Regardless if you are an experienced fiduciary functioning as conservator, an executor working to close a family member’s estate, or a new trustee for a close friend’s trust, the process of locating and marshaling assets can be challenging.
It may seem like a scavenger hunt. where your clues consist of shoeboxes under beds or notes on random scraps of paper, but the hunt consists of a layer of institutional bureaucracy, and once the assets are found, the work is only just beginning. There are a host of questions and details that may need to be answered – is the titling correct, are beneficiaries up to date? With that in mind, here are four tips for locating and marshaling assets when administering a trust or estate.
As 67% of Americans do not have an estate plan, chances are high that there will be assets that you will need to locate. Even with an estate plan, many families and individuals neglect to update them after significant life changes or major decisions. This might mean searching through the house and checking drawers, cabinets, and moving boxes when it’s time to administer the trust. It also can be helpful to consult with the estate attorney. They might know the family well and have insights into the types of assets that you will need to gather.
Review estate documents
For those 33% who do have a plan, a good place to start when locating and marshaling assets is within an estate’s will or trust. Even finding these documents can be an exercise in itself, as a new will or trust document can suddenly appear, like in the case of Aretha Franklin’s estate.
But assuming the document in hand is the most recent and legitimate version available, a careful reading can provide clues as to the assets that you will be in charge of administering. Wills might have a current assets list while trust documents might have a Schedule A of trust assets. Even for situations with an estate plan, there may be assets that are not mentioned in the will or trust because the plan has not been updated or the accounts are to be distributed via beneficiary designation.
Reviewing estate documents can also give you insight into future distributions that you need to prepare for. This can be particularly helpful for trusts that stipulate distributions based on age or specific life goals, such as college graduation. This information will help you map out ongoing administration needs and potential management for investments.
Estates are complex, and because there will be many assets outside of a traditional bank account, it is necessary to have a systemic and organized approach. One way to categorize assets is through real, tangible, and intangible designations. It is important to understand this difference as a last will and testament might specify unique instructions for tangible versus intangible property. It’s recommended to consult an attorney when administering an estate, but the below list is a general overview of how assets might be categorized
- Real Property
- Real estate
- Cash accounts
- Mutual funds
- Life insurance
- Fixed annuities
- Variable annuities
- Name and likeness
- Digital assets
As you find and locate assets, be sure to record pertinent account information, including institution name, institution contact information, account name, account number, and login information.
Tangible assets should be stored in a safe and secure location. Digital documents with sensitive information should be stored using encryption with access behind two-factor authentication. Doing this can help you stay organized and protect against assets getting lost and identities getting stolen.
Review Beneficiary Assignments
Another important way of categorizing assets is whether the assets will be eligible for probate. Revocable trusts and joint accounts, unlike individual accounts or tenants in common, will need to be administered outside of probate.
Similarly, life insurance and retirement accounts (i.e., IRAs, Roth IRAs, 401K, 403B, 457) allow beneficiary designation assignments, and these types of accounts will also bypass the probate process. Understanding beneficiary designations will help you quickly distribute these assets without having to wait through the lengthy process of the probate courts, which could take a year or longer. There is an exception, however, for life insurance policies that have a beneficiary designation of the individual’s estate. Because the death benefit is paid to the estate, it’s eligible for probate.
It is also important to check that beneficiary information on all accounts is up to date and to verify that beneficiary information is consistent with what is stipulated in estate documents. As beneficiary designations can change over time, it can be helpful to review past paperwork to confirm beneficiaries are correctly assigned. Doing so can protect you against the possible liability of incorrect distributions.
After assets have been located, it is time to update their titling. For successor trustees, this may mean sending in paperwork to designate you as the trustee, including a copy of the trust document and your appointment as successor trustee. Check the title of the trust closely – every letter and detail needs to match exactly when transferring an account. It’s vitally important to use the correct Under Agreement date and not the amended date, date of court order, or court accounting. If this date is wrong, the account may be frozen from making distributions.
For conservators, the account titling process may mean creating a completely new account at a bank or financial institution, as the individual account may not necessarily allow the appointment of a conservator.
For administrators or executors of an estate, you will most likely need to create new accounts for distribution or transfer of assets during the probate process. This process can be complex, so it is advisable to consult with an attorney for assistance.
Sometimes, old stock certificates or bonds are discovered, usually in the name of the original owner. The process of assigning ownership and transferring to a correctly titled account can be arduous because transfer agents (i.e., the bookkeepers and record holders of stock ownership) can be difficult to work with. These companies normally require medallion signature guarantees, which is a special stamp used by the financial industry to authenticate paperwork. These medallion guarantees can be difficult to obtain as financial institutions might not offer this service to normal customers.
As you are working to correctly title accounts, also be sure to check that the operations account you use for expenses has the same titling as the other accounts you will be administering. Without like account titling, distributions and transfers may be held up.
The process of locating assets can be time consuming. Even after this is done, your work as a fiduciary is just beginning. As financial professionals experienced in the complexities of estate administration and UPIA, we understand the steps and bureaucracy involved in the marshaling process.
To find out how a qualified investment advisor can help trustees and estate administrators fulfill their fiduciary duties and obligations, request a no-obligation consultation today.
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