Trust and estate law 101: issues in estate administration

Lawyers are invaluable resources during the administration of an estate, especially when executors are thrust into their roles unexpectedly and don’t know what to do.

During part one of an ABA CLE series on trust and estate law, “Critical Issues in Estate Administration,” Rana H. Salti, counsel and trust officer of Kinship Trust Company LLC, and Kalimah Z. White, vice president and national practice manager at NatCity Trust Company of Delaware, explained the role of lawyers and shared tips on getting better client results.

As lawyers often represent administrators during a difficult time for the beneficiaries of an estate, Salti and White suggested lawyers be cognizant of family dynamics. They urge thorough and sensitive communication during what can be a complex and emotional process. Lawyers should also work with estate administrators to determine the best way to relay information—such as what information will be collected, probate, investment or sale of stocks and other related matters—to the beneficiaries.

As guides, lawyers must ensure that estate administrators understand their fiduciary responsibilities relating to serving as an executor. Salti and White further suggested that lawyers advise their clients to document the process of how they are carrying out these responsibilities.

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Also important, Salti and White encouraged lawyers to make their clients aware of strict time limitations on filing documents and protecting assets—“the representative must be educated regarding his duties to act prudently and timely.”

Knowledge of local law is also critical for lawyers as laws vary from state to state. State law impacts how the administration of the estate is managed. For instance:

• Determining the rules of descent and distribution for interstate estates, in the event that the decedent did not have a will at her death
• Determining whether to administer a probate estate. Even if the estate is small enough to qualify under a state’s Small Estate Affidavit exemption (the dollar figure for such an exemption varies from state to state), it may be advantageous to open a probate estate for reasons of shortening a claims period or addressing potential family issues
• Determining whether the decedent owned property in different states and whether ancillary administration would be beneficial.

In addition, Salti and White emphasized that the lawyer also must consider whether the decedent owned property in another jurisdiction. If so, the executor may need to open an ancillary administration in that state.

Salti and White further advised lawyers on the necessity of filing federal and state estate tax returns, which is dependent on the estate tax exemption in effect at the time of the decedent’s death ($2 million for 2008 and $3.5 million for 2009) and other issues. Don't rely on a representative's word on the value of the decedent’s estate. ;Ask for the decedent's financial statements, asset information and tax returns, suggested White.

Lastly, in the consideration of assets, Salti and White emphasized that intangible assets as well as real property must be addressed, such as a decedent’s cause of action or book rights. Special issues arise in the context of a decedent’s business interests, such as addressing business succession issues and valuing the business interests for estate tax purposes.

“Critical Issues in Estate Administration” was sponsored by the Center for CLE, Section of Real Property, Trust and Estate Law and the Young Lawyers Division.

To view a portion of the materials released along with the session, click here.

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