Last Will and Testament

Is Probate Required If There Is a Surviving Spouse?

Probate, also called “estate administration,” is the management and final settlement of a person’s estate after they pass away. It is conducted by an executor, also known as a personal representative, who is nominated in the will and approved by the court. Estate administration needs to be done when there are assets subject to probate, regardless of whether there is a will, says the article “Probating your spouse’s will” from The Huntsville Item.

Probate is the formal process of administering a person’s estate. In the absence of a will, probate also establishes heirship. In some regions, this is a quick and easy process, while in others it is a lengthy, complex and expensive process. The complexity depends upon the size and value of the estate, whether a proper estate plan was prepared by the decedent prior to death and if there are family members or others who might contest the will.

Family dynamics can cause a tremendous amount of complications and delays, especially if the family has blended children from prior marriages or if a child has predeceased their parents.

There are some exceptions, when the estate is extremely small and when probate is not required. However, in most cases, it is required.

A recent District Court case ruled that a will not admitted to probate is not effective for proving title and thereby ownership, to real estate. A title company was sued for defamation after the title company issued a title report that included the statement that the decedent had died intestate, that is, without a will.

The decedent’s son, who was her executor, sued the title company because his mother did indeed have a will and the title report was defamatory. The court rejected this theory, and the case was brought to the Appellate Court to seek relief for the family. The Appellate Court ruled that until a will has been admitted to probate, it is not effective for the purpose of proving title to real property.

If a person owns real estate, they must have an estate plan to ensure that their property can be successfully transferred to heirs. When there is no estate plan, heirs find out how big a problem this can be when someone decides they want to sell the property or divide it up among family members.

Problems also arise when the family finds that they must pay taxes on the property or that there are expenses that must be paid to maintain the property. Without a will, the disposition of the property is determined by the state’s estate law. Things can become complicated quickly, when there is no will.

If the deceased spouse has children from outside the most recent marriage, those children may have rights to the property and end up owning a portion of the property along with the surviving spouse. However, neither the children nor the surviving spouse can sell the property without each other’s approval. This is a common occurrence.

An estate planning attorney can help the family move through the probate process more efficiently when there is no will. A better situation would be for the family to speak with their parents about having a will and estate plan created before it’s too late.

Reference: The Huntsville Item (Nov. 22, 2020) “Probating your spouse’s will”

Why Everyone Needs an Estate Plan

Many people think you have to be a millionaire to need an estate plan and investing in an estate plan is too costly for the average American. Not true! People of modest means actually need an estate plan more than the wealthy to protect what they have. A recent article from TAPinto.net explains the basics in “Estate Planning–Getting Your Affairs in Order Does Not Need to be Complicated or Expensive.”

Everyone needs an estate plan that includes the following documents: a Last Will and Testament, a General Durable Power of Attorney and an Advance Medical Directive or Living Will, and a HIPAA Release.

Everyone needs an estate plan
People of modest means actually need an estate plan more than the wealthy.

Unless your estate is valued at more than $11.58 million, you may not be as concerned about federal estate taxes right now, but this may change in the near future. Some states, like Florida, don’t have any state estate tax at all. There are states, like Pennsylvania, which have an “inheritance” tax determined based on the relationship the person has with the decedent. However, taxes aren’t the only reason to have an estate plan.

If you have young children, your will is the legal document used to tell your executor and the court who you want to raise your minor children by naming their guardian.

Why do you need a General Power of Attorney? This is the document that you need to name a person to be in charge of your affairs, if you become incapacitated and can’t make or communicate decisions. Without a POA in place, no one has the legal authority to manage your financial and legal affairs. Your family would have to go to court and file a guardianship action, which can be expensive, take time to complete and create unnecessary stress for the family.

An Advance Medical Directive, also known as a Living Will, is used to let a person of your choice make medical decisions, if you are unable to do so. This is a very important document to have, especially if you have strong feelings about being kept alive by artificial means. The Advance Medical Directive gives you an opportunity to express your wishes for end of life care, as well as giving another person the legal right to make medical decisions on your behalf. Without it, a guardianship may need to be established, wasting critical time if an emergency situation occurs.

