Do's and Don'ts for an Executor of an Estate

Being nominated as an executor for an estate is a responsibility that can be complex and time-consuming. Oftentimes, the executor appointed is an individual who has little to no experience with estate administration. Lack of experience and familiarity in the niche subject of estate administration can lead to a number of problems including debts not being paid on time, tax issues, and beneficiaries not receiving as much as they would have had you correctly and efficiently administered the estate.

While there are many things to learn with estate administration, there are a few fundamental Do’s and Don'ts that can serve first-time executors who are feeling as though they are in over their heads. If you follow the basic rules below, it will go a long way in ensuring that an estate is administered successfully:

DO stay organized and keep diligent notes: One of the most important skills for an executor to have is the ability to stay organized. Oftentimes, a decedent will have a number of accounts at several different financial institutions. A decedent’s creditors may come out of the woodwork and demand that a debt be paid by the estate. All of these assets and debts coupled with real and personal property that a decedent may have owned can create confusion for an inexperienced executor. If an executor fails to maintain organization and track all records in an accounting, information can be lost in the shuffle and assets may be at risk. Having a clear idea of all accounts, real property, personal property, and debts will allow you to continually distribute assets correctly and efficiently.

DON’T keep beneficiaries out of the loop: Consistent communication and transparency with the decedent’s beneficiaries is an integral part of the duties of an executor. The beneficiaries are the people who will ultimately receive the assets of the Estate. This requires a tremendous amount of cooperation between the executor and the beneficiaries. A beneficiary should always be up to date on the status of any open item, whether it be the sale of property, assets held in accounts, etc. While this may seem obvious, it is sometimes difficult to successfully communicate with a number of different beneficiaries. This is especially the case if the beneficiaries are at odds with one another or do not communicate well on a regular basis. A relatively simple solution is to schedule a bi-weekly or monthly meeting to keep the beneficiaries up to date on open matters facing the estate.

DO act in the best interest of the Decedent: A great rule of thumb to abide by when you run into any issue in your duties as an executor is to act in the best interest of the Decedent. Had he or she be living, would the Decedent want you to make a specific decision with regards to their assets? As executor, the decedent personally entrusted you to distribute his or her belongings after they pass. Keeping that in mind, it is important to do what you believe they would have thought is best when managing and distributing their assets.

DON’T delay opening an Estate Account: An estate account is a bank account in the estate’s name. Once an estate account is open, you can begin transferring funds from the bank accounts held in the Decedent's name to the newly established estate account. Opening an Estate account early in the process is important as it allows you to have all of the decedent’s funds in one place. The sooner that you can have all of a Decedent’s funds in a central estate account, the sooner debts can be paid off and distributions can be made.

DO retain an Attorney and Financial Planning expert with Estate Planning experience: Administering an estate can be an extremely time-consuming and complex matter. Depending on the complexity of an estate, being an executor can be a position that takes as much time as your day job. To ease this burden and to ensure the best for carrying out the Decedent's wishes, you will want to retain an Estate Planning or Probate Attorney to assist you with the facilitation of the Decedent’s assets. This is especially important when you are unfamiliar with the process; but even if you have administration experience, it is always smart to have an expert alongside you to ensure that you are doing the best for the Decedent and the Estate.

If you have any questions about preparing an estate plan, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

ALL CORRESPONDENCE FROM THE IRS MUST BE READ!

Receiving a letter from the IRS may send a chill up your spine. What should you do?

The IRS sends out a variety of letters to taxpayers. Some are informative, some are merely requesting additional information after a tax return has been filed, and some are demanding payment for taxes owed. The worst thing you can do is to ignore an IRS letter with a deadline stated in the letter for a timely response. If you miss the deadline, it will become harder to contest the content of the letter.

Many IRS letters contain a “CP” number in the upper right-hand corner. The letter contains an explanation of the tax due and the options you have: to contest it or to pay it (even if you can’t pay it all at once).

Once there is an unpaid tax balance, the IRS simply starts with a reminder notice that you are late in paying your tax. The first CP14 reminder notice comes shortly after you file your tax return. It simply lists the amount of tax due along with penalties and interest that have accrued since the filing date. If you believe the balance due is incorrect, you must either call the IRS or respond to them in writing soon after receiving the letter. When in doubt contact a tax attorney.

Letters CP501 and CP503 are the next reminders that will appear in your mailbox if the tax still has not been paid and no arrangements for payments are in place. These notices again alert you to the amounts owed for taxes, penalties, and interest. If you have tax balances due for a number of years, you will receive one letter for each tax year owed.

The CP504 letter, next in the series, signifies a serious situation. It notifies you of the IRS’ right to file a lien against you and to levy (seize) any state income tax refund you might be entitled to. When the IRS files a lien against you, it is very difficult to remove it until you fully pay the balance due.

