At the point you have lost both parents administration usually means transferring the assets to children or to trusts for the benefit of children. (“Children” can also be taken to mean any non-spouse beneficiary such as nieces and nephews, siblings, friends, etc.)

Most parents do not share the planning they have done with their children in any detail. This leave the beneficiaries somewhat at a loss.

Many questions need to be addressed including:

1. Do you know where all of your parent’s assets are? Some detective work is sometimes needed to unearth all that is there.
2. Who will you keep the doors of the family business open while you find a buyer? The value can be seriously eroded as customers go elsewhere during the administration process.
3. Administration of IRAs and retirement plan assets is very different when they are inherited by children rather than by a spouse. Costly early mistakes are made in this area more than any other. Don’t touch the retirement plan assets until you have consulted your advisors. Make sure your attorney, CPA, and financial advisor agree on a plan before making a decision. IRA’s are vulnerable to both estate taxes and income taxes and a premature decision to withdraw IRA assets can leave you with an enormous tax bill.
4. Will there be a probate? Many people don’t realize it only takes $100,000 of assets to be subject to the expense and delay of probate. Probate is often avoided when a spouse dies even without careful planning because the assets are owned jointly. But when children inherit, probate is much more likely. There are many ways to avoid probate—joint tenancy, transfer on death, beneficiary designations, living trusts (funded!), etc. But the title of each asset needs to be reviewed in order to make a determination of whether a probate will be required.
5. Which assets are the most efficient to spend on estate expenses? For example, it usually is not advisable to spend IRA assets since an income tax has to be paid on the withdrawal. For similar reasons it may not be advisable to sell stocks that will incur a capital gains tax in order to raise money to pay the expenses.
6. How do you change the title on assets? Contrary to popular belief, it isn’t automatic—not even with joint tenancy—not even with a trust. Was there a will or a trust? How were the assets titled? What is the latest beneficiary designation? The addressee on account statements do not determine title. The underlying account agreement must be examined. Statements rarely provide this information and are often misleading. You have to know where to look for each asset class: real estate, retirement, brokerage accounts, life insurance, annuities.
7. What steps do you need to take to prevent identity thieves from transacting business in your parent’s name?
8. Who do you turn to: Your attorney? Your CPA? Your financial advisor? The work of administration is usually initiated by the attorney. Putting together a team of advisors who speak with one voice is essential for your peace of mind.
9. What are the deadlines for making these decisions? The number one reason for attorney discipline is blowing a deadline. Go to www.ilardc.com and click on "Lawyer Search." By filling in the name of the attorney you can find out two important facts: One, the disciplinary history and two, whether the lawyer carries malpractice insurance. (Unlike some States, Illinois does not require lawyers to carry malpractice insurance.)
10. Estate taxes are generally due on the second death. However, there are many options for reporting estate taxes that can have a huge impact on the estate tax bill for you and your children.

Call 847-674-0200 for a free consultation.