Losing a spouse may be one of the most difficult life events that any of us have to deal with. A spouse is a parenting partner, a co-CFO, a best friend and a beloved soul mate. Losing the person who supports you in so many ways can create an emptiness which can be almost paralyzing.

This is why it’s so important after the death of a loved one to have the support you need to get through the detail-oriented and often emotionally draining probate process, which includes tasks such as sorting through a financial history, submitting legal documents to the probate court, contacting creditors and family members, and more. Some people have family or friends to help with these time-consuming tasks, others enlist the help of an estate planning or probate attorney, but one thing is clear: no one should do it alone.

Every family or couple will have a different experience with the probate process, but our firm would like to offer a basic list of universal “to-do” items to remember after the death of a spouse. We hope this will help give our readers a little bit of security during a very emotional and stressful time.

* Obtain multiple copies of the death certificate
* Gather any and all estate planning documents
* Contact an estate planning attorney. Even if you don’t plan to retain an attorney, a brief initial consultation can help you understand the task ahead and prevent you from skipping important steps
* Notify the person named as executor or trustee
* Notify the necessary institutions or agencies (the deceased’s employer, social security administration, insurance company, creditors, post office, etc.)
* Remove spouse’s name from all joint accounts or ventures, such as bank accounts, utility companies, credit card accounts, etc.
* Pay final bills
* Cancel accounts, subscriptions, etc.

Depending on your situation and location, there may be many more tasks to be done. Additionally, if you are serving as executor or trustee (as many spouse’s do) there will be a great number of administrative tasks to be performed in addition to the ones on this list. Under these circumstances even the strongest and most capable people can feel overwhelmed. Remember that you don’t have to go through the process alone.

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When someone creates a will or a trust of course they want to choose a dependable and trustworthy person as executor or trustee. For most people this means someone close to them—a family member or friend, or often the most responsible of their adult children. However, this often means that the person they’ve chosen as executor or trustee is also a beneficiary. The question that occurs is this: Is it a conflict of interest to be both executor/trustee and beneficiary?

As executor or trustee a person has a legal duty to manage the property in the decedent’s estate for the benefit of the trust or estate beneficiaries. This means that while the executor/trustee should be compassionate, he or she must act in an equal and unemotional manner toward ALL the beneficiaries.

A beneficiary, on the other hand, is often by definition emotional. Even those beneficiaries who are not concerned with the monetary aspect of their inheritance (and let’s be honest, many heirs are more concerned with the dollar amount than they might let on) will likely be emotionally invested in the heirlooms of the estate. Many family feuds are sparked when siblings can’t agree on who gets the family silver or great grandma’s engagement ring. And the potential for conflict only increases when real estate is involved.

If you are creating your will or trust, the best way to avoid this conflict is to be as specific as possible in your instructions to your executor and beneficiaries. Spelling out in no uncertain terms who gets the family silver will decrease the chances that the executor will be tempted to take advantage of his or her position. You may also want to consider naming a disinterested party as a trust advisor or co-executor to provide checks and balances throughout the administration process.

If you are a beneficiary who is also serving as executor/trustee there are a few things you can do to ensure you keep your executor and beneficiary roles separate:

* You may want to consider contacting a probate or estate planning attorney to mediate or oversee the process.

* Rely on random but fair methods (such as flipping a coin, drawing straws, or organizing a round robin) to distribute unassigned personal property with emotional value.

* Be sure to involve an impartial appraiser if real property is involved.

* If all else fails, an executor or trustee is always permitted to step down and hand the role over to a qualified and disinterested party.

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When asking about how to avoid probate, many clients have asked about the wisdom of adding family members as joint owners to bank accounts. While joint ownership will achieve the goal of avoiding probate, there are many dangers and drawbacks to adding family members—even trusted family members—as joint owners on bank accounts:

Vulnerability to creditors: Your only goal in adding a family member as a joint owner may be to avoid probate, but in the eyes of creditors that bank account is suddenly fair game, and may be used to pay off the debts of your co-owner.