The next correspondence, LTR11 or CP90, will notify you of the IRS’ intention to levy your bank accounts, wages, Social Security checks, and any of your other property the IRS can find, such as real estate and vehicles.

After receiving notification of the IRS’ intent to levy, you have only 30 days to respond before the IRS can start seizing your assets. The IRS looks for available assets, held under your name or Social Security number, and starts collecting them until the IRS has recovered the total amount of taxes, penalties, and interest due.

As you can see, the IRS collection division has an established procedure for notifying taxpayers and collecting outstanding balances. Therefore, all correspondence from the IRS must be read so you can determine your rights as a taxpayer.

If you have been contacted by the IRS, you should promptly seek the advice of a tax professional who can help you in choosing the appropriate resolution.

We are ready to assist you. Please feel free to contact Glick and Trostin, LLC at 312-346-8258 for a complimentary consultation

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

What is the Difference between a Will, Living Will and a Pour-Over Will

You may have discussed estate planning documents with family and friends and heard terms such as Will, Pour-Over Will, or Living Will and wondered if these are all the same document.  As legal documents can commonly be referred to by different names, the confusion is understandable.  Here are the common types of Wills and how they may be of benefit to your estate plan.

Last Will and Testament

This is what most people think of when someone refers to a "Will".  A last will and testament allows an individual to name beneficiaries of their estate assets, nominate guardians for minor children, and identify who they wish to be the executor of their estate.  A Will only takes effect after you have died but can be amended at any time prior to your death.  States have specific formalities for signing. In Illinois, a Will must have two witnesses to be a valid last will and testament. A notary attestation is also recommended.

Pour-Over Will
A pour-over will is a type of last will and testament that goes hand-in-hand with a declaration of trust (a revocable trust).  Rather than the Will stating how the assets are to be distributed, the Will leaves the assets to the declaration of trust and a trustee handles the distribution.  The use of a pour-over will and trust combination is helpful to avoid probate proceedings(court oversight of an estate).  The pour-over acts as a safety net in case the trust is not fully funded and allows the trust to be the primary dispositive document.

Living Will

Finally, a living will is not a dispositive document but instead provides guidance to healthcare professionals regarding a person's preference for certain forms of medical treatment when he or she is in a terminal condition and unable to express end-of-life wishes.  Illinois' statutory declaration of living will allows a person to state his or her preference to withhold any death delaying procedures when possibly nearing the end of life.  A living will allows the family and healthcare professionals to understand a person's wishes when he or she is unable to communicate. Of course, even with an executed living will, as long as an individual is able to communicate his or her wishes with a health professional, those directions will always supersede the written document.

If you have any questions about preparing an estate plan, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Check Your Property Tax for the Homeowner and Senior Exemption

You may have recently received a letter from the Cook County Assessor, Fritz Kaegi, regarding the Cook County Homeowner and Senior Exemptions. If you are a homeowner in Cook County, it is a good exercise to check to make sure you are receiving the homeowner and senior exemptions on your property tax bill. Like many other residents, you would like to see your property tax reduced if possible.  One simple way to get a nice reduction is to ensure you are receiving the homeowner's exemption (also known as Homestead Exemption) if you own your residence.  This exemption is given to property owners on their property tax bill. Taxpayers whose single-family home, townhouse, condominium, co-op or apartment building (up to six units) is their primary residence can save $250 to $2,000 per year, depending on local tax rates and assessment increases. 

If you are over 65 years of age, you may also be entitled to a Senior Exemption or Senior Freeze on your property taxes.

First, check to see if you have a homeowner's exemption by searching your property by address or PIN on the Cook County Assessor's website or Cook County Treasurer's website.  Either website will show if an exemption has been applied to the prior year.

You can also review the most recent 2nd installment of your property tax bill, it will list the exemptions at the lower portion of the bill and whether you received any exemptions for that tax period. 

Next, if you believe you are entitled to an exemption, you can obtain the exemption forms on the Assessor's website.  If you have lived in the property for a number of years and have not claimed the exemption, you can file a Certificate of Error forms to request a refund for the Homeowners and/or Senior Exemption for the years that you qualify.

Finally, if you are a new homeowner, you may not qualify for this year's homeowner exemption but put a reminder to file for the exemption next year. You may want to request the former owner to submit an exemption if they are qualified. This is also important for anyone soon to obtain the age of 65 so that they file to obtain the Senior Exemption.  

This exemption is not limited to Cook County or the State of Illinois.  Contact your local Property Tax Assessor or Treasurer to confirm that you are receiving all credits for being a homeowner in your state.

