Tag Archives: probate

Small Estates: No Probate Necessary

Dear Liza: If there is no or very little property left under a will (because almost all was left under a revocable trust), and there are no known outstanding debts, is it necessary to file the will with the probate court (New York)?  If it is necessary, are probate court proceedings necessary? Check with the probate court in your county (called Surrogates Court in New York) as for Will filing requirements.  But it doesn’t sound like you’ll need to open a probate. Most states have some way for small estates to bypass a full-blown probate proceeding. In New York, if the property left is worth less than $30,000, you can settle the estate with what’s called a summary probate proceeding. Here’s a link to more info.  In other states, like California, if the total value of property is less than a certain amount, you can transfer the assets using what’s called a Small Estates Affidavit, after waiting for a certain number of days after the death.

Stuff in the House: Tangible Personal Property

Dear Liza: My mother is 79 years old and is on social security.  She and her brother own a house together.  At this point, I really don’t care if her brother has control of the property.  But I do care if the contents of the house are legally given to him.  Does he have rights to the contents of the furniture in the house?   Does my mother need a Will and would that Will prevent her estate from going into probate?   Your mother’s furniture and furnishings are what’s called “tangible personal property.” This is lawyer-speak for all the stuff in her house: pots, pans, rubber bands, and the couch. That property will pass to you and your siblings if your mother executes a simple Will and gives her tangible personal property and any other assets she owns to her children.  If the house is owned in joint tenancy, the surviving joint tenant (your uncle) would own the property upon your mother’s death, by what’s called “right of survivorship.”  The house passes to him because of the way he and your mother owned it.  But the tangibles, and anything else your mother owned other than the house, would pass to her kids via her Will.  If all she really has at this point are those tangibles, no probate would be required because states exclude small estates from the necessity of a probate proceeding.  Nolo offers a simple Will that would do the trick.

What if there’s no Will?

Dear Liza: My father passed away last fall and I have not received any notification of a Will.  I am estranged from my family and my brothers have refused to tell me the name of any attorney or executor involved with the estate, and have refused to tell me if there is a Will.  Is there any way to demand this information?  There are state laws that require disclosure to you in certain circumstances, and if your family isn’t cooperating, those provide you the best chance to figure out what is going on.  If your father died and did have a Will, the Will is supposed to be lodged with (filed with) the superior court in the county in which your father died by the executor within a certain period of time (which varies from state to state, but is 30 days in California).  Once filed, the Will is a public record and you can get a copy by requesting it from the probate court.  If there is no Will and your father owned property worth more than a certain amount (this also varies state to state, in CA it is $100,000 now and will be $150,000 as of January 1, 2012) the estate has to go through probate before anything can be distributed, unless your father had a surviving spouse.  Probate is a court supervised settling of the estate: the Will is proven to be valid, the creditors are paid, the assets are appraised, and the estate is settled.  If a probate proceeding is opened, you are required to get notice of it, as a surviving heir.  Here’s a good summary of the California probate process.  But, if your father died without a Will, and had less than the minimum required for probate, I’m not aware of any state disclosure laws that would provide you with information about his assets.  If your father died without a Will,  even if there’s no probate, you would, as a surviving heir, be entitled to a share of his assets, but enforcing that without family cooperation will be difficult.

Getting a Copy of the Will

Dear Liza:  My mother in law passed away a couple of weeks ago, she lived in Nebraska.   But I am aware Mom had a will, and although we are on good terms, as the sister in law, I did not mention the reading of the will as it sounded like this would happen.  Do my daughters have a right to know what the will says and can we get a copy of the will from the court or where ever it was filed?  In movies there’s a dramatic reading of the Will. In real life, that doesn’t happen hardly ever. Instead, the Will is supposed to be filed in the probate court in the county where the person died. Once filed, that Will is a public record and anyone can get a copy. Here’s a link to information about Nebraska probate law. Good luck.

