If you are acting as an Executor or Administrator of an Estate, a court appointed guardian, an agent acting under a Power of Attorney, or a Trustee, you are a Fiduciary. By law, a Fiduciary is accountable for their acts and must act in the best interest of the person or persons for whom they serve.  The end of the year presents an opportunity for certain duties and recommended actions to be completed. This article will identify five such tasks which should be completed by Fiduciaries.

End of Year Fiduciary Tasks

 End of Year Fiduciary Tasks

Fiduciary Records Should be Brought Up To Date

First, be sure that all transactions have been recorded, and any backup documents, like a bill of sale, have been set aside.  These recordings should be done consistently all year.  To the extent they have not, now is the time to make corrections and bring your records up to date.  There should be no checks payable to “Cash”.  Any payments/reimbursements to the Fiduciary should be few and well documented by an invoice.  All account statements should be reconciled.

Any Required Minimum Distribution Has Been Taken  

Second, if there is a qualified retirement plan such as an IRA, be sure that the Required Minimum Distribution has been issued from the account this year.  The rule applies only if your ward has reached the age of 70 ½ . Then, each year, an amount, calculated by the financial advisor, must be withdrawn from the account. Failure will mean significant penalties assessed by the IRS.

Court Reports And Other Filings

Third, many times guardians and others are required to file financial and/or well-being reports with the court on an annual basis.  Other reports might be filed if there is a change of address or other status.  Were these filed this year?  Also, did a court require you to post a bond?  If so, was it continued this year? If not, take care of this issue now.

Income Tax Returns

Fourth, if you have to file an income tax return next year for the person you are acting for, gather any needed receipts and other documents that will be needed.  Be sure that you receive Form 1099’s and other tax documents for all accounts early next year.  If you are an Executor, Administrator or Trustee of a Trust, ask your tax advisor if Form 1041 will need to be filed for the previous year.

Commissions for Fiduciaries

Fifth, nearly every Fiduciary is entitled to a commission for the work and expenses he or she has incurred.  If the amount of the commission is not stated in the Last Will, trust document or a court order, the commission will be according to New Jersey statute.  Taking a commission is not mandatory.  But, if you are going to take a commission, take it before December 31.

The financial responsibilities of Fiduciaries can be daunting.  However, with a little organization and good advice from a trusted professional, these tasks can be performed seamlessly.  Knowing what legal duties are required of you is an essential start.  Law Offices of Robert J. Shanahan, Jr. has many years representing Fiduciaries of all types, and we can help guide you easily and expertly.   Give us a call.