If you have any questions about tax and estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein.  No one should rely upon the information contained herein as constituting legal advice.  The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Amending 2020 Tax Return with Unemployment Compensation

Now that President Biden has signed into law the "American Rescue Plan", there are a number of benefits that individuals should take note of such as the next round of stimulus payments and extended unemployment benefits.  One aspect that has not been discussed much is that for individuals who received unemployment compensation in 2020. The first $10,200 per person will not be taxed if the household makes under $150,000.  For married couples filing jointly, this means that the first $20,400 will be tax-free and could result in tax savings of over $1,000.

If you haven't filed your income tax return yet and believe you may qualify for this tax break, it is best to wait until directions have been more clearly defined from the IRS so you can receive this tax reduction. It could take a few weeks for the IRS to provide guidance on how to implement this tax law change in the middle of the tax season but your patience may pay off.  It may also impact your state income taxes as each state treats income differently than the IRS, but it may allow the tax break to benefit your state return as well.

Individuals who have already filed their 2020 income tax returns and did not take this benefit will want to review their situation to see if filing an amended return will allow them to receive this tax break.  If you believe you qualify, contact your tax preparer to ask how you may go about filing an amended return. Fortunately, the IRS has now implemented the ability to e-file amended returns starting this year.  That will hopefully expedite the process for those who normally would have to file and mail in an amended return which could take months to process. 

If you have any questions about tax and estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein.  No one should rely upon the information contained herein as constituting legal advice.  The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

Illinois 'Tax Deduction' for Dividends from Abbvie, Abbott Labs, Caterpillar and Walgreens Boots Alliance

As tax time nears and you begin to gather your tax documents, you may want to look closer at your dividends for the year. If you are an Illinois resident, you may be permitted to subtract certain dividends from specific Illinois companies. Under Illinois law, dividends you receive from a corporation that conducts business in a foreign trade zone and is designated a “High Impact Business” are eligible for the subtraction modification from Illinois base income.

Over the past few years, I have worked with a number of clients who received dividends from companies that qualify for the dividend subtraction in Illinois.  Depending on the total dividend distribution, this subtraction can be a sizable reduction in Illinois State Income Taxes, especially for shareholders who may have received stock through their employment with the companies.

Currently, I am aware of the following 4 companies that have published letters to their shareholders notifying them of the potential dividend subtraction for Illinois in the past. Below are the most current letters online.

Abbott Laboratories (Tax year 2020 letter)

AbbVie Inc. (Tax year 2020 letter)

Caterpillar Inc (Tax year 2020 letter)

Walgreens Boots Alliance, Inc. (Tax year 2019 letter)

There may be other qualifying companies in Illinois although it is best to receive a letter from the company if you decide to utilize the dividend subtraction on your income tax return.  If you believe you have received dividends from a qualifying company in the past 3 years, you may want to determine if filing an amended Illinois Income Tax Return is worthwhile.

If you have any questions about tax and estate planning, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice.  Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein.  No one should rely upon the information contained herein as constituting legal advice.  The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.

New Year's Resolution - Create an Estate Plan

As the dust settles on 2020 and we begin to prepare for what hopes to be a better 2021, many of us will make the annual New Year's Resolution.  Most of the resolutions will deal with improving ourselves in numerous ways.  The motivation for many of these goals is to take care of yourself and your loved ones.  

One goal to set for 2021 is to make sure you have an estate plan in place. This may consist of drafting a will or simply reviewing beneficiaries on your accounts.   Too often, people push this process off until it is too late and their family is left attempting to figure out how matters are to be sorted.

A recent 2020 Q4 Wells Fargo/Gallop Investor and Retirement Optimism Index reports that close to half of the surveyed investors did not have a will or an estate plan in place. The majority of those with some type of plan were over the age of 65.  That leaves a substantial number of families without any type of estate plan in place. 

Estate planning does not have to be difficult or overwhelming.  The fact is that not having some simple documents in place such as a Power of Attorney for Health care or for Property can create a much more expensive problem later on. 

Making a New Year's Resolution to create an estate plan is important and doable. By accomplishing this resolution, you can rest easier and help protect your interests and wishes for your family. 

If you have any questions about preparing an estate plan, please feel free to contact Glick and Trostin, LLC at 312-346-8258.

Disclaimer: The materials on this website are provided for informational purposes only and do not constitute legal advice. Transmission of the information is not intended to create, and receipt does not constitute, an attorney-client relationship between any attorney and any other person, group or entity. No representations or warranties whatsoever, express or implied are given as to the accuracy or applicability of the information contained herein. No one should rely upon the information contained herein as constituting legal advice. The information may be modified or rendered incorrect by future legislative or judicial developments and may not be applicable to any individual reader's facts and circumstances.