Most people of modest means need only these three documents, but they can make a big difference to protect the family. If the family includes disabled children or individuals, owns a business or real estate, there are other documents needed to address these more complex situations. However, simple or complex, your estate and your family deserve the protection of an estate plan.

Reference: TAPinto.net (Sep. 23, 2020) “Estate Planning–Getting Your Affairs in Order Does Not Need to be Complicated or Expensive”

There Is a Difference between Probate and Trust Administration

Many people get these two things confused. A recent article, “Appreciating the differences between probate and trust administration,” from Lake County News clarifies the distinctions.

Let’s start with probate, which is a court-supervised process. To begin the probate process, a legal notice must be published in a newspaper and court appearances may be needed. However, to start trust administration, a letter of notice is mailed to the decedent’s heirs and beneficiaries. Trust administration is far more private, which is why many people chose this path.

In the probate process, the last will and testament and most other documents in the court file are available to the public. While the general public may not have any specific interest in your will, estranged relatives, relatives you never knew you had, creditors and scammers have easy and completely legal access to this information.

If there is no will, the court documents that are created in intestacy (the heirs inherit according to state law), are also available to anyone who wants to see them.

In trust administration, the only people who can see trust documents are the heirs and beneficiaries.

There are cost differences. In probate, a court filing fee must be paid for each petition, plus the newspaper publication fee. The fees vary, depending upon the jurisdiction. Add to that the attorney’s and personal representative’s fees, which also vary by jurisdiction. Some are on an hourly basis, while others are computed as a sliding scale percentage of the value of the estate under management. For example, each may be paid 4% of the first $100,000, 3% of the next $100,000 and 2% of any excess value of the estate under management. The court also has the discretion to add fees, if the estate is more time consuming and complex than the average estate.

For trust administration, the trustee and the estate planning attorney are typically paid on an hourly basis, or however the attorney sets their fee structure. Expenses are likely to be far lower, since there is no court involvement.

There are similarities between probate and trust administration. Both require that the decedent’s assets be collected, safeguarded, inventoried and appraised for tax and/or distribution purposes. Both also require that the decedent’s creditors be notified, and debts be paid. Tax obligations must be fulfilled, and the debts and administration expenses must be paid. Finally, the decedent’s beneficiaries must be informed about the estate and its administration.

The use of trusts in estate planning can be a means of minimizing taxes and planning for family assets to be passed to future generations in a private and controlled fashion. This is the reason for the popularity of trusts in estate planning.

Reference: Lake County News (July 4, 2020) “Appreciating the differences between probate and trust administration”

Turning 65 in 2020? Some Pointers for a Special Year

Many things change when celebrating your 65th birthday. For one thing, if you haven’t already retired, chances are good that you’ve set a retirement date and it’s not too far away. There are a number of things to be considered, advises the article “Points to ponder before turning 65” from Knox News.

The year you turn 65 is the year that you enroll in Medicare. Coverage begins at age 65, and the initial window to enroll opens three months before your 65th birthday and ends three months after. Miss that deadline, and there may be penalties when you do at last sign up for Medicare.

You can sign up for Medicare, whether you are working or not. If you are turning 65 and already collecting Social Security, you’ll automatically be enrolled in Medicare Parts A and B. You’ll need to sign up for Part D to avoid penalties, unless you have coverage through a spouse’s employer.

Here are some details:

  • Part A covers hospital care and is generally free for enrollees.
  • Part B covers diagnostic and preventive care. You pay for it with a monthly premium.
  • If you’re still working at age 66 and have health insurance through your employer, you may choose not to enroll in Part B. You can sign up for Part A, at no cost, and delay Parts B and D.
  • If you’re still working past 65 and have creditable coverage through your employer or your spouse’s employer, then you can defer Medicare.

Note that you may not get a full monthly benefit, if you claim Social Security right away. You can begin collecting Social Security at the young age of 62, but you won’t get the full monthly benefit that you otherwise would get unless you wait until you reach full retirement age. That date depends upon your date of birth. For most people turning 65 in 2020, that means full retirement age is 66 plus two months. Is it worth the wait? Your monthly benefit shrinks by 7.8%, if you file for benefits at age 65.

