What’s Involved in the Probate Process?

SWAAY’s recent article entitled “What is the Probate Process in Florida?” says that while every state has its own laws, the probate process can be fairly similar. While the Article is about Florida, the New York process is similar. Here are the basic steps in the probate process:

The family consults with an experienced probate attorney. Those mentioned in the decedent’s will should meet with a probate lawyer. During the meeting, all relevant documentation like the list of debts, life insurance policies, financial statements, real estate title deeds, and the will should be available.

Filing the petition. The process would be in initiated by the executor or personal representative named in the will. He or she is in charge of distributing the estate’s assets. If there’s no will, you can ask an estate planning attorney to petition a court to appoint you as an administrator. When the court approves the estate representative, the Letters of Administration or Letters Testamentary are issued as evidence of legal authority to act as the executor. The executor will pay state taxes, funeral costs, and creditor claims on behalf of the decedent. He or she will also notice creditors and beneficiaries, coordinate the asset distribution and then close the probate estate.

Noticing beneficiaries and creditors. The executor must notify all beneficiaries of trust estates, the surviving spouse and all parties that have the rights of inheritance. Creditors of the deceased will also want to be paid and will make a claim on the estate.

Obtaining the letters of administration (letters testamentary) obtained from the probate court. After the executor obtains the letter, he or she will open the estate account at a bank. Statements and assets that were in the deceased name will be liquidated and sold, if there’s a need. Proceeds obtained from the sale of property are kept in the estate account and are later distributed.

Settling all expenses, taxes, and estate debts. By law, the decedent’s debts must typically be settled prior to any distributions to the heirs. The executor will also prepare a final income tax return for the estate. Note that life insurance policies and retirement savings are distributed to heirs despite the debts owed, as they transfer by beneficiary designation outside of the will and probate.

Conducting an inventory of the estate. The executor will have conducted a final account of the remaining estate. This accounting will include the fees paid to the executor, probate expenses, cost of assets and the charges incurred when settling debts.

Distributing the assets. After the creditor claims have been settled, the executor will ask the court to transfer all assets to successors in compliance with state law or the provisions of the will. The court will issue an order to move the assets. If there’s no will, the state probate succession laws will decide who is entitled to receive a share of the property.

Finalizing the probate estate. The last step is for the executor to formally close the estate. The includes payment to creditors and distribution of assets, preparing a final distribution document and a closing affidavit that states that the assets were adequately distributed to all heirs.

Reference: SWAAY (Aug. 24, 2020) “What is the Probate Process in Florida?”

 

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Estate Planning for Asset Distribution

Asset Distribution – Without proper planning, your state law determines who inherits your property—everything from your home, car, bank accounts and personal possessions. Your spouse may not necessarily be your heir—and that’s just one of many reasons to have an estate plan.

An estate plan avoids a “default” distribution of your possessions, says the recent article “Asset distribution when we die” from LimaOhio.com.

Let’s say someone names a nephew as the beneficiary of his life insurance policy. The life insurance company has a contractual legal responsibility to pay the nephew, when the policy owner dies. In turn, the nephew will be required to provide a death certificate and prove that he is indeed the nephew. This is an example of an asset governed by a contract, also described as a named beneficiary.

Assets that are not governed by a contract are distributed to whoever a person directs to get the asset in their will, aka their last will and testament. If there is no will, the state law will determine who should get the assets in a process known as “intestate probate.”

In this process, when there is a last will, the executor is in charge of the assets. The executor is overseen by the probate court judge, who reviews the will and must give approval before assets can be distributed. However, the probate court’s involvement comes with a price, and it is not always a fast process. It is always faster and less costly to have an asset be distributed through a contract, like a trust or by having a beneficiary named to the asset.

If a will only provides limited instructions, the state’s law will fill in the gaps. Therefore, any assets that pass-through contracts will be distributed directly, assets noted in the will go through probate and anything else will go usually to the next of kin.

A better course of action is to have an estate attorney review all of your assets, determine who you want to receive your property and make up a plan to make this happen in a smooth, tax-efficient manner.

Reference: LimaOhio.com (Aug. 22, 2020) “Asset distribution when we die”

 

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Daughters of Don Lewis from Tiger King File Lawsuit

Wealth Advisor’s recent article entitled “Family of Tiger King ’s Don Lewis files lawsuit against Carole Baskin and others” explains that that the attorney filed a “pure bill of discovery.” That’s a pretty obscure legal pleading. It demands that the defendants produce information they might have about the Lewis case for possible use in later lawsuits. The plaintiffs are Lewis’ adult daughters, Donna L. Pettis, Lynda L. Sanchez, Gale Rathbone and Lewis’ longtime assistant, Anne McQueen.

