If you own anything in Kentucky, you have an estate. Having an estate means what you own, whether it's a vehicle or a bank account, when you die, it goes to your estate. If you have loved ones or even a beloved charity, you may want to make sure what you have goes to the appropriate person or organization. Estate planning is key to this successful end because through it, your estate can be administered properly and according to your wishes and the law.
At Fred Simon Law in Louisville, I will explain what estate administration is and how it can impact your estate if done right versus if done wrong. Contact me at (502) 558-8576 to schedule a Consultation and learn more about the importance and benefits of estate planning.
What is Estate Administration?
Estate administration refers to the legal process around the organization of someone's affairs after they pass away. It includes identifying their financial accounts, real estate, and other tangible property. It also involves settling debts, filing tax returns, notifying Social Security, and distributing their remaining assets.
A personal representative handles the administration of someone's estate. Where someone has a will, they designate an executor as their personal representative. If someone dies without a will (intestate), a probate court appoints an administrator as their personal representative.
The Estate Administration Process in Kentucky
Specific estate administration processes vary between states. They also depend on whether an executor or administrator is involved. However, the following steps are generally practiced across most jurisdictions.
Arrange the Funeral
Not always, but often the estate administrator will request burial or cremation, organize a memorial, order death certificates, and make other arrangements accordingly.
Appoint a Personal Representative
If someone dies with a will, their will must be filed with the probate court where the deceased lived. If there is no will, their eligible heirs (usually their spouse, adult children, or parents) must apply to the court to become an administrator.
Notify the Relevant Parties
The personal representative is obligated to keep any involved parties reasonably informed about the status of the estate administration. Who exactly must be notified depends on relevant state laws.
Identify the Assets
The personal representative must prepare an inventory of all the deceased's assets to file with the probate court.
Settle Outstanding Liabilities
The personal representative must pay the deceased's outstanding debts or bills and determine which claims, if any, might be rejected or disallowed. Bills can include but are not limited to:
- Personal loans
- Car or other vehicle loans
- Condominium or homeowners association fees
- Income taxes
- Phone bills
- Utility bills
- Credit card debt
Kentucky has specific rules and notices that must be given to a creditor to properly disallow a claim. It is the personal representative's responsibility to properly handle all claims for the benefit of the estate.
File Any Necessary Tax Returns
At the federal level, estates over a certain amount are taxed. There may also be Kentucky Inheritance taxes assessed and due on assets left to certain beneficiaries or heirs. The personal representative also needs to file the deceased's last income tax annual returns.
Failure to file federal and state (if applicable) tax returns can result in fines and interest.
Distribute the Estate
The personal representative is typically required to wait until after the claims period has passed before they can distribute the deceased's estate. This is done in order to cover any possible claims and costs associated with finalizing the estate.
Finalize the Estate
Finalizing the estate can mean many things, but typically it involves closing the administration either by filing a formal final accounting of the assets with the probate court, detailing all the actions the personal representative took concerning the estate or by informally settling the estate with the consent of all concerned parties. Once the settlement is accepted by the court and the order is signed closing the administration, the personal representative can distribute any remaining estate funds and close all estate accounts.
There can be strict time frames around the estate administration process. You should speak to an estate administration attorney in Kentucky for guidance on the relevant laws and deadlines.
How to Choose an Executor in Kentucky for Your Estate
When appointing an executor in your will, there are quite a few factors you may want to consider. Keeping in mind that these factors are relevant to your specific circumstances, here are some points to keep in mind.
- Choose an executor who is responsible, trustworthy, and competent. While an executor doesn't need to have specialist qualifications, they do need to be able to handle your affairs ethically and follow your wishes. They also need to be able to manage the responsibilities involved in being an executor.
- Confirm your chosen executor is eligible. While eligibility rules vary between states, executors usually must be at least 18 years old. People with criminal histories may be precluded from being executors. Some states may also require the executor to live in the same state where the estate administration process takes place, especially if they are not related to the deceased person.
- Appoint a contingent or alternate executor in case your designated executor is unable to perform their duties. Common reasons they may not be able to perform is their own death or incapacitation by an illness or another condition. For these reasons, you may want to appoint a secondary or alternative executor to the estate.
Choosing the right executor can be challenging. An estate administration lawyer can answer any questions you have about appointing an executor.
Common Issues in Estate Administration in Kentucky
Many issues can arise in the context of estate administration, and many of the latter can create problems or challenges. It is in part why you want a lawyer to help you create a solid estate plan that can anticipate, address, and resolve any issue. With that said, here are some common estate administration issues in Kentucky with which you should acquaint yourself.
- The personal representative fails to fulfill their duties. This can happen if they do not act in accordance with the deceased's wishes, fail to perform their responsibilities, or misuse the estate's assets. This failure may amount to a breach of their fiduciary duties and result in the personal representative being removed from their role. It is also why you may want to list an alternative.
- Disputes or challenges to a will. It is not uncommon for disputes to arise between family members during the estate administration process. For example, there can be claims that a newer version of the will exists or that undue influence or fraud occurred.
- An outdated or incomplete will. If your will is missing information or contains outdated information, the executor may not know what to do with aspects of your estate. People whom you do not wish to obtain certain property or assets may be in line to receive it but for specific details in the will. You can avoid this problem by reviewing and updating your will during your lifetime, as necessary.
Acting as a personal representative can be complex. That's why it is important to speak to an estate planning attorney who can help you fully understand your obligations and the laws in your state.
Contact an Estate Planning Lawyer in Louisville Today
Estate planning is important in Kentucky if you want to be certain your bills are properly handled after you die and your heirs and beneficiaries benefit from your life's work. The right estate personal representative can make all the difference and help ease the grief and stress loved ones experience.
Contact us today either by using our online form or calling us at (502) 558-8576 to schedule a Consultation. We will discuss all your concerns, review your estate, and move forward with a plan best for you and your family.