Tag Archives: probate

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.

Should I Put My Son’s Name on Title?

Dear Liza,, Within a month I’m going to have a closing on a duplex house in NJ.   If I want my son to live there and manage it for us (since he lives in NJ) should I put his name in the title also?  If somebody sues him for any reason can they go after the house if his name is included in the title?  Is there any legal differences whether his name is included in the title or not?  Short answer: YES!  If you put your son’s name on title to the duplex, you are making a taxable gift to him equal to the value of percentage of the property you put in his name. You and your wife can each give him $13,000 free of gift tax ($26,000) total per year. But if the property is worth more than that, which it probably is, you’ll have to file a gift tax return by April 15th of the year following the gift, reporting the value.  Currently, you and your wife can each make gifts of up to $5 million, so you’re most likely not going to owe any gift tax on this transaction, but by reporting it, you’ll be using up a part of that lifetime gift tax exclusion. And yes, certainly, if his name is on title, creditors can go after his percentage ownership of that property.  Finally, if you put him on title now, his basis in that property (for the share that he would own) will be the original cost of the property; if, instead, he inherits it upon your death, his tax basis in that property will be stepped up to it’s then current market value (which means no capital gains tax if he sells it at that time).

Do IRA’s go through probate?

Dear Liza: My sister has an IRA naming her three children as beneficiaries. They are all adults. My sister is quite ill and she doesn’t have a living trust. Will her IRA have to go through probate before it can be transferred to her children? That is such a great question–for two reasons. First, it’s so important: for many people, a retirement account is the largest asset that they will be leaving to their children. Second, I have a really clear answer, not one of those, “well-it’s-complicated” kind of blog posts. NO, IRA’S DO NOT GO THROUGH PROBATE IF THEY HAVE NAMED BENEFICIARIES. NEITHER DO LIFE INSURANCE PROCEEDS.  Probate was invented in merry old England to avoid fraud after a person died. Way back when, if the lord died, the evil nephew could easily steal the castle because no one was really looking out for the interest of the dead lord. Probate is about freezing the estate until the Will is proven valid, heirs are identified and contacted, debts are paid, and conflicts resolved.  At the end of the process, the assets are give to those named in the Will. But IRA’s, and other retirement accounts (such as Roth IRA’s, 401-K’s, 403-B’s, and the like) have named beneficiaries. The companies who administer these assets are contractually bound to give these assets to the named beneficiaries on those contracts. No possiblity of fraud; no probate.   If evil nephew Fred asks Vanguard to give him the IRA, Vanguard won’t, unless Fred is the named beneficiary for that account. One caveat: if you named ‘my estate’ as the beneficiary, that would require a probate of retirement assets, so don’t do that.