“It’s a lawsuit for equity,” said Jacksonville based lawyer John M. Phillips, who specializes in personal injury and wrongful death cases and is representing Lewis’ family in the action.

At a news conference, Phillips explained that his legal move could mean depositions and subpoenas to determine who exactly the family will sue in the future. The complaint demands that the defendants turn over electronic device data, diaries and investigative material related to Lewis. Phillips said Carole Baskin, one of the stars of the Netflix series is “invited to the table” to willingly come forward with information on Lewis.

“Generally you announce a $150 million lawsuit and how we’re going to get justice,” Phillips said. “And we are going to do all of that, in time. But our office wants to invite reason, to invite civil conversation where it can be had.”

Carole Baskin was married to Lewis, when he disappeared. Kenny Farr worked as a handyman for Lewis for many years and continued working for Baskin after Lewis went missing. The third defendant in the suit, Susan A. Bradshaw, is listed as a witness on Lewis’ will and durable power of attorney. Bradshaw told the Tampa Bay Times in 2005 that Baskin asked her to testify that she was there for the will signing—but she wasn’t.

Phillips said that his law firm is also conducting an independent investigation into Lewis’ disappearance.

“We may or may not have hopped a fence yesterday just to try to investigate and find out if, you know, if this was a place where Don Lewis could have been buried,” Phillips said in an interview with HLN.

A judge is tasked with deciding whether to allow the bill of pure discovery to go forward. The family’s attorney will have to convince the judge that the lawsuit isn’t filed as a “fishing expedition,” simply looking for evidence, or that it’s not being used to harass the defendants.

Lewis was never found after his wife reported him missing in August of 1997, a day before a scheduled trip to Costa Rica. Lewis was declared legally dead in 2002. The interest in Lewis’ case again came into focus, when it was part of the hit Netflix series “Tiger King”, which was the story of the feud between Baskin and Oklahoma zookeeper Joe Exotic. Lewis’ daughters suspect that Baskin was somehow involved in their father’s disappearance.

Reference: Wealth Advisor (Aug. 11, 2020) “Family of Tiger King’s Don Lewis files lawsuit against Carole Baskin and others”

 

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What Is a Testamentary Trust ?

A testamentary trust is a legal document that’s part of your will. It goes into effect after your death. This trust holds property for your heirs’ benefit and comes into effect when three criteria are met:

  • the testator has died
  • the will goes through probate; and
  • and the terms of the trust are still relevant.

US News and World Report’s recent article entitled “What’s a Testamentary Trust and How Do I Create One?” explains that a frequent reason to create a testamentary trust, is to provide for your children after your death.

Testamentary trusts are not the same as living trusts. Those trusts become effective while you’re still alive. The main purpose of a living trust is to allow assets within the trust to avoid the legal proceedings associated with administering the will in the probate process.

With such a trust, assets are transferred to the trust at your death through your will. As a result, they’re subject to probate proceedings.

A living trust can be revocable. That means it can be modified at any time. There’s also an irrevocable trust, which means that it can’t be changed once it’s finalized. A testamentary trust can be changed up, until the creator’s death.

A testamentary trust is often used when the creator has minor children and wants to provide some financial control over the assets, if both parents die while the children are minors. The trust can arrange management of those assets by a trustee.

You can also employ a testamentary trust for Medicaid planning. State law has a lot to do with how this works, so it is best to speak with an experienced estate planning attorney or elder law attorney.

Generally speaking, if you have a beneficiary who needs Medicaid government benefits, a supplemental needs trust or Medicaid trust can help the beneficiary afford needed expenses, without disqualifying them from the program’s benefits.

Note that Medicaid benefits are available to people who own few assets and eligibility is income-based.

Reference: US News and World Report (Aug. 6, 20201) “What’s a Testamentary Trust and How Do I Create One?”

 

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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 Petition must be filed in court and often a court appearances is 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 any 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. 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.

It should be noted that a higher level of competency—mental comprehension—must be possessed by an individual to execute a trust than to execute a will. A person whose capacity may be questionable because of Alzheimer’s or another illness may not be legally competent enough to execute a trust. Their heirs may face challenges to the estate plan in that case.

