Do I Need an Attorney for Probate?

Having an estate planning attorney manage the probate process can alleviate a great deal of stress for the family, says the recent article “Reasons to hire a lawyer for probate” from The Mercury.

For one thing, the attorney will know what your state requires in the way of executing the will. You may need to pay a state inheritance tax, or you may have to file certain documents specific to your state. Even if the surviving spouse is the only beneficiary and all assets are either jointly titled or are distributed through beneficiary designations, there are other details you may miss.

A surviving spouse will certainly appreciate not having to undertake a mountain of paperwork or electronic forms on their own, especially if there are no adult children living nearby to help. Which beneficiary form needs to be completed, and what will financial institutions need to change accounts to the proper ownership? It can be daunting, especially during mourning.

Depending upon the state, there may be exemptions, discounts and deductions from the estate. A layperson likely does not know if their state deducts the attorney’s fees and/or the executor fees. Even attorneys who do not practice estate law do not always know about these potential benefits.

An estate planning attorney will also know how long the probate process will take. If the surviving spouse is the executor and is unable to attend probate court, some cases accept a remote process. There are also COVID-specific procedures in some states, which a layperson may not know about.

If there are family disputes between beneficiaries regarding distribution, an estate planning attorney could be a very important resource. There may need to be a settlement agreement created that conforms to the state’s law. If it is not handled properly, the agreement could be deemed invalid if challenged in court.

What if the family home is being sold? Sometimes executors working without an attorney do not realize the requirements from title insurance companies regarding the sale of a property where one of the parties has passed. Failing to make sure that these requirements are met, could delay the settlement of the estate and put the property sale in jeopardy.

If there are health or creditor issues, or disputes over property, an estate planning attorney is invaluable in protecting the surviving spouse and/or executor. In many cases, the estate is left with substantial medical bills, Medicaid claims or related costs. Executors may not know their rights, or how to defend the estate. A knowledgeable estate planning attorney will.

Reference: The Mercury (Feb. 8, 2022) “Reasons to hire a lawyer for probate”

What Power Does an Executor Have?

Being asked to serve as an executor is a big compliment with potential pitfalls, advises the recent article “How to Prepare to Be an Executor of an Estate” from U.S. News & World Report. You are being asked because you are considered trustworthy and able to handle complex tasks. That’s flattering, of course, but there’s a lot to know before making a final decision about taking on the job.

An executor of an estate helps file paperwork, close accounts, distribute assets of the deceased, deal with probate and any court filings and navigate family dynamics. Some of the tasks include:

  • Locating critical documents, like the will, any trusts, deeds, vehicle titles, etc.
  • Obtaining death certificates.
  • Overseeing funeral arrangements and memorial services, if any.
  • Filing the will in probate court.
  • Creating an estate bank account, after obtaining an estate tax number (EIN).
  • Notifying organizations, including Social Security, pension accounts, etc.
  • Paying creditors.
  • Distributing assets.
  • Overseeing the sale or transfer of real estate
  • Filing estate tax returns and final tax returns.

If you are asked to become the executor of an estate for a loved one, it’s a good idea to gather as much information as possible while the person is still living. It will be far easier to tackle the tasks, if you have been set up to succeed. Find out where their estate planning documents are and read the documents to make sure you understand them. If you don’t understand, ask, and keep asking until you do. Similarly, obtain information about all assets, including joint assets. Find out if there are any family members who may pose a challenge to the estate.

Today’s assets include digital assets. Ask for a complete list of the person’s online accounts, usernames and passwords. You will also need access to their devices: desktop computer, laptop, tablet, phone and smart watch. Discuss what they want to happen to each account and see if there is an option for you to become a co-owner of the account or a legacy contact.

Many opt to have an estate planning attorney manage some or all of these tasks, as they can be very overwhelming. Frankly, it’s hard to administer an estate at the same time you’re grieving the loss of a loved one.

As executor, you are a fiduciary, meaning you’re legally required to put the deceased’s interests above your own. This includes managing the estate’s assets. If the person owned a home, you would need to secure the property, pay the mortgage and/or property taxes and maintain the property until it is sold or transferred to an heir. Financial accounts need to be managed, including investment accounts.

The amount of time this process will take, depends on the complexity and size of the estate. Most estates take at least twelve months to complete all of the administrative work. It is a big commitment and can feel like a second job.

A few things vary by state. Convicted felons are never permitted to serve as executors, regardless of what the will says. A sole executor must be a U.S. citizen, although a non-citizen can be a co-executor, if the other co-executor is a citizen. Rules also vary from state to state regarding being paid for your time. Most states permit a percentage of the size of the estate, which must be considered earned income and reported on tax returns.

Be very thorough and careful in documenting every decision made as the executor to protect yourself from any future challenges. This is one job where trying to do it on your own could have long-term effects on your relationship with the family and financial liability, so take it seriously. If it’s too much, an estate planning attorney can help.

