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Probate

Wednesday, March 1, 2017

What are Letters Testamentary?

What are Letters Testamentary?

An individual who has been named as a "Personal Representative" or "Executor" in a will has a number of important duties. Probate is the court process in which the duly appointed Executor is given the authority to transfer the deceased person's property in accordance with a Will. The Executor, after qualifying as such, is given Letters Testamentary ("Letters") that give him or her the legal authority to administer the deceased person's estate.


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Monday, September 12, 2016

Things to Consider When Picking an Executor


The role of an executor is to effectuate a deceased person’s wishes as declared in a will after he or she has passed on. The executor’s responsibilities include the distribution of assets according to the will, the maintenance of assets until the will is settled, and the paying of estate bills and debts. An old joke says that you should choose an enemy to perform the task because it is such a thankless job, even though the executor may take a fee for doing the job.
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Wednesday, April 8, 2015

Pooled Income Trusts and Public Assistance Benefits

A Pooled Income Trust is a special kind of trust that is established by a non-profit organization. A Pooled Income Trust allows individuals of any age (typically over 65) to become financially eligible for public assistance benefits (such as Medicaid home care and Supplemental Security Income), while preserving their monthly income in trust for living expenses and supplemental needs.  All income received by the beneficiary must be deposited into the Pooled Income Trust.

In order to be eligible to deposit your income into a Pooled Income Trust, you must be disabled as defined by law. For purposes of the Trust, "disabled" typically includes age-related infirmities and special needs. The Trust may only be established by a parent, a grandparent, a legal guardian, the individual beneficiary (you), or by a court order. 

Typical individuals who use a Pooled Income Trust are: (1) elderly persons living at home who would like to protect their income while accessing Medicaid home care; (2) recipients of public benefit programs such as Supplemental Security Income (SSI) and Medicaid; (3) persons living in an Assisted Living Community under a Medicaid program who would like to protect their income while receiving Medicaid coverage.

Medicaid recipients who deposit their income into a Pooled Income Trust will not be subject to the rules that normally apply to "excess income," meaning that the Trust income will not be considered as available income to be spent down each month.  The Trust can pay for supplemental needs, medical procedures not provided through government assistance, and some other expenses not provided by government assistance programs.


Wednesday, April 1, 2015

Beware of “Simple” Estate Plans

“I just need a simple Will.”  It’s a phrase estate planning attorneys hear practically every other day.   From the client’s perspective, there’s no reason to do anything complicated, especially if it might lead to higher legal fees.  Unfortunately, what may appear to be a “simple” estate is all too often rife with complications that, if not addressed during the planning process, can create a nightmare for you and your heirs at some point in the future.   Such complications may include:

Probate - Probate is the court process whereby property is transferred after death to individuals named in a will or specified by law if there is no will. Probate can be expensive, public and time consuming.  A revocable living trust is a great alternative that allows your estate to be managed more efficiently, at a lower cost and with more privacy than probating a will.  A living trust can be more expensive to establish, but can, if fully funded, avoid a potentially complex probate proceeding. Even in states where probate is relatively simple, like Texas, you may wish to set up a living trust to hold out of state property or for other reasons.

Minor Children - If you have minor children, you not only need to nominate a guardian, but you also need to consider setting up a trust to hold property for those children. If both parents pass away, and the children do not have a trust, the children’s inheritance could be held by the court until he or she turns 18, at which time the entire inheritance may be given to the child or alternatively, a guardian of the estate must be established by the court. By setting up a trust, which doesn’t have to come into existence until you pass away, you are ensuring that any money left to your children can be used for educational and living expenses and can be administered by someone you trust.  You can also protect the inheritance you leave your children or other beneficiaries from a future divorce as well as from creditors.

Second Marriages - Couples in which one or both of the spouses have children from a prior relationship should carefully consider whether a “simple” Will is adequate. All too often, spouses execute simple Wills in which they leave everything to each other, and then divide the property among their children. After the first spouse passes away, the second spouse inherits everything. That spouse may later get remarried and leave everything he or she received to the new spouse or to his or her own children, thereby depriving the former spouse’s children of any inheritance.  Couples in such situations should consider establishing a special marital trust to ensure children of both spouses will be provided for and/or they should consider making certain provisions for their children immediately upon their death, so their children don’t have to wait until their step-parent dies in order to receive something from their deceased parent’s estate.

Taxes - Although from 2011 forward, federal estate taxes only apply to estates over $5 million for individuals and $10 million for couples, (with such amounts increasing as they are indexed for inflation each year – in 2015, the exemption for individuals is $5,430,000) that doesn’t mean that anyone with an estate under that amount should forget about tax planning. Many states still impose a state estate tax that should be planned around, although Texas does not have a separate state estate tax. 