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

 

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‘ Siegfried & Roy ’ Star Roy Horn Named Siegfried His Executor

Legal documents revealed that Siegfried & Roy performer, Roy Horn’s last will and testament was filed in the Las Vegas courts on June 18, 2020, according to the article “’Siegfried & Roy’ Star Roy Horn’s Will Names Siegfried As Executor Of His Multi-Million Dollar Estate” as reported in The Blast. The document gave Siegfried Fischbacher the power to administer and distribute Horn’s assets after his death. If Siegfried was not able to perform the tasks, Roy Horn had named Lynette G. Chappell as the alternate executor.

Lynette G. Chappell was the performer’s longtime assistant.

Roy Horn died at age 75 after contracting COVID-19. Siegfried had told an interviewer that he drove to the hospital with Lynette and was able to see his life partner one more time before he died.

Roy Horn also named Siegfried’s longtime lawyer, John Moran Jr., to be co-executor of his estate with Chappell, if Siegfried was unable or unwilling to be his executor.

The will, which was signed in 2016, also included directions that Roy Horn’s multi-million estate be distributed to beneficiaries, which were named in a private trust. The trust was not attached to the legal filing that included the last will and testament, so the names of his beneficiaries will remain private. The will does state that Roy Horn is unmarried and has no children. He was survived only by his brother, Werner Horn.

Siegfried was given broad powers to manage all of the financial issues of the estate, including paying for the funeral and any expenses regarding handling Horn’s remains. As the executor, the personal representative is empowered to perform any act necessary to administer the estate and any trust established under the will. The will also permits Siegfried to hold, retain, invest, sell or manage any real or personal property, distribute assets of the estate without requiring pro-rata distribution of specific assets, employ attorneys, accountants, custodians, and any other agents or assistants as the executor deems necessary and to pay them and pay for their expenses from income or principal.

According to reports, Siegfried and Roy had a combined estimated net worth of more than $100 million, after they had signed several highly lucrative contracts to perform their award-winning show on the Las Vegas Strip.

The duo performed on the Las Vegas Strip for decades, until 2003, when their show abruptly ended when Roy was attacked on stage by a white tiger. He was dragged off the stage by the tiger and suffered severe injuries, including a severed spine, a stroke and massive blood loss.

Siegfried revealed in a recent interview with a German publication that Roy Horn had been cremated and his ashes are being kept in a chapel in their Las Vegas compound.

Reference: The Blast (June 27, 2020) “’Siegfried & Roy’ Star Roy Horn’s Will Names Siegfried As Executor Of His Multi-Million Dollar Estate”

 

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How Can You Disinherit a Child and Be Sure it Sticks?

How to disinherit a child – Let’s say you want to leave everything you own to your children, but you can’t stand and don’t trust their spouses. That might make you want to delay making an estate plan, because it’s a hard thing to come to terms with, says a recent article “Dealing with disinheritance, spouses” from the Times Herald-Record. There are options, but make the right choice, or your estate could face challenges.

Some people choose to leave nothing at all for their child in the will, so that if there is a divorce or if the child dies, their assets won’t end up in the daughter or son-in-law’s pocket. For some parents, particularly those who are estranged from their children, this can create more problems than it solves.

If you Disinherit a child with a will is not always a good idea. If you die with assets in your name only, they go through the court proceeding called probate, when the will is used to guide asset distribution. The law requires that all children, even disinherited ones, are notified that you have died, and that probate is going to occur. The disinherited child can object to the provisions in the will, which can lead to a will contest. Most families engaged in litigation over a will become estranged—even those that weren’t beforehand. The cost of litigation will also take a bite out of the value of your estate.

A common tactic is to leave a small amount of money when you disinherit child in the will and add a no-contest clause in the will. The no-contest clause expressly states that anyone who contests the will loses any right to their inheritance. Here is the problem: the disgruntled child may still object, despite the no contest clause, and invalidate the will by claiming undue influence or incapacity or that the will was not executed properly. If their claims are valid, then they’ll have great satisfaction of undoing your planning.

How can you disinherit a child, and be sure that your plan is going to stand up to challenge?

A trust is better in this case than a will. Not only do trusts avoid probate, but (unless state law requires otherwise at death) the children do not receive notice of the creation of a trust. An inheritance trust, where you leave money to your child, names a trustee to be in charge of the trust and the child is the only beneficiary of the trust. The child might be a co-trustee, but they do not have complete control over the trust. The spouse has no control over the inheritance, and you can also name what happens to the assets in the trust, if the child dies.

This kind of planning is called “controlling from the grave,” but it’s better than not knowing if your child will be able to protect their inheritance from a divorce or from creditors.

