5 Easy Steps to Effectively Administer an Estate or Trust or Conservatorship

Managing an estate is much like managing a trust or a conservatorship. It primarily involves gathering the assets, managing them for creditors, heirs, or any interested persons, and then distributing the assets to the rightful people upon conclusion. With all these entities, there are things you need if you want to effectively administer assets for another person or an estate. Here are five of the most important things:

  1. Hire an accountant or an attorney with estate tax knowledge. Most often, there is no tax issue to deal with if the estate only consists of a house (see the “step up” basis rule) and some personal property; however, I recommend having a tax professional tell you that rather than ignoring what could become a tax nightmare. Accountants sometimes charge a reduced rate to review your file to confirm a return is not needed. For example, if the estate or trust collects dividends, that is considered taxable income, and the estate should file a return for that year you received the dividends. If you close or terminate the estate or trust before paying that taxable income, as the fiduciary, you might be stuck with personally paying the bill or penalty if your forgot about it. By then, the heirs are probably long gone or have already spent their money.
  2. Inventory the assets as best as you can.  In most cases, heirs or interested persons can reasonably work out how to divide the assets. However, in every case, you should itemize and inventory everything as best as possible. Contested cases sometimes materialize overnight. At the very least, put tags like these on every piece of property the estate or trust owns. Take pictures of everything. These practices will separate your stuff from the estate’s stuff, and it will avoid commingling. You should then prepare an inventory. Microsoft Excel works great. We track our assets with Wasp MobileAsset. The price for that may be more than what you are willing to invest for one estate; however, you can use this excel template I made as a guide. It will keep track of what the estate owns, the estimated value, and what the items sold for. I would recommend quickbooks and quicken to track your expenses and income as well. When you conclude your administration, this report is vital to show the interested parties how everything was distributed. If you do not adequately track the personal property and expenses, somebody is going to ask you about a particular item six months into the administration. Without proper tracking, you will not have any idea where that item is located or where it went.
  3. Keep track of your time and expenses. Many executors or trustees that do not regularly to this type of work forget to track their time on a consistent basis. When administration has concluded, they end up trying to estimate how much time they spent. Without calendars or a billing system, estimating in lump sums will get contested and you may not be able to charge at all or at a very reduced rate. Buy a cheap or free calendar and put down your hours for each day. You can calculate a reasonable hourly rate later. Don’t forget about mileage either. Expenses are also reimbursable.
  4. Get appraisals or a market analysis for assets. If you are selling land or valuable assets, nothing is better than a professional appraisal to back up your sale. They are also great expert witnesses to rely upon in contested cases. Where there have been disputes over sale of assets, and the ones that stand up are professional appraisals behind them the sale. The assessed value with the county’s assessor and Zillow will give you a good estimate but do not solely rely on them.
  5. Never buy or take estate owned for yourself. This is axiomatic, but it needs to be repeated. Someone else has put you in charge to handle the estate or conservatorship. Someone entrusted you to do the right thing on behalf of the others involved and to not take from the estate. Even if you buy it for market value, you are putting yourself in a compromising position. Further, the transaction could be voidable if it is not expressly authorized by the court and after notice of interested persons.

 

In many cases, you probably can do most of the work on your own if you follow these rules. If you need assistance, maybe even limited advisement, please call the Grand Junction Estate Attorneys, Reams & Reams at 970-242-7847.

Filing for Probate? Consider a Small Estate Affidavit (Updated 2020)

If you are the nominated personal representative of a Will, you have a lot of questions. The most important one is where to start. Do you need to file a probate proceeding or not? (For a quick overview of your duties, please see Colorado Bar Association’s article: So Now You Are A Personal Representative.)

There are two rules that require probate filing: (1) If the estate owns real property (exclude properties in joint tenancy or beneficiary deeds); (2) or the estate has more than $7,000 (2020) less liens and encumbrances. If you do not meet these criteria, you can use this form and not file a proceeding: Affidavit for the Collection of Personal Property

To reiterate those rules:

  • There is no real property in the decedent’s sole name (check the Assessor’s Online Lookup and the Mesa County Clerk and Recorder to review the chain of title to the property and the vesting deed) and the estate has less than $70,000 (see above) in assets less liens and encumbrances;
  • At least ten days have elapsed since the date of death;
  • There is no appointment of a personal representative pending in this district or any other state; and
  • You swear you are the successor to the estate

With the Small Estate Affidavit, you can: (1) collect assets from a financial institution; (2) transfer or sell vehicles in the decedent’s name (the DMV will require the use of its own form); (3) authorize cremation or deal with funeral services;  (4) deal with creditors of the estate; or, but not limited to (5) distribute assets to heirs. That means you can do everything as the personal representative but without a court proceeding.

However, anyone who uses the Affidavit is still held accountable for any action they make on behalf of the estate. If there is a Will, follow the terms of the Will. If there is no Will, you must follow the Colorado Revised Statutes regarding intestate succession.

One major disadvantage of not filing is the creditor period. If you do not file a proceeding, you must wait one year from the date of death for all creditor claims to expire (there are exceptions to this). If you file an proceeding and publish notice, you can reduce this period down to four (4) months from teh first publication date.

If you need assistance with the estate administration, please contact the Estate Attorneys at Reams & Reams, (970)-242-7847.

The material presented on this site is included with the understanding and agreement that Reams & Reams is not engaged giving legal advice by posting material on this website. The services of a competent professional should be sought if legal or other specific expert assistance is required. Further, the firm does not wish to represent anyone desiring representation based upon viewing this website in any state or jurisdiction where this website fails to comply with all laws and ethical rules. The firm is also only licensed to practice in the State of Colorado. Any material presented on this site may be different or incorrect in another state. Please consult any attorney before using any of this information.