How Probate Works

Dear Liza:
I live in Massachusetts as well as my 3 other sisters and our parents who are in their 80s live in Florida. My father’s only  brother from South Carolina passed away 3 years ago (they were very close) We recently learned from a friend in SC of a CD in the amount of 67k that was my uncle’s. This CD was in a bank in Connecticut. We assumed this money belonged to my father being the only immediate family (next of kin). However since we did not have a will (the Will is lost) my father was not able to directly receive the money. So one of my sisters took it upon herself to take some legal action and moved that money into “an estate” checking account. She is the “owner” of this estate. I don’t have all the details from her as she is being very secret about it. I do know that she said she has to go to “probate court”? My dad is a vulnerable and passive type of person and unfortunately my dad and I are not fully clear on how this works and having a hard time understanding the process that my sister is doing. My dad being elderly is confused (I’m confused a little too) yet wants to trust my sister that she is doing the right thing and not spending that money.  Based on what you’ve outlined here, it sounds like your sister petitioned the probate court in South Carolina to be named the administrator of your uncle’s estate. (That’s like being the executor, but when there’s no Will; also called the Personal Representative).  And that would make sense, because you’d need a probate to transfer an asset that large.  If that’s what she did, and the court did appoint her administrator, she could take the paperwork issued by the court, and use it to open an estate account. But she’s NOT the owner of the money, she’s in charge of safeguarding it until the probate process is completed.  That process requires that all creditors be notified, all assets identified, all heirs be notified, and all debts paid.  At that point, the court will issue an order distributing that money to the appropriate people under that state’s law of intestacy.  What’s confusing is that your father, as the only living heir, should have received notice from the court of your sister’s petition to be named administrator.  To find out what’s actually happened, you should call the probate court in the county where your uncle died to find out about any proceedings there under his name.  Here’s a helpful article on settling an estate in South Carolina as well.

Naming Kids as Beneficiaries

Dear Liza: Do you have any recommendations on naming children as secondary beneficiaries for life insurance/investments? Why, as a matter of fact, I do! If your children are minors (under 18 in most states), your estate plan should establish some way of managing money for them until they are old enough to handle money responsibly. This is usually accomplished by creating a trust for them until a certain age, say twenty-seven. Until then, you would name a trustee to manage and distribute the child’s assets for them; after that, the money’s theirs to manage and invest. If you have created a living trust, you would name that trust as the beneficiary for your life insurance and the secondary beneficiary for your retirement accounts — that way, the money will be available to your children, but be managed by your trustee.

You can instead use a Will as your main estate planning document and your Will can set up exactly the same structure of a trust for children managed by a trustee until the children reach a certain age. However, if you use a Will, your estate will go through probate BEFORE the trust for the kids can be funded (don’t worry, the kids will have access to your estate during the probate process). Think of this as two roads to the same place — one road (the living trust)  just gets you there faster.

If, however, you name minor children directly as beneficiaries on those forms, and you die while they are still minors, a guardian of the estate will have to appointed to manage these assets, and, when a child reaches the age of 18, they money will be all theirs.

If your children are adults, you can and should name them directly. It makes it easier for them to deal with these assets after your death and there are special advantages to doing this with respect to retirement accounts.

When to Fire Your Lawyer: Excessive Fees

Dear Liza, my brother and I are in the process of distributing the personal/real property of our recently departed mother’s estate/trust according to her wishes. The attorney for her estate initially included his fee of $17,000+ as part of one document. When questioned, he stated because of the divisive and hostile relation between my brother and me, he was going to charge fees in anticipation of the estate having to be probated, instead of treating it as an dissolution of an estate.  Can he do that? Yikes! $17,000 is A LOT of money to settle a living trust. Here’s my advice–fire that lawyer. Remember, you are the client and if a lawyer isn’t serving your needs (or is charging way too much), get yourselves a new one. Most attorney’s charge an hourly rate for trust administration services. At a rate of $200/hour (which is sort of low), you are being charged for EIGHTY FIVE hours of time. Most estates take only a fraction of that. As for his decision to submit the estate to probate–that’s your decision, not his. Probate can be an effective forum for resolving disputes, but in a trust administration that would be an unusual step. If the estate goes to probate, he can charge you a statutory fee equal to a percentage of the value of the assets in the estate, and $17,000 may actually be about right. But, he’s not entitled to bill you for services he hasn’t provided. Ask for a detailed billing statement outlining exactly how he is spending his time on your matter. If he can’t, or won’t, provide it, fire him and report him to the state bar. I have found that just mentioning your intention to report a lawyer to the state bar can result in an amazing reduction in an excessive bill. Also, ask for your client file on the way out–legally that’s yours, not his.

