaries that may be followed:
Step 1: Information Gathering
- Look for the estate planning documents
The first thing you want to look for is the original Will. Did your parents tell you whether they had their estate planning documents prepared? More importantly, did they tell you where the originals were kept? In our office, on signing day, we always instruct our clients that we will be giving them back all original signed documents in a binder so it is important for them to (1) inform their fiduciaries about who we are (note: our business card is included within in the binder); (2) to let them know where they are planning to keep our binder (ex. locked filing cabinet in home office or vault in basement etc.); and if kept locked, then where can they find the key or combination/password.
- Review the Will. Notify those who are serving as the appointed Executor (Guardian or Trustee) where applicable
Once you have located the original Will, you will want to review it to see who has been appointed for the various positions. If the Will appoints someone other than you, contact them and let them know what the Will/Trust says. In our office, we provide something called the Confirmation of Names and Fiduciaries Summary that lists all of the people appointed for the various roles along with their current address and phone number. During the signing, we encourage our clients to share this document with these individuals right away, so they know exactly what role they are serving and when they might possibly be called in.
- Review the Assets in the Estate. What assets are in the estate of the deceased person?
Next, look for all asset information. If you have not completed your estate plan with us, then you will want to go through all of the places your parents may have saved their financial documents. In this digital era when a lot of account statements are generated online, it may very important to know a list of institutions and banks where your parents have accounts. In our office, our Asset Integration Worksheet or AIW is a revered document. This is where list out a snapshot of our clients assets (from across the globe) and gear the document towards estate administration. We empower our clients to keep the document updated each year or, for a nominal fee, help them keep it updated. This way, if the unfortunate happens, beneficiaries have one document to reference to know exactly what their parents left behind. Once you have this information, you can figure out the extent of the complexity and decide for yourselves whether or not you need to engage the services of an estate administration attorney. See Step 3
Step 2: How do you order death certificates?
Your funeral home director will not only help you get the death certificates (DC). The DCs generally arrive 1-3 weeks after death. Once you get this, make sure to look at it carefully for any errors and if any, make sure to inform the director immediately – this will help avoid running into various problems later.
Step 3: Who needs to be contacted?
- Social Security and pension: The funeral home typically informs the Social Security Administration on your behalf. Note that typically social security benefits terminate at the death of the surviving spouse unless there are minor children or adult children with disabilities. If your family situation happens to fall into this category, then be sure to call up the SSA office on your own to establish ongoing payments. Same as true for pension benefits except you will need to contact the relevant department within the company/organization to reinstate pension where applicable
- Banks & Institutions: Depending on the complexity of the estate assets, you may require our help in contacting these institutions and helping you release the accounts over to the estate and/or trusts established for the beneficiaries. This is where it will be important to call our office as soon as possible to schedule a call to discuss next steps and to find out whether any inheritance or estate taxes may be due or if any estate income tax considerations need to be taken onto account for that year, if waivers need to be filed with the State Tax Branch and/or if trusts need to be set up
Step 4: What’s the time commitment your fiduciaries are looking at to administer an estate? Normal time frames could range anywhere from 4 to 6 months to several years (especially if there is a business involved or if the matter becomes contested) with the probate of a Will. Revocable Living Trusts avoid probate but there may be some aspects to trust administration (like set up of further testamentary trusts or estate tax filings) that may be necessary. However, both probate costs and time delays due to waivers are significantly reduced when Grantors of Revocable Living Trusts pass away.
Step 5: Common mistakes or traps to avoid
- Schedule the initial consultation with the law firm post death – don’t make the mistake of foregoing this call since there may be aspects of your plan (disclaimer trust planning; portability elections) that are time sensitive.
- Taking out the RMD for the year – which could avoid up a 50% penalty imposed by the IRS
- Account for foreign assets – every US green card holder and US citizen is subject to death taxes based on his or her worldwide assets so its important to consider everything that the decedents owned when thinking about estate taxation. Also important is to see if the decedents have a foreign Will. In our office we guide and counsel several clients with international assets and have always recommended that they set up another Will in the overseas jurisdiction
- Avoid consulting only a CPA and not also an estate administration attorney with the probate of the estate. There are aspects to estate planning that may catch an unwary CPA who is not familiar with estates & trusts off guard and as a result end up giving the wrong advice.
We hope you found this helpful. We would love to hear from you to let us know what you think and if there are other questions that we can address to improve this Consumer Guide. At some point, we plan to include a Frequently Asked Questions Section to this blog so we can consistently inform and educate our clients.
 For any prospective clients reading this Consumer Guide, note that the estate becomes significantly more difficult to probate when no estate planning documents are in place so it is always better to have something than nothing at all. But we strongly encourage you to use a specialized estate planning attorney for even the simplest of Wills as you just ‘don’t know what you don’t know’.