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Probate Checklist

Preliminary Agenda/Checklist of Probate Actions For Decedents Passing in 2013

Effective as of Friday, May 17, 2013 Note: This checklist is provided as a service to the public. It does not cover every issue and fact pattern and does not provide any tax, legal or probate advice to any specific person or estate. Each particular estate will have unique issues. Contact competent legal counsel to discuss the estate and the matters outlined in this checklist.

Copyright John J. Scroggin, 2013. All Rights Reserved.

    • Understanding Fiduciary Responsibility and Liability
      1. Authority and Duty of the Fiduciaries and Decision Making
      2. The Use of Letters Testamentary
      3. Fiduciary Fees
        • Fiduciary Fees Taxation
          1. Fees are subject to Income Taxes
          2. Excluded from Social Security Taxes
        • Computation of Fiduciary Fees (review Will and Statute)
      4. Deadlines
        • Tax Deadlines for Income Taxes and Estate Taxes
        • Disclaimer Deadline – 9 months
      5. The Timing of the Process
      6. Tax Issues
        • Paying the Taxes of the Decedent
        • Paying the Taxes of the Estate
        • The Executor’s Personal Liability for not paying Taxes
        • Order a copy of IRS Publication 559
      7. Note: Any Power of Attorney signed by the Decedent is Revoked at Death
    • Filing the Will for Probate with Petition for Probate
      1. Petition Signed by Heirs at Law
        • Process for Lost Heirs or Unresponsive Heirs
      2. Needed:
        1. Original Last Will and Testament
        2. Copy of the Death Certificate
      3. Executor is Sworn in and Obtains Letters Testamentary from the Probate Court – Generally request ten (10) Letters Testamentary to Start
    • Understanding the Difference between the Probate Estate and the Taxable Estate
  • Initial Items Needed by Probate Counsel (as soon as possible)
    • Original of the Will and Any Trusts
    • Copy of the Death Certificate
    • Copy of the Last Filed Federal Income Tax Return
    • Financial Statement for the Decedent
    • Copy of any Beneficiary Designations for IRAs, Retirement Plans and Life Insurance
    • Copy of any “Pay on Death” Designations for any Accounts
    • Information on Life Insurance on the Decedent
  • Other Items Needed by Probate Counsel (over time)
    • The Last Three Years Filed Income Tax Returns for the Decedent
    • Brokerage Statements as of the Date of Death
    • Retirement Plan and IRA Statements as of the Date of Death
    • Details of any Stock Options, Warrants, and other Compensation Rights
    • Life Insurance Policies
    • Deeds for any Real Estate owned by the Decedent
    • With regard to each Business:
      1. Stock Certificates for any Business Entities
      2. Minute Books for any Businesses
      3. Last Two years Income Tax Returns for any Businesses
      4. Any Buy-Sell Agreements for the Business
    • General RecommendationDo Not provide for any movement of Assets until there is a clear picture of the Entire Estate. Such movement can create Adverse Creditor and Tax issues. This especially includes Financial Accounts, Retirement Accounts and IRAs.
    • Review Terms of the Will
      1. Special Bequests
      2. Funding of the any Charitable Bequests
      3. Funding of any By-Pass Trust
        1. Discuss Trust Funding, Terms, Investments and Distributions
        2. Discuss any Limited Power of Appointment
      4. Funding of any Marital Trust
        1. Discuss Trust Funding, Terms, Investments and Distributions
        2. Discuss any Limited Power of Appointment
      5. Discuss possible Conflicts and No Contest Clauses
      6. Discuss the Use of Disclaimers to Move Assets – due within 9 months
        1. Discuss why Disclaimers can make Sense
      7. Determine whether there have been any Advancements of any Bequests
    • Determine Ownership of Assets & Value – this will be an On-Going Activity
      1. The Decedent’s Individually Owned Assets
      2. Assets Passing Outside the Probate Estate (but which may be taxable)
        1. Jointly Held Assets
        2. Beneficiary Designations
        3. POD Payments
      3. Appraisal of Non-Readily Marketable Assets for Tax Basis Purposes and Estate Tax Purposes (e.g., businesses, real estate, other investments)
      4. Dealing with Final Salary Related Payments, Stock Options and other Compensation
      5. Dealing with any Assets outside Georgia
        1. Ancillary Probate in other Jurisdictions
        2. Estate and Inheritance Taxes in other States and Countries
      6. Obtain access to any Safety Deposit Boxes
      7. Determine if there is any Debt owed by any Heir
      8. Determine if there is any Asset on Loan to an Heir or Third Party
      9. Create a List of Assets, Debts and Values as of the Date of Death
        1. Create a Notebook of supporting Documentation
        2. Compare the List to Information on the Income Tax Returns
    • Dealing with Existing Entities
      1. Dealing with the Existing Trusts – discuss terms, funding and investments
        1. Revocable Living Trusts
        2. Irrevocable Life Insurance Trusts & Inclusion of Life Insurance Proceeds
        3. Charitable Trusts
        4. Trusts created by Others – where Decedent was a Beneficiary or Trustee
        5. Other Trusts
      2. Business Entities
        1. The Sale, Transfer or Closing Down of the Business
        2. Operational Issues
        3. Discuss of Existing Buy-Sell Agreement and Funding of Purchases
        4. Make sure all Tax filings and payments are current (e.g., income taxes, payroll taxes, sales taxes, real estate taxes)
    • File Initial Forms with the IRS
      1. Federal ID # for the Estate (IRS form SS-4)