Incapacity Planning – Estate planning is not only about death planning.  What happens if you become disabled or incapacitated?  You need to have proper documents to enable someone you trust to manage your affairs if you become incapacitated.  There are a myriad of options that you need to be aware of when authorizing someone to make decisions on your behalf, whether for your medical care or your financial, legal and property affairs.  If you don’t establish these important documents while you have capacity, your loved ones may have to go through an expensive and time-consuming guardianship or conservatorship proceeding to petition a judge to allow him or her to make decisions on your behalf.  Simple incapacity protection planning up front can potentially avoid those problems.

By failing to properly address potential obstacles, over the long term, a “simple” Will can turn out to be incredibly costly and ineffective.   An experienced estate planning attorney can provide valuable insight and offer effective mechanisms to ensure your wishes are carried out in the most efficient manner possible while providing protection and comfort for you and your loved ones for years to come.


Sunday, March 8, 2015

Problems with Joint Accounts for Inheritance

When deciding who will inherit your joint financial accounts after you die, it is important to consider that you might outlive the beneficiary you choose.  If you have added someone to your financial accounts to ensure that he or she receives this asset after you die, (like a pay on death designation or a joint account with rights of survivorship), you might be concerned about what will happen should you outlive this person.

What happens to a joint bank account in this situation depends upon the specific circumstances. For example, if a co-owner that was meant to inherit dies first, the account will automatically become the property of the surviving co-owner and will not be included in the decedent’s estate.  Upon the death of the surviving co-owner, the account will be included in their estate to be distributed pursuant to their estate plan.

It is important to make sure you coordinate your estate plan Will provisions with your joint account designations and your beneficiary designations to ensure your overall estate plan benefits the people you intend to benefit.

If you are considering adding someone to your financial accounts so that they inherit it when you die, you should contact an experienced estate planning attorney to discuss your options. 


Tuesday, December 2, 2014

Selecting An Executor Post Mortem

The death of a loved one is a difficult experience no matter the circumstances.  It can be especially difficult when a person dies without a will.  If a person dies without a will and there are assets that need to be distributed, the estate will be subject to the process of heirship and administration instead of typical probate proceedings.

In this case, the decedent’s heirs can select someone to manage the estate, called an administrator instead of executor.  State law will provide who has priority to be appointed as the administrator. Most states’ laws provide that a spouse will have priority and in the event that there is no spouse, the adult children are next in line to serve. However, those who have priority can decline to serve, and the heirs can sign appropriate affidavits or other pleadings to be filed with the court that nominate someone else as the administrator. Once the judge appoints the nominated person they will then have the authority to act and begin estate administration.

In certain circumstances, it may be necessary to change the initially appointed administrator during the administration process. Whether this is advisable depends on many factors. First, the initial administrator will have started the process and will be familiar with what remains to be done. The new administrator will likely be behind in many aspects of the case and may have to review what the prior administrator did. This can cause expenses and delays. Also, it is possible that the attorney representing the initial administrator may not be able to ethically represent the new one, again causing increased expenses and delays. However, if the first administrator is not doing his or her job, the heirs can petition the court to remove the individual and appoint a new one.

If you are currently involved in a situation where an estate needs to be administered, it is recommended that you speak with an estate planning attorney in your state.



Tuesday, September 30, 2014

When Will I Receive My Inheritance?

If you’ve been named a beneficiary in a loved one’s estate plan, you’ve likely wondered how long it will take to receive your share of the inheritance after his or her passing.  Unfortunately, there’s no hard or and fast rule that allows an estate planning attorney to answer this question. The length of time it takes to distribute assets in an estate can vary widely depending upon the particular situation.

Some of the factors that will be involved in determining how long it takes to fully administer an estate include whether the estate must be probated with the court, whether assets are difficult to value, whether the decedent had an ownership interest in real estate located in a state other than the state they resided in, whether your state has a state estate (or inheritance) tax, whether the estate must file a federal estate tax return, whether there are a number of creditors that must be dealt with, and of course, whether there are any disputes about the will or trust and if there may be disagreements among the beneficiaries about how things are being handled by the executor or trustee.

Before the distribution of assets to beneficiaries, the executor and trustee must also make certain to identify any creditors because they have an obligation to pay any legally enforceable debts of the decedent with those assets. If there must be a court filed probate action there may be certain waiting periods, or creditor periods, prescribed by state law that may delay things as well and which are out of the control of the executor of the estate.

In some cases, the executor or trustee may make a partial distribution to the beneficiaries during the pending administration but still hold back sufficient assets to cover any income or estate taxes and other administrative fees. That way the beneficiaries can get some benefit but the executor or trustee is assured there are assets still in his or her control to pay those final taxes and expenses. Then, once those are fully paid, a final distribution can be made. It is not unusual for the entire process to take 9 months to 18 months (sometime more) to fully complete.

If you’ve been named a beneficiary and are dealing with a trustee or executor who is not properly handling the estate and you have yet to receive your inheritance, you should contact a qualified estate planning attorney for knowledgeable legal counsel. 