Vulnerability to lawsuits: In the same way that joint accounts are vulnerable to the creditors of both owners, they are also vulnerable to potential lawsuits against both owners.

Gift tax assessment: If a new owner is added to an account as a joint owner, but doesn’t contribute any funds to the account, the IRS may see the move as a monetary gift. If the “gift” exceeds the annual gift tax exclusion amount the IRS will require it be reported on a gift tax return.

Joint ownership can adversely affect Medicaid planning: Even if an account is jointly owned by two people, the state considers ALL the funds in the account to be at the disposal of the owner applying for Medicaid. Furthermore, if your co-owner chooses to remove assets from the account Medicaid could consider this an improper transfer of assets and you could be rendered ineligible for Medicaid for a certain period of time.

And of course, the number one danger of joint ownership for probate avoidance purposes is that your co-owner may act unethically or irresponsibly.

For more reliable—and more effective—estate planning strategies to protect your assets and avoid probate, please contact our office.

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What is probate?

Probate is defined as “the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under the valid will. A probate interprets the instructions of the deceased, decides the executor as the personal representative of the estate, and adjudicates the interests of heirs and other parties who may have claims against the estate.”

The definition doesn’t sound too bad, but probate can be a very trying process. Even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years.

Do I need a lawyer to help probate an estate?

As a rule it is not necessary to have a lawyer help you probate an estate. However, if you have been named as executor, probate can often become an overwhelming maze of deadlines, notifications and potential liabilities. This is why many executors do choose to hire a probate lawyer to help them through the process.

You may want to think about hiring an attorney if you are serving as an executor under any of the following circumstances:

• There are a number of beneficiaries who are not on friendly terms, or are receiving varying sizes of inheritance.
• The decedent had large estate with many different assets, especially if the assets are not commonly held.
• The decedent was a resident in a different state than your own home state.
• A large number of creditors are making claims on the estate.
• There is a disagreement about the will, or if more than one will was found.
• The will is challenged or contested.

Do Life Insurance or Retirement Benefits Have to Go Through Probate?

The answer to the question above is generally “no”; life insurance and retirement benefits do not have to go through probate if the account has a named beneficiary. Benefits from life insurance accounts can be paid directly to the named beneficiary, and money from IRAs, Keoghs, and 401(k) accounts transfer automatically to the named beneficiaries of those accounts as well. The persons named as beneficiary, however, will most likely want to consult with a financial advisor to determine what needs to be done with the proceeds from these accounts. Another type of account that may not be subject to probate is a pay on death (or POD) account, the money from which can pass directly to the named beneficiary upon the death of the owner.

Probate is a subject most people don’t want to spend much time considering, not only because the rules and requirements can be convoluted and confusing, but also because of the close association between probate and death. If you have any questions at all about the probate process please don’t hesitate to contact our office—or your own local attorney who specializes in probate—for more information.

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Administering the estate of a deceased loved one can be complicated and emotional under the best of circumstances, but executors who take on this overwhelming task may find themselves facing more than just the demands of relatives and heirs—they may also find themselves facing the illegitimate demands of creditors. This article on the New York Times’ New Old Age Blog warns readers to “Be wary of collection agencies that try to convince you that you are responsible for payment on a card owned solely by a deceased parent.”

After the death of a parent, children and heirs often receive calls from debt collectors looking for someone—anyone!—to pay off the debts of the deceased, even if the heirs have no obligation to do so. In most situations relatives are not required to pay the debts of the deceased from their own assets. “Spouses, children or other loved ones don’t ‘inherit’ credit card debt unless they co-signed the card… When someone dies, credit card companies have to wait near the back of the line to receive payment. If what’s left over after settling the estate isn’t enough to pay the bill, credit card debt is written off.”

Probate or administration of an estate is a process which follows established steps; heirs and credit card companies alike must wait their turn in line. “Administrative fees (like executors’ fees, filing fees, appraisals of