How to settle a loved one’s estate – and when to hire a pro

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When a loved one passes away, taxes and other important financial considerations may be the last thing on your mind, but they need to be sorted out.

In four recent columns, I have largely focused on the tax problems that can arise. See here for more on inheritance tax; here if you are thinking of inheriting a house or a retirement account; here to learn more about important tax deadlines for executors; and here for a checklist of the duties of executors.

This column is the last in our series, and we cover the rest of the story here.

When to sell the family home

When the deceased loved one (the deceased) was financially well off, selling an upscale family home can be one of the tasks of the executor.

If the deceased was not married, the heirs (often adult children) will likely want to sell the place. Until COVID-19 hit, there were separate home selling seasons in most areas. For a while, this was no longer true because buyers were distraught and houses were scarce. But now seasonality can return. Your friendly local real estate agent can “strongly” encourage you to prepare the place for sale during peak sales season so that you can get the best price, which also maximizes the real estate agent’s commission. Getting the best price is great, but you may be presented with a sell-by-sell deadline much sooner than you’d like.

If the deceased was married, the surviving spouse may want to downsize, be closer to relatives, move to a state with lower taxes, or move to an assisted living environment. You may need to organize the relocation of the surviving spouse in addition to arranging for the sale of the former marital home.

When to hire an estate liquidator or other professional

If the house that is now to be sold has been inhabited for many years, you will likely find that there are many years of “stuff” piled up in the place. If there is a lot of valuable stuff that other interested parties won’t take away from you (like a house full of fine furniture, rugs, antiques, etc.), consider hiring an estate liquidator.

For the rest, consider hiring a professional organizer and packer to help you pack things up and move them to their new location. Your organizer likely has ties to local charities that will sometimes send trucks to pick up any excess that is not outright junk.

Of course, you can choose to manage the arrangement of all the elements yourself, but it will take much longer than expected.

When to change the house title

You may need to change the title of the house before you can sell it. For example, this may be the case if the house was owned by a revocable family trust to avoid probate. If the deceased was not married, the trust is probably now an irrevocable trust, because the person who set it up is deceased. If this is the case, the title to the home may need to be changed to reflect this fact. If the house was owned by a revocable trust established by a married couple, the trust may need to be amended to remove the deceased as a trustee. There are other situations that may require a change in title to the property. Consult a good real estate or estate planning lawyer. For tax considerations when there is a trust, see this Tax Guy.

Key questions and practical considerations

The following is far from a complete list, but it is a start.

Will there be enough money and / or income for the surviving spouse to live comfortably without selling the matrimonial home?

If so, the surviving spouse may wish to stay put. But if the survivor is elderly, it may simply delay all of the inevitable sales and relocation issues mentioned above. It might be better to do away with the inevitable while the surviving spouse is still in good enough physical and mental health to participate in the process.

Is the surviving spouse ready to manage the finances?

Maybe not. Many married couples (especially the elderly) delegate virtually all financial matters to one spouse. The surviving spouse may not be that person. If so, he or she may not know how to keep a checkbook; may have only a vague idea of ​​all the bills to pay; and may know nothing about insurance policies, retirement accounts and investments. Have health, home and auto insurance premiums been paid? Have property taxes been paid? Maybe not.

If the deceased was managing the finances and fading away, things can be slipped through the cracks without the other spouse having a clue. Ouch. Be prepared to do forensic accounting. And get ready to host a basic personal finance seminar for the surviving spouse.

Remember to check the surviving spouse’s life insurance policies

The now deceased spouse may be the named beneficiary of the policy. Not good. Designate new beneficiaries to avoid probate and other hassles when the surviving spouse dies.

Get your retirement and investment accounts in order

First you need to find out if they exist, what their size is and what investments they hold. You may need to liquidate certain investments to pay for the expenses of the estate or the surviving spouse. You may be able to organize the consolidation of multiple IRAs into one account that can be managed more easily.

Check safes

Enter it and face what you find. A valuable collection of coins could be in a box. Title deeds are likely to be in a box. There could be US savings bonds worth thousands. Who knows? You will likely need a death certificate and possibly a power of attorney to access the deceased’s box (es).

Taxes, taxes, taxes

Ouch. See the links to my previous columns.

Shut things up

This could include utilities, garbage collection, yard maintenance, pool maintenance, security monitoring, cable and communications services, and credit cards. Have computer hard drives cleaned before donating machines to charity.

The bottom line

Hope this series gives you an idea of ​​what you might be faced with when a loved one passes away. It can be an exhausting process that lasts for months. If you can hire pros to help you out, do it. It is money well spent and sanity is preserved.

Previous Tax Guy columns for heirs

What does an executor do? Here is a checklist of the most important financial tasks

What to do if you are the executor of a loved one – starting with when to pay taxes

Are you inheriting a home or retirement account from a loved one? Read this first

Worried about inheritance tax? Read this if you are a beneficiary, executor, or trustee


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