Friday, January 24, 2014

What to Do after a Loved One Passes Away

The loss of a loved one is a difficult time, often made more stressful when one has to handle the affairs of the deceased. This may be a great undertaking or rather minimal work, depending upon the level of estate planning done prior to death.

Tasks that have to be performed after the passing of a loved one will vary based on whether the departed individual had a will or not. In determining whether probate (a court-managed process where the assets of the deceased are managed and distributed) is needed, the assets owned by the individual, and whether/how these assets were titled, must be considered. It’s important to understand that assets titled jointly with another person as joint tenants with rights of survivorship, are not probate assets and will normally pass to the surviving joint owner. Also, assets such as life insurance and retirement assets that name a beneficiary will pass to the named beneficiaries outside of the court probate process. If the deceased relative had formed a trust and during his life retitled his assets into that trust, those trust assets will also not pass through the probate process - they would pass pursuant to the trust provisions.

Each state’s rules may be slightly different so it is important to seek proper legal advice if you are charged with handling the affairs of a deceased family member or friend. Assuming probate is required, there will be a process that you must follow to either file the will and ask to be appointed as the executor (assuming you were named executor in the will) or file for probate of the estate without a will (this is referred to as dying "intestate" which simply means dying without a will). Also, there will be a process to publish notice to creditors and you may be required to send each creditor specific notice of the death. Those creditors will have a certain amount of time to file a claim against the estate assets. If a legitimate creditor files a claim, the claim can be paid out of the estate assets. Depending on your state's laws, there may also be state death taxes (sometimes referred to as "inheritance taxes") that have to be paid and, under certain circumstances, if the estate is large enough, a federal estate tax return may also have to be filed along with any taxes which may be due. In Texas, there is no state death tax, just the federal estate tax, if applicable.

Only after the estate is fully administered, creditors paid, and tax returns filed and taxes paid, can the estate be fully distributed to the named beneficiaries or heirs. Given the many steps, and complexities of probate, you should seek legal counsel to help you through the process.


Thursday, September 12, 2013

Planning Pitfall: Probate vs. Non-Probate Property

Transfer of property at death can be rather complex. Many are under the impression that instructions provided in a valid will are sufficient to transfer their assets to the individuals named in the will. However, there are a myriad of rules that affect how different types of assets transfer to heirs and beneficiaries, often in direct contradiction of what may be clearly stated in one’s will.

The legal process of administering property owned by someone who has passed away with a will is called probate. Prior to his passing, a deceased person, or decedent, usually names an executor to oversee the process by which his wishes, outlined in his Will, are to be carried out. Probate property, generally consists of everything in a decedent’s estate that was directly in his name. For example, a house, vehicle, monies, stocks or any other asset in the decedent’s name is probate property. Any real or personal property that was in the decedent’s name can be defined as probate property.

The difference between non-probate property and probate centers around whose name is listed as owner. Non-probate property consists of property that lists both the decedent and another as the joint owner (with right of survivorship) or where someone else has already been designated as a beneficiary, such as life insurance or a retirement account. In these cases, the joint owners and designated beneficiaries supersede conflicting instructions in one’s will. Other examples of non-probate property include property owned by trusts, which also have beneficiaries designated. At the decedent’s passing, the non-probate items pass automatically to whoever is the joint owner or designated beneficiary.

Why do you need to know the difference? Simply put, the categories of probate and non-probate property will have a serious effect on how plan your estate. If you own property jointly with right of survivorship with another individual, that individual will inherit your share, regardless of what it states in your will. Estate and probate law can be different from state-to-state, so it’s best to have an attorney handle your estate plan and property ownership records to ensure that your assets go to the intended beneficiaries.


Wednesday, June 6, 2012

What happens if you are bequeathed a car that no longer exists? The ABC's of Ademption

If you’re involved in settling a loved one’s estate, you may come across the curious word “ademption”. Ademption describes what happens when something designated in a will no longer exists. Say, for example, your uncle dies and leaves for you in his will an old-school Harley Davidson motorcycle. However, if your uncle crashed the motorcycle two years before the will was probated and there’s nothing to leave, then that gift would be considered adeemed and you would receive nothing. This is why certain wills include language that says, “if owned by me at my death.”

However, it is important to realize that certain items cannot be adeemed. For instance, money. If your uncle died and left $7,000 for you in his will, but left a zero dollar balance in his accounts, your gift of cash would not be adeemed. Depending on your state’s laws, the estate could be responsible for satisfying that gift, say for example, through the sale of other such property.

There are exceptions to ademption, however. Some states make exceptions for cases where interest in a corporation that no longer exists because the shares were exchanged with that of an acquiring company.  Your state may tackle ademption differently based on its laws, so please consult a qualified real estate or probate lawyer if you want to learn more about ademption and its exceptions.

 

 


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