This is the time to check on your estate planning documents. If you don’t have these already, speak with an estate planning attorney to make sure that you and your family are protected by the following:

  • General Durable Power of Attorney for Finances
  • Durable Power of Attorney for Healthcare
  • HIPAA release
  • Revocable Living Trust
  • Advanced Health Care Directive
  • Last Will and Testament

It’s a great birthday to celebrate but be certain that you take care of the estate planning, Medicare and Social Security aspects of your life, as you prepare for this milestone.

Reference: Knox News (December 26, 2019) “Points to ponder before turning 65”Social Security, Medicare, Part A, Part B, Estate Planning Attorney, Power of Attorney, Revocable Living Trust, Health Care Directive, Last Will and Testament

Having a Will Is Not The Same As Having An Estate Plan

A last will and testament is an important part of an estate plan, and every adult should have one. But, there is only so much that a will can do, according to the article “Estate planning involves more than a will” from The News-Enterprise.

estate plan
Having a Will and having an Estate Plan are as different as apples and oranges.

First, let’s look at what a will does. During your lifetime, you have the right to transfer property. If you have a Power of Attorney it gives someone you name the authority to transfer your property or manage your affairs, while you are alive. In most states, this document expires upon your death.

When you die, a will is one piece of your estate plan that is used to transfer your property, according to your wishes. If you do not have a will, the court must determine who receives the property, as determined by your state’s law. However, only certain property passes through a will.

Individually owned property that does not have a beneficiary designation must be transferred though the process of probate. This includes real property, like house or a land, if there is no right of survivorship provision within the deed. The deed to the property determines the type of ownership each person has.

Couples who purchase property after they are married, usually own the property with the right of survivorship. This means that the surviving owner continues to own the property without it going through probate.

However, when deeds do not have this provision, each owner owns only a portion of the property. When one owner dies, the remaining owner’s portion must be passed through probate to the beneficiaries of the decedent.

Assets that have a designated beneficiary do not pass through probate, but are paid directly to the beneficiary. These are usually life insurance policies, retirement accounts, investment and/or bank accounts. Your will does not control these assets.

Beneficiaries through the will only receive whatever property is left over, after all reasonable expenses and debts are paid.

If you wish to ensure that beneficiaries receive assets over time through your estate plan, that can be done through a trust. The trust can be the beneficiary of a payable-on-death account. A revocable trust avoids property going through the probate process and can be established with your directions for distribution.

A will is a good start to an estate plan, but it is not the whole plan. Speak with an estate planning attorney about your situation and they will be able to create a plan that addresses distribution of your assets, as well as protect you from incapacity.

Reference: The News-Enterprise (September 30, 2019) “Estate planning involves more than a will”

How Does a Probate Proceeding Work?

A Will, also known as Last Will and Testament, is a legal document that is used in probate court.  It’s used when a person dies with assets that are in their name alone without a surviving joint owner or beneficiary designated, says the Record Online in the article “Anatomy of a probate proceeding.”

So, how does a probate proceeding work?

How does a probate proceeding work
Probate has been referred to as the law suit you file against yourself after you pass away.

Probate is a judicial or court proceeding, where the probate court has jurisdiction over the assets of the person who has died. The court oversees the personal representative’s payment of debts, taxes and probate fees, in addition to supervising distribution of assets to the person’s beneficiaries. The personal representative of the will has to manage the probate assets and then report to the court.

Without a will, things can get messy. A similar court proceeding takes place, but it is known as intestate succession, and the assets are distributed according to state law.

To start the probate proceeding, the personal representative completes and submits a Petition for Administration with the probate court. Most personal representatives hire an estate planning attorney to help with this. The attorney knows the process, which keeps things moving along.

The probate petition lists the beneficiaries named in the will, plus certain relatives who must, by law, receive legal notice in the mail. Let’s say that someone disinherits a child in their will. That child receives notice and learns they have been disinherited. Beneficiaries and relatives alike must return paperwork to the court stating that they either consent or object to the provisions of the will.