With a national divorce rate around fifty percent, it’s hard to tell if the in-law you welcome with an open heart, will one day become a predatory enemy in the future, even after you are gone. The use of trusts can ensure that assets remain in the bloodline and protect your hard work from divorces, lawsuits, creditors and other unexpected events.

Reference: Times Herald-Record (June 6, 2020) “Dealing with disinheritance, spouses”

 

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What If Grandma Didn’t Have a Will and Died from COVID-19?

Grandma Didn’t Have a Will – The latest report shows about 1.87 million reported cases and at least 108,000 COVID-19-related deaths were reported in the U.S., according to data released by Johns Hopkins University and Medicine.

Here’s a question that is being asked a lot these days: What happens if someone dies “intestate,” or without having established a will or estate plans?

If you die without a will in California and many other states, your assets will go to your closest relatives under state “intestate succession” statutes.

Yahoo Finance’s recent article entitled “My loved one died without a will – now what?” explains that there are laws in each state that will dictate what happens, if you die without a will.

In Pennsylvania, the laws list the order of who receives upon your death, if you die without a will: your spouse, your children, and then your parents (if still alive), your siblings, and then on down the line to cousins, aunts and uncles, and the like. Typically, first on every state’s list is the spouse and the children.

You may also have some valuable assets that will not pass via your will and aren’t affected by your state’s intestate succession laws. Here are some of the common ones:

  • Any property that you’ve transferred to a living trust
  • Your life insurance proceeds
  • Funds in an IRA, 401(k), or other retirement accounts
  • Any securities held in a transfer-on-death account
  • A payable-on-death bank account
  • Your vehicles held by transfer-on-death registration; or
  • Property you own with someone else in joint tenancy or as community property with the right of survivorship.

These types of assets will pass to the surviving co-owner or to the beneficiary you named, whether or not you have a will.

It’s quite unusual for the government to claim a deceased person’s estate. While it might be allowed in some states, it’s considered a last resort. Typically, we all have some relatives.

If you have a loved one who has died without a will, or if Grandma didn’t have a Will, speak with an experienced estate planning attorney about your next steps.

Reference: Yahoo Finance (June 1, 2020) “My loved one died without a will – now what?”

 

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What You Need to Do with a Family Member’s Assets after they Die?

The Dallas Morning News’ recent article entitled “Three things to do on the death of a loved one” explains the steps you should take, if you are responsible for a family member’s assets after they die.

Be sure the property is secured. A deceased person’s property becomes a risk in some instances. Friends and family will help themselves to what they think they should get, including the deceased’s personal property. Once it is gone, it is hard to get it back and into the hands of the individual who’s legally entitled to receive it.

Criminals also look at the obituaries, and while everyone is at the funeral or otherwise unoccupied, burglars can break into the house and steal property. Assign security or ask someone to stay at the house to protect the property. You can also change the locks. Credit cards, debit cards, and checks need to be protected. The deceased’s mail must be collected, and cars should be locked up.

Make funeral plans. If you’re lucky, the deceased left a written Appointment of Burial Agent with detailed instructions, which can make your job much easier.

For example, Texas law lets a person appoint an agent to be in charge of funeral arrangements and to describe the arrangements. An estate planning attorney can draft this document as part of an estate plan. You should see if this document was included. If you’re listed as the agent, present the paper to the funeral home and follow the instructions. If there are no written instructions, the law will say who has the authority to make arrangements for the disposition of the body and to plan the funeral.

Talk to an experienced attorney. When a person dies, there is often a lapse in authority. The decedent’s power of attorney is no longer in effect, and the executor designated in the will doesn’t have any authority to act, until the will is admitted to probate and the executor is appointed by the probate judge and qualifies by taking the oath of office and filing a bond, if required. Direction is needed earlier rather than later, on what you’re permitted to do. The probate of a will takes time.

It is best to get started promptly, so that there’s an executor in place with power to handle the affairs of the decedent.

Reference: Dallas Morning News (April 10, 2020) “Three things to do on the death of a loved one”

 

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What is a Letter Testamentary for an Estate?

Mom just passed away. You walk into the bank to get the money out mom’s bank account. But you are shocked when the bank says you are not allowed to have access to the bank account without getting a letter testamentary.

What?

The bank manager tells you: “A Letter testamentary can be gotten from a lawyer.”

You say: But I have her Last Will and Testament. I am supposed to get all the money. But still no luck convincing the banker.

So you go to the lawyer’s office and say, “I need a letter from a lawyer to get into mom’s bank account.”

Unfortunately, a letter testamentary is a court order. To get that court order you have to go through a court process called probate.

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