April 2003 "The Lawyer's Role In Estate And Trust Administration"

Planning For Wealth & Security

By Attorneys Jennifer & Jeff Hawkins

THE LAWYER’S ROLE IN ESTATE AND TRUST ADMINISTRATION

Most families experience intense grief and sorrow when a loved one dies. The grief sometimes turns to frustration and depression when the family members must organize the deceased person’s records, gain control of the person’s finances, and sell, distribute, or throw away the person’s property. Many families become overwhelmed with the obligations to deal with the Bureau of Motor Vehicles, the banks, county assessors, courts, department of revenue, and other offices and agencies that play a part in a deceased person’s estate. If you think of all of these participants in the estate and trust administration process as members of a band, the lawyer should serve as the band conductor, coordinating the relationships among the family and the other participants.

Prelude

The beginning of any estate or trust administration requires key family members to meet with a lawyer and discuss what must be done to settle the affairs of the estate or trust. The family should bring to that first meeting all copies of any wills, trusts, bank account statements, or any other documents that they can find concerning the deceased person’s estate plan and financial affairs. Sometimes not all of the information is available, but the attorney needs as much information as the family can provide in the first meeting. The family should always meet with the attorney before speaking with bankers, investment representatives, insurance agents or any other people, because important decisions may be required about how to deal with the financial service providers. Also, if the deceased person died without a will or trust, the family may need to decide which family member will step forward to carry the estate’s administrative burden. The lawyer can help the family make that decision.

The Lawyer’s Job

Part of the lawyer’s job in an estate is to coach the family through the administration process. The lawyer will prepare all documents relating to the estate including all of the petitions, the Indiana inheritance tax return, the federal estate tax return, and in many cases, the income tax returns as well. If the lawyer charges a fee based upon the percentage of the value of the assets, the lawyer is agreeing to perform several services to earn that fee. Usually, a lawyer will prepare all tax returns other than the deceased person’s final income tax returns. However, some large estates have very complicated issues that may justify a delegation by the attorney to a specialized law firm that can help the family save federal estate tax money. In such a case, the lawyer should discuss the delegation with the family. In any case, all death tax returns should be prepared by attorneys, because issues regarding death taxes require legal interpretation that constitutes the practice of law.

Passing the Torch

The lawyer can provide valuable estate planning services to the family during the estate administration process. For example, it is preferable sometimes for a family member not to receive money from an estate because of health issues or that person’s own considerable wealth. The attorney can engage in multi-generational estate planning for the family during the estate administration and help the family preserve and accumulate wealth. This planning process resembles the Olympic torch relay that occurs before the games when one person passes the torch to another. As one person dies, the rest of the family members must behave responsibly to continue passing the wealth down through the family.

THIS ARTICLE IS NOT LEGAL ADVICE. ALWAYS CONSULT AN ATTORNEY DIRECTLY BEFORE RELYING UPON THIS ARTICLE OR CHANGING AN ESTATE PLAN.