A disinherited child has the right to file objections with the court, and then begin a battle for inheritance that is known as a will contest. This can become protracted and expensive, drawing out the probate process for years. A will contest places all of the assets in the will in limbo. They cannot be distributed unless the court says they can, which may not occur until the will contest is completed.

In addition to the expense and time that probate takes, while the process is going on, assets are frozen. Only when the court gives the all clear does the judge issue what are called Letters of Administration, or “Letters Testamentary,” which allows the executor to start the process of distributing funds. They must open an estate account, apply for a taxpayer ID for the account, collect the assets and ultimately, distribute them, as directed in the will to the beneficiaries.

Now that you know a little about how a probate proceeding works you’re probably asking whether a will contest, or probate be avoided? Avoiding probate, or having selected assets taken out of the estate, is one reason that people use trusts as part of their estate plan. Assets can also be placed in joint ownership, and beneficiaries can be added to accounts, so that the asset goes directly to the beneficiary.

By working closely with an estate planning attorney, you’ll have the opportunity to prepare an estate plan that addresses how you want assets to be distributed, which assets may be placed outside of your estate for an easier transfer to beneficiaries and what you can do to avoid a will contest, if there is a disinheritance situation looming.

Reference: Record Online (August 24, 2019) “Anatomy of a probate proceeding”

When Should a No Contest Clause Be Included in My Will?

Deciding whether a no contest clause should be included in your will is an emotionally charged decision. Parents who sit down with an estate planning attorney would much rather talk about their grandchildren and how much they are looking forward to retirement.

When should a no contest clause be used in my will?
One of the main reasons to use a no contest clause is to deter a family member from challenging the distributions in your will.

But, when the discussion turns to how they want to distribute their assets, as reported in the article “Why is it called a ‘No Contest’ clause?” from The Daily Sentinel, the problem is revealed.

The parents share that there is a family member, an adult child, who has never been part of the family. Usually they have had a troubled past, pushed others in the family out of their lives and it’s heartbreaking for all concerned.

The discussion then moves to determining how to handle that family member with respect to their estate plan. “Do you want her to be part of your estate plan?” is the least judgmental question the attorney can ask. In many cases, the parents say yes and say they’ll keep trying to foster some kind of relationship, no matter how limited. In other cases, the answer is no.

In both cases, however, the concern is that the difficult child will fight with their siblings over their inheritance (or lack thereof) and take the battle to court. That’s one of the primary reasons a no contest clause should be included in a will.

As long as estate planning documents are prepared and executed correctly, they will survive a legal contest. However, putting in a no contest clause creates another barrier to an estate battle.

The no contest clause is intended to act as a strong deterrent for those individuals who believe they are entitled to more of the estate. It makes it clear that any challenges will result in a smaller portion of the estate, and possibly no inheritance at all, depending upon how it is written.

Both parents need to have a no contest provision included in their wills. The message is clear and consistent: these are the estate plans that we decided to create. Don’t try to change them.

For families with litigious family members or spouses who married into the family and feel that they are not being treated fairly, a no contest clause makes sense to protect the wishes of the parents.

Speak with an experienced estate planning attorney about how a no contest provision might work in your situation. If your family doesn’t need such a clause, count your blessings!

Reference: The Daily Sentinel (Aug. 10, 2019) “Why is it called a ‘No Contest’ clause?”

Will the State Decide Who Gets Your Assets?

It’s something that everyone needs, but often gets overlooked. Estate planning makes some people downright uncomfortable. There’s no law that says you must have an estate plan—just laws that will determine how your property is distributed and who will raise your children if you don’t have a will.  So, will the state decide who gets your assets?

Will the state decide who gets your assets?
If you don’t have a will when you pass away, state laws will determine who gets your assets.

If you don’t at least have a last will and testament, state statutes will decide who gets your assets after you pass away.  Thats one of the biggest reasons planning is important, says WMUR 9 in a recent article “Money Matters: Estate planning,” if you want to be the one making those decisions.

An estate plan can be simple if you only own a few assets, or complicated if you have significant assets, more than one home or multiple investments. Some strategies are easier to implement, like a last will and testament. Others can be more complex, like trusts. Whatever your needs, an estate planning attorney will be able to give you the guidance that your unique situation requires. Your estate planning attorney may work with your financial advisor and accountant to be sure that your financial and legal plans work together to benefit you and your family.

