Post-mortem duty: the challenge for the new executor or trustee.

• Author: Wiener, Jeanne L.

Individuals are often asked to be an executor or trustee for family members or friends without knowing what their duties will be when they are called to serve. There are many necessary legal and administrative steps to address, and not knowing what to do can be overwhelming. There are also deadlines to meet, which can have material consequences.

The First Call

In many cases our accounting clients call us first after the death of a family member or friend and are looking for guidance regarding next steps. In some cases, no legal or administrative steps have been taken for months, and their call is triggered by a tax-related concern, such as the sale of real property. It's critical to quickly put the executor/trustee on the right path. As CPAs, we're in a position to help guide them through the administrative process.

Obstacles Faced by the Executor/Trustee

The executor/trustee is often starting with a blank slate and most times doesn't know where the decedent's legal documents are located. The executor/trustee must begin to inventory all the assets owned by the decedent, as well as any outstanding debts. Assets may be difficult to identify due to the type of asset, such as life insurance or employee retirement benefits. Records may be in poor order due to the decedent's declining health or mental capacity. If there's a surviving spouse, that person may be unable to handle the duties due to grief, or they themselves may be incapacitated. It's possible a successor executor or trustee may need to be named.

Why a Plan of Action Is Important

A new client came in to see me saying their mother passed away 18 months prior. The decedent's home was supposed to be in an irrevocable trust. The beneficiaries--the children--had started renting the property and were concerned about how to report the rental income. It turned out they had taken no legal steps when the mother died. The property had not been valued as of date of death, the will had not been lodged and title to the property had not been transferred to the trust. We assisted in getting a historical appraisal of the property to establish basis, and then referred the client to an attorney to assist with the legal steps.

Creating a Plan of Action

The executor/trustee needs to develop a plan of action to administer the estate or trust, and there are some key components to this plan.

First the executor/trustee must contact the client's attorney or hire an attorney of their own choice. The estate...