When it comes to losing a loved one, especially a parent, emotions can run high, leaving little room for the complexities of practical matters. Yet, for many individuals unexpectedly thrust into the role of an executor with no proper planning or guidance, the grieving process is compounded by the overwhelming responsibility of managing their parents' estate. It's a situation that can leave you feeling lost in a maze of legal, financial, and emotional challenges.
We've created this Estate Checklist to help you manage your parent’s estate, even if no pre-planning was done.
Take Time for You
First things first, permit yourself to grieve. Not everything is as urgent as it may seem when your parents pass. Take a breath, let yourself process the emotions, and gradually find your way through this challenging time. Most responsibilities can wait a bit, and rushing through them increases the chance of expensive and time-consuming mistakes.
Caring for yourself creates a more balanced approach to managing your parent’s affairs and facilitating your healing.
Find The Crucial Documents
Start by gathering all those vital estate documents – the will, trust papers, and other financial documents. If there's no will or you can't locate it, contact a lawyer for guidance.
Probate laws vary widely by state so if your parents lived in a different state, be sure to contact an attorney in their community. The cost of obtaining a skilled attorney is well worth it because of the time they will save you and the peace of mind you’ll get from knowing things are done well.
Plan The Funeral
One of the few things that need to be taken care of quickly is arranging for your loved one's obituary, funeral, and resting place. Funerals can be as simple or elaborate, private or public, formal or relaxed as you want. The most important thing to remember is to add your parent’s personality as much as possible. You can do this by including favorite locations or songs, requesting donations be sent to a favorite organization instead of flowers, and inviting loved ones to share their favorite memories.
Work with the funeral home to obtain a death certificate. Ask for more copies of the certificate than you think you’ll need because they’re key to accessing and closing your parent’s accounts.
Organize Money Matters
Set up an estate checking account to manage future expenses and merge funds from other closed accounts. A separate account simplifies tracking estate expenses for accounting purposes and provides transparency if other beneficiaries are involved.
Review your parent’s assets, like interest or dividends, to see if they generate income. If they create more than $600, you'll need to file a tax return. To file taxes, you'll need an Employer Identification Number (EIN) for the estate. An EIN can be obtained easily for free at IRS.gov.
Evaluate Their Assets
Creating a comprehensive list of your parents' belongings and debts is a big task. Review their bank accounts, properties, investments, credit card statements, loan documents, and physical belongings. This list is your roadmap to understanding their financial situation and serves as a guide for closing out their estate.
An attorney will help you navigate probate and complete forms promptly and accurately so you don't have to worry about surprises later.
Execute The Will
When it comes to carrying out your parent’s will, you're essentially bringing their wishes to life once they're no longer living. This means you'll follow the guidelines they've set in their will to divide their belongings, settle any debts, and handle their affairs.
As the executor, you're in charge of ensuring everything goes according to their plan. This might mean teaming up with lawyers, keeping beneficiaries in the loop, and overseeing money matters based on how they've written it all down.
If no will exists, hire an attorney to help you navigate the local estate laws.
Make Tax Decisions
Choosing when to file taxes – either by the calendar year or fiscal year – can influence the estate's financial game plan. Filing based on the fiscal year might give you more time to organize your parent's estate, depending on what month they pass away.
It’s important to note that publicly available tax software is not designed to handle the complexity of estate taxes. Hiring a Certified Public Accountant (CPA) who fully understands estate taxes is essential to avoiding penalties and overpaying. In recent years, estate taxes were simplified to make it easier to claim deductions for estate-related expenses like attorney and accounting expenses without itemizing.
Remember to take care of yourself while settling your parent’s estate. Reach out for professional help, especially regarding legal and financial accounts, to honor your parent’s legacy and minimize tax liability.
Manage Your Parent's Estate with Bestgate Wealth Advisors
Our team, composed of experienced CPAs and CFP® practitioners, is here to help you make more informed decisions and navigate complex estate laws. Contact us today for help managing your parent's estate.