The first step for any estate plan is to review your family finances, dynamics and assets.

  • Who are your family members?
  • How do you want to help them?
  • What do they need?
  • What is your tax picture like?
  • How old are you, and how good is your health?
  • Do you have minor children?  If so, who will care for them?

These are just a few of the things an estate planning attorney will discuss with you. Once you are clear on your situation, you’ll discuss overall goals and objectives. The attorney will be able to outline your options, whether you are concerned with passing wealth to the next generation, avoiding family disputes, preparing for a disability or transferring ownership of a business.

A last will and testament will provide clear, legal direction as to how your assets should be distributed and who will care for your minor children.

A trust is used to address more complex planning concerns. A trust is a legal entity that holds assets to be used for the benefit of one or more individuals. It is overseen by a trustee or trustees, who can be individuals you name or professionals.

If you create trusts, it is important that assets be retitled so the trust owns the assets and not you personally. If the assets are not retitled, the trust will not achieve your goals.

Some property typically has its own beneficiary designations, like IRAs, retirement accounts and life insurance. These assets pass directly to heirs according to the designation, but only if you make the designations on the appropriate forms.

Once you’re done with your estate plan, make a note on your calendar. Estate plans and beneficiary designations need to be reviewed every three to five years. Lives change, laws change and your estate plan needs to keep pace.

Don’t be left asking yourself whether the state will decide who gets your assets.  Take charge and work with an experienced estate planning attorney to make sure you are the one deciding who gets your assets and who will raise your children.

Reference: WMUR 9 (Aug. 1, 2019) “Money Matters: Estate planning”

Estate Planning Basics Everyone Should Know

The discomfort most people have with the knowledge of their own mortality makes it challenging for some people to do the estate planning that needs to take place before an emergency occurs. However, according to the Gettysburg Times’ recent article “Essentials necessary for estate planning,” the best course of action is to take care of the estate planning basics now, when there is no urgency. Having detailed plans in place to protect loved ones from possible complications, costs and added stress in the future, is a gift you can give to those you love.

Estate Planning Basics
Taking care of the estate planning basics is a simple but important step for everyone to take.

There are any number of legal documents and strategies used to accommodate the varied situations of life, including family dynamics and asset levels. An estate planning attorney licensed in your state will have the ability to create a plan and the documents that suit your personal situation. The three documents discussed in the following section are generally considered to be the most important for anyone to have.

Power of Attorney or POA—This document gives legal authority to another person or entity, referred to as your “Agent”, to perform certain acts on your behalf, when you cannot do so because of illness, injury or incapacity. There are many different types of POA, from a “full” POA with no limitations, to a “limited” POA that is created solely for a specific purpose. This document comes into action, when you are incapacitated and becomes void upon your death.

Living Will—This is a detailed health care directive that allows you to list your wishes regarding several medical procedures and life-sustaining treatments. These treatments include resuscitations, breathing assistance, feeding tubes and similar medical matters. You want to have this in place to spare your loved ones the emotional anguish of trying to decide what you would have wanted. They’ll know, because you specifically told them in this document.

Last Will and Testament—When prepared correctly, and that includes signed, witnessed, and notarized, a will is used by the “testator” (the person making the will) to provide the legal wishes regarding what should happen to their minor children (if any) and assets upon death.

What happens if you don’t have these documents? It is likely that your loved ones will need to go to court to have someone named as your agent or executor, which is the person who is in charge of your estate. Depending upon the laws of your state, that person may be a family member, or it may end up being a family member who you haven’t spoken to in decades. It is far better to take the time to have these estate planning basics taken care of by an estate planning attorney, so your family is protected, and your wishes are fulfilled.

The best time to do this, is when there is no crisis. Estate plans also require regular monitoring and updating. Life circumstances change, estate and tax laws change, and new opportunities may present themselves. Speak with your estate planning attorney now and create your plan for the future.

Reference: Gettysburg Times (July 27, 2019) “Essentials necessary for estate planning”

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