      2. Notice of Fiduciary Appointment with the IRS (IRS form 56)
      3. Power of Attorney (IRS form 2848)
    • Creation of Estate/Trust Bank Account(s)
      1. After Swearing in and Obtaining Tax ID Numbers for the Estate
    • Notifications
      1. Creditors (with copies of Death Certificates)
        1. By Letter and Calls
        2. By Newspaper Advertising
      2. Payors (with copies of Death Certificates)
        1. Social Security –  Changes in Payments from Social Security
          1. Note: Small payment from SSA for Burial
        2. Pensions, etc.
      3. Life Insurance Carriers
        1. Obtaining payment and IRS form 712 from the Carrier
      4. Banks and other Financial Accounts
      5. Veterans Affairs – check on any benefits (small burial fee)
      6. Small payment from Social Security
    • Payment of Creditors
      1. Discuss possible Settlements of Claims
      2. Discuss Years Support to Protect a Surviving Spouse and Minor Children
      3. Note: Under Federal Law, a mortgage passing to a surviving spouse cannot be called.
      4. Discuss how cancelling Credit may harm a Joint Debtor (e.g., a credit card in a husband and wife’s name)
    • Disposition of Assets
      1. Timing of Dispositions – after handling tax and creditor issues
      2. Personal Property Divisions and Shipping
      3. Making Decisions with regard to Retirement Accounts and IRAs
        1. The Choices
        2. The Tax Results
      4. Disposal of Other Assets
      5. Discuss if particular heirs want Particular Assets
        1. Treat an Heir’s Debt as a part of their Inheritance
      6. Discuss Liquidation of Assets versus Assets passing to particular Heirs
    • Completion of the Estate and Transfer of Assets
      1. Approval of Heirs
      2. Approval of the Court
      3. Leaving the Estate Open
    • Investments
      1. Maintain Adequate Liquity for the Expenses and Debts of the Estate
      2. Review the Tax cost associated with the Investments
      3. Generally invest in Limited Risk Investments
    • Transfer Taxes
      1. Federal Estate Tax Returns (IRS form 706) – due within 9 months
        1. Filing can be Extended, Taxes cannot normally be extended
      2. The Impact of Portability of the Decedent’s Exemption on the Filing of an Estate Tax Return
        1. Requirement of a Filing to Obtain Portability
        2. Timing of the Decision
      3. Understanding the different Rules for Non-US Citizens
      4. Lifetime Gifts can reduce the Estate Exemption
        1. Any Prior Year Taxable Gifts before 2012? Obtain copies from the Estate or the IRS (IRS form 4506)
        2. Any Gift Tax Returns (IRS form 709) to be Filed for 2012?
        3. Needed: Copies of all Prior Gift Tax Returns
      5. State Estate Tax Returns – none in Georgia but may be Imposed in other States
    • Income Taxes
      1. Make sure the prior year Income Tax Return has been filed
      2. File a Personal Income Tax Return for 2013 (IRS form 1040)
        1. The Surviving Spouse can filed a Joint Return for the Year
        2. Income from beginning of year to date of Death – then income belongs to the Estate
        3. Use of Expiring Tax Loss Carry-forwards in the Final Return
        4. Tax Elections on the Tax Returns
        5. Needed: A copy of the 2011 and 2012 Income Tax Returns
      3. Estate/Trust Income Tax Return During Probate/Estate Process (IRS form 1041)
        1. Analyze how to reduce the income tax burden of the Estate – the tax rate can be very high
    • Obtain an Appraisal of Non-Readily Marketable Assets
      1. The Basis of Assets Step up to their Fair Market Value Date of Death
        1. Allocating the Basis of Assets in Partnerships and LLCs
      2. If the Taxable Estate is Reduced, consider Alternative Valuation Date
    • A few Tax Planning Issues
      1. Alternative Valuation Date
      2. Using Disclaimers to move Assets and Tax Liabilities
      3. Taking Deductions on Estate Tax Returns or Income Tax Returns
      4. Using any Tax Loss Carry-forwards
      5. Getting the Highest Basis
      6. Timing and Distribution of Assets
      7. Charitable Deductions
      8. Other Ideas will Evolve as we obtain more Information
    • Obtain Copies of the Death Certificate (15-20 copies)
    • File Probate Petition (all heirs sign petition) & Original Will
    • Swear in the Executor ( Probate Court)
    • Obtain Letters Testamentary (15-20 copies)
    • File Notice of Appointment with IRS
    • File Notices to Creditors
      1. In Paper
      2. By Notice
    • Obtain Tax ID# for the Estate (IRS form SS-4)
    • File Notice of Appointment with the IRS (IRS form 56)
    • Income Tax Filings
      1. 2012 Federal Income Tax Return
      2. 2013 Federal Income Tax Return
      3. Estate Income Tax Return (form 1041)
    • File Federal Estate Tax Return (form 706)
    • File any unfiled Gift Tax Returns (form 709)
    • Request Copies of Prior Gift Tax Returns from the IRS, if needed
    • File Notice to Creditors for the Estate
    • Begin Marshaling the Assets; Determining Debts
    • Create a List of Assets, Debts and Values as of the Date of Death
    • Begin Preliminary Work on any Estate Tax Return (due in 9 months – can be extended)
    • Determine if any Heirs Want to Disclaim Their Inheritance
      1. Analyze the Benefits and Burdens of Disclaiming
    • Distribute Assets to Trusts and Heirs
      1. It could be several months before any distributions are made
      2. Final Distribution may not occur until IRS provides clearance letter, if needed
      3. Decisions will need to be made on:
        1. Liquidating assets
        2. Tax Savings Approaches
    • File Final Income Tax Returns for the Estate
    • After Final Distributions  – Close Out the Estate
      1. Obtain Final Approval from Heirs