Living Trusts and Property Tax in California

Dear Liza, My Wife and I own two pieces of real-property that we purchased long ago, in Los Angeles.  Because of Prop. 13, our property taxes are quite low. If we pass these properties to our children via a living trust, will they have to pay more property taxes? NO! I love being able to give you a simple, happy answer. But, you are in luck. By placing these properties into a living trust, you will be able to pass them to your children without a costly probate proceeding AND because you are passing properties from a parent to a child, they will inherit your property tax rate in both properties! The transfer of real property from parents to children is currently an exception to Property 13 reassessment. Your children will have to file a form requesting that this exception be applied to the properties within three years of the transfer, but unless the law changes in CA, they won’t be reassessed. For those of my readers who do not live in California, I apologize, this is a completely state-specific blog post. California passed Prop. 13 in the 1970″s, limiting the amount of property tax that’s assessed on real property until there’s a new owner, at that point, the property tax is applied to the then-current value of the property. However, parent-to-child is one of a few exceptions to this rule.

Leaving Roth IRA to minors

Dear Liza: My father just died. He left his Roth IRA to ten family members, thrilled to be leaving us with a long-term retirement investment.  But two of the beneficiaries are under 18, and our credit union is saying that the minors can’t keep the Roth IRA, but have to cash out their shares and open custodial accounts. That’s not what my Dad would have wanted. Are they right?  Yes, most likely. Here’s the deal: a minor can inherit property, but under state law, minors can’t control that property until they’re legal adults. In California, where I practice, a minor cannot own more than $5,000 without some form of legal control and management by an adult, like a property guardianship, a custodial account, or a trust for that minor’s benefit.  A property guardian is appointed by the court, and may be a child’s parent or any person nominated by the parent. The guardianship terminates when the child becomes a legal adult — 18 in my state, but this varies by state law as well. So, check with your credit union to see if they’d permit you to keep those accounts under a property guardianship to age 18.  If so, it may be worth it to you get yourself appointed as property guardian. Alternatively, cash those accounts out, open up a custodial account at the credit union, and don’t let those kids touch that money. When the custodial accounts end (25 in my state; varies by state law), make them open up IRA’s with the money because that was your father’s wish. You can’t legally require that they do so, but you can make them feel really, really guilty if they don’t.

Does My Sister’s Husband Inherit?

Dear Liza: My Mother’s Will left ½ to me, ½ to my sister.  I am married with no children; my sister is survived by her husband and two grown children. The probate attorney said my sister’s share will go to her two children, but that her husband would inherit nothing.  If that’s true, why does my attorney want my sister’s husband to sign a Quit Claim deed?   As a general matter, unless a Will or trust states otherwise,  a parent’s inherited share is passed to their surviving issue (children, grandchildren) and not to a surviving spouse.  Of course, your mother could have left your sister’s share to your sister’s husband if she wanted to. Without reading the Will and without reviewing probate rules for your state, I can only offer you some general thoughts.  It sounds as if your attorney is just being extra careful to make sure that title to the house is clear–if you ever sell that house, the chain of title must be documented and cleared before the sale. A Quit Claim Deed documents that your brother-in-law has no claim on the property, which sounds true.  Your brother-in-law may feel more comfortable signing the Quit Claim deed if he gets his own attorney to make sure that nothing fishy is going on.