Reference: U.S. News & World Report (Dec. 22, 2021) “How to Prepare to Be an Executor of an Estate” 

What a Will Can and Cannot Do

Having a will doesn’t avoid probate, the court-directed process of validating a will and confirming the executor. To avoid probate, an estate planning attorney can create trusts and other ways for assets to be transferred directly to heirs before or upon death. Estate planning is guided by the laws of each state, according to the article “Before writing your own will know what wills can, can’t and shouldn’t try to do” from Arkansas Online.

In some states, probate is not expensive or lengthy, while in others it is costly and time-consuming. However, one thing is consistent: when a will is probated, it becomes part of the public record and anyone who wishes to read it, like creditors, ex-spouses, or estranged children, may do so.

One way to bypass probate is to create a revocable living trust and then transfer ownership of real estate, financial accounts, and other assets into the trust. You can be the trustee, but upon your death, your successor trustee takes charge and distributes assets according to the directions in the trust.

Another way people avoid probate is to have assets retitled to be owned jointly. However, anything owned jointly is vulnerable, depending upon the good faith of the other owner. And if the other owner has trouble with creditors or is ending a marriage, the assets may be lost to debt or divorce.

Accounts with beneficiaries, like life insurance and retirement funds bypass probate. The person named as the beneficiary receives assets directly. Just be sure the designated beneficiaries are updated every few years to be current.

Assets titled “Payable on Death” (POD), or “Transfer on Death” (TOD) designate beneficiaries and bypass probate, but not all financial institutions allow their use.

In some states, you can have a TOD deed for real estate or vehicles. Your estate planning attorney will know what your state allows.

Some people think they can use their wills to enforce behavior, putting conditions on inheritances, but certain conditions are not legally enforceable. If you required a nephew to marry or divorce before receiving an inheritance, it’s not likely to happen. Someone must also oversee the bequest and decide when the inheritance can be distributed.

However, trusts can be used to set conditions on asset distribution. The trust documents are used to establish your wishes for the assets and the trustee is charged with following your directions on when and how much to distribute assets to beneficiaries.

Leaving money to a disabled person who depends on government benefits puts their eligibility for benefits like Supplemental Security Income and Medicaid at risk. An estate planning attorney can create a Special Needs Trust to allow for an inheritance without jeopardizing their services.

Finally, in certain states you can use a will to disinherit a spouse, but it’s not easy. Every state has a way to protect a spouse from being completely disinherited. In community property states, a spouse has a legal right to half of any property acquired during the marriage, regardless of how the property is titled. In other states, a spouse has a legal right to a third to one half of the estate, regardless of what is in the will. An experienced estate planning attorney can help draft the documents, but depending on your state and circumstances, it may not be possible to completely disinherit a spouse.

Reference: Arkansas Online (Dec. 27, 2021) “Before writing your own will know what wills can, can’t and shouldn’t try to do”

How Does Probate Work?

Probate is a court-directed process to examine the last will and testament, authorize the executor named in the last will and give the “all clear” to the executor to go ahead and carry out all of the directions in the last will. However, it’s not always that simple—and sometimes, it can get extremely complicated.

A probate judge also oversees cases when there is no last will, explains the article “How Do Probate Judges Administer Estates?” from Yahoo! Finance. If there is no last will, the estate is considered “intestate,” and the court appoints an administrator to manage the estate.

Most probate cases are decided using the laws of the state. The probate judge may also be involved in guardianship and mental competency cases. In some states, the probate court oversees adoption cases instead of a family court. However, the main responsibility of the probate judge is overseeing estates.

Probate includes the process of determining the last will’s validity, ensuring that bills and taxes are paid and property is distributed according to the deceased’s wishes. However, if there is no last will and no family member petitions the court to contest the last will, the probate judge’s involvement in the estate (and the family’s life) becomes far more extensive.

Here’s how it works.

The executor of the estate files the last will with the probate court. The probate court has to be sure there are no objections to the last will, like a possibility that someone may claim that the last will was not knowing and voluntarily made by the decedent. In the most intense cases, the judge may have to declare the need for litigation. However, if there are no objections, the executor is approved. The next step is for the executor to get a tax ID number from the IRS and open an estate bank account.

The executor next notifies all interested parties about the last will. This is done by placing classified ads in local newspapers. All possible heirs must be notified, whether they are mentioned in the last will or not, and if they can be found. Creditors have a specific time period to submit claims against the estate through the probate court.

Inventory of all assets must be done, and a total value assigned to the estate on the date of death. The inventory is filed with the probate court and provided to heirs. This is a lot of work, and the executor must be diligent. It may be necessary to hire professionals to value assets, like real estate. Many people work with an estate planning attorney to ensure that the estate is properly valued.

If the last will is contested, the probate judge reviews evidence and hears arguments. The process can take years, depending on the complexity of the estate. The probate judge issues rulings and opinions.

If there is no last will, the judge appoints an administrator of the estate to conduct the duties of the executor as described above. With no last will, the probate judge invokes the law of intestate succession, which in most states, means that the order of inheritance is based on the relationship between the deceased and the next of kin. If there are estranged family members, they may end up inheriting most of the estate, regardless of their relationship with the decedent.

Having a last will prepared by an experienced estate planning attorney permits you to make the decisions about your property, spares your family from potentially losing everything you have worked to attain and saves your loved one’s time, money and emotional hardship.

Reference: Yahoo! Finance (Aug. 31, 2021) “How Do Probate Judges Administer Estates?”

What You Need to Know about Probate

We often read about celebrities who die without an estate and how everything they own must go through probate. The article titled “What to know about probate” from wmur.com explains what that means, and what you need to understand about wills, probate and estate planning.

Probate is a process used to prove that a person’s will is valid and to supervise how their estate is handled. It involves a court that focuses on this area. Much about the process depends upon the state in which it’s taking place, since these laws vary from state to state.

When someone dies without a will, they have failed to provide instructions for the distribution of their property. Their assets will still be distributed, but the laws of the state will determine what happens next. The state follows intestacy laws, which outline pre-set patterns of distributing property. In one state, property will go to the spouse and children. In others, the spouse may get everything.

Other decisions are made for your family when there is no will. If you have not named an executor, the court will appoint someone to oversee your estate. The court will also appoint a person to raise your children, if no guardian has been named for minor children. A family member may be chosen, but it may not be the family member you wanted to raise your kids, or it may be a stranger in a foster home.

Another reason to have a will is that probate can take a few months, or, depending on where you live, a few years, to complete. If there is litigation, and not having a will makes that more likely, it would take longer and will undoubtedly cost more. While this is going on, assets may lose value and heirs may suffer from not having access to assets.

Probate is also costly. There are legal notices to be published, court fees, executor fees and bond premiums, appraisal fees and attorney expenses.

Having an estate plan also means tax planning. While the federal estate tax as of this writing is $11.7 million per individual, it will not be that high forever. If the proposals to lower the federal estate tax to $3.5 million per person come to pass, will your estate escape estate taxes? What about your state’s estate or inheritance taxes?

Probate is also a very public process. Once a will is admitted as valid by the court, it becomes a public document. Anyone and everyone can view it and learn about your net worth and who got what.

With all these drawbacks, are there good reasons to allow your estate to go through probate? In some cases, yes. If multiple wills have been found, probate will be needed to establish which will is the correct one. If the will is confusing or complex, probate could provide the clarity needed to settle the estate. If beneficiaries are litigious, probate may be the voice of authority to quell some (but not all) disputes. And if the estate has no money and a lot of debt, it may be the probate court that sorts out the situation.

Every estate is different. Therefore, it is important to speak with an estate planning attorney to have a will, power of attorney and any health care directives created and properly executed. Every few years, these documents should be reviewed and revised to keep up with changes in the law and in your personal life.

Reference: wmur.com (July 29, 2021) “What to know about probate”

Do You Have to Do Probate when Someone Dies?

Probate is a Latin term meaning “to prove.” Legally, a deceased person may not own property, so the moment a person dies, the property they owned while living is in a legal state of limbo. The rightful owners must prove their ownership in court, explains the article “Wills and Probate” from Southlake Style. Probate refers to the legal process that recognizes a person’s death, proves whether or not a valid last will exists and who is entitled to assets the decedent owned while they were living.

The probate court oversees the payment of the decedent’s debts, as well as the distribution of their assets. The court’s role is to facilitate this process and protect the interests of all creditors and beneficiaries of the estate. The process is known as “probate administration.”

Having a last will does not automatically transfer property. The last will must be properly probated first. If there is a last will, the estate is described as “testate.” The last will must contain certain language and have been properly executed by the testator (the decedent) and the witnesses. Every state has its own estate laws. Therefore, to be valid, the last will must follow the rules of the person’s state. A last will that is valid in one state may be invalid in another.

The court must give its approval that the last will is valid and confirm the executor is suited to perform their duties. Texas is one of a few states that allow for independent administration, where the court appoints an administrator who submits an inventory of assets and liabilities. The administration goes on with no need for probate judge’s approval, as long as the last will contains the specific language to qualify.

If there was no last will, the estate is considered to be “intestate” and the laws of the state determine who inherits what assets. The laws rely on the relationship between the decedent and the genetic or bloodline family members. An estranged relative could end up with everything. The estate distribution is more likely to be challenged if there is no last will, causing additional family grief, stress and expenses.

The last will should name an executor or administrator to carry out the terms of the last will. The executor can be a family member or a trusted friend, as long as they are known to be honest and able to manage financial and legal transactions. Administering an estate takes time, depending upon the complexity of the estate and how the person managed the business side of their lives. The executor pays bills, may need to sell a home and also deals with any creditors.

The smart estate plan includes assets that are not transferrable by the last will. These are known as “non-probate” assets and go directly to the heirs, if the beneficiary designation is properly done. They can include life insurance proceeds, pensions, 401(k)s, bank accounts and any asset with a beneficiary designation. If all of the assets in an estate are non-probate assets, assets of the estate are easily and usually quickly distributed. Many people accomplish this through the use of a Living Trust.

Every person’s life is different, and so is their estate plan. Family dynamics, the amount of assets owned and how they are owned will impact how the estate is distributed. Start by meeting with an experienced estate planning attorney to prepare for the future.

Reference: Southlake Style (May 17, 2021) “Wills and Probate”