Last week we learned the Dos and Don’ts after losing a loved one. This week we’ll explore the Top 4 Estate Administration Mistakes.
The first mistake is Going to the Clerk of Court before Seeking Legal Advice. As discussed last week, going to the Clerk of Court first can lead to filing an unnecessary full estate or even a collection for a small estate; often a spousal years’ allowance is all that is needed. A full Estate Administration leads to a long process of filings and deadlines that may have been avoided. Tied to this mistake is not seeking legal advice. There are times when an estate administration isn’t necessary. Other times, a full estate must be opened. An attorney will take the time to review the assets of the deceased and will note them properly on the filings. Some assets are distributed outside of an estate (Life Insurance, IRAs, Pay on Death Accounts to name a few along with survivorship real estate and/or life estates). Some of those need to be included on the filings with the Clerk of Court and some do not. Including property that is not supposed to be on the filings – especially when there are debts – can cause problems.
Another mistake is paying expenses that shouldn’t be paid from the deceased’s account or estate account. Examples of these expenses are food to feed the family after the funeral, travel of the family to or from the funeral, and expenses related to the real property owned by the deceased (electricity bill, mortgage, insurance, etc.). These expenses, and some others, are not legally allowed to be paid from the estate account and must be paid back. Similarly, paying debts of the decedent, just because you received the bill, can lead to trouble. Some debts have priority over other debts, so if you pay a debt without a priority and run out of money without paying all the valid debts creates personal liability. The Executor will have personal liability for anything that is paid improperly.
The third mistake is withdrawing cash from an estate. If you have an invoice for $27.32 and withdraw $40.00 to pay it, there is an excess of $12.68; your accounting won’t balance and can’t be approved. All expenses from the estate must have an accompanying receipt. Cash causes problems when completing an accounting or inventory and you won’t remember what happened to the excess. The excess needs to be deposited back in the estate account but is often forgotten. Again, you’ve created personal liability for the Executor.
The fourth mistake is not confirming ownership of vehicles and trailers. This is often an issue when the deceased is married and the title of the vehicle is jointly owned or in the deceased’s name. Vehicles are often forgotten about when considering assets owned by the deceased. If husband passes away in 2015, wife passes away in 2020, and the vehicle is still in husband’s name (sole or joint with wife), an estate must be opened for the husband to transfer the vehicle to the deceased wife’s name and then you must open the second estate to get a clean car title so the vehicle can be sold or distributed.
If you want to avoid these mistakes, or if you’ve already made a few but need help, call us today at 919-256-7000 to schedule an appointment!