By Kimbra Spann, Principal 5 Star Title of Tennessee
We will all most likely encounter the news of losing our parents at some point in our lives. Navigating the next steps in fulfilling their wishes is the first issue looming before you. One of the most concerning issues which may arise is finding out that no plan exists for your parents. So, before anything happens, a gentle question about whether a plan has been formalized with an attorney will create a much smoother process for you, and any other heirs or beneficiaries of the estate, later on.
I recommend contacting a trusted attorney to determine how to proceed, whether a plan is in place or not. Often the same attorney who prepared the estate plan in question is a good person to contact. Any attorney consulted will need documents governing the estate. Your parents were most likely advised by their attorney to notify their children of the location of their documents. Many times, those documents are located in a safe place in their home or protected in a lock box at their bank. Difficulties in locating documents can arise and can cause delays.
If a plan has been formalized, there are basically two types: a will-based plan or a trust-based plan. The first step is to review the documents in conjunction with an attorney, and determine the person named by your parents to fulfill those wishes, whether a Personal Representative (for a probated estate) and/or a Trustee (for a Trust.) What is the difference between these two types of fiduciaries?
A Trustee is named for the administration of your parents’ plan through an existing trust. This plan will usually avoid the probate court process unless some assets were not transferred to the trust.
A Personal Representative is appointed if your parents’ plan is a will-based plan, or if the trust used did not hold all your parents’ assets. This process is more streamlined and easier for the Personal Representative if an attorney is hired to assist to ensure compliance with court deadlines and advise on issues as they arise.
Some other issues can create a less than ideal process. You may be displeased with the trustee or personal representative named in the plan documents, which may require that you work with an attorney to get them removed or prevent them serving in their fiduciary role. If you are a beneficiary, you may need a separate attorney since the attorney representing the Personal Representative or trustee may have a conflict of interest in representing your interests. Bickering among beneficiaries can derail a smooth process. In addition, if you are the named fiduciary, then you may have choices which can affect the taxes owed to the government.
What is the best advice to be given? Consult with a trusted attorney, regardless of whether your parents had an estate plan formalized, or whether you are navigating the probate process where there is no will. An attorney can make the difference between a smooth process and one fraught with challenges.
Kim Spann is a member of the Jewish Federation of Nashville Professional Advisory Council (PAC). For more information about the PAC members and upcoming seminars, contact Eric Stillman at eric@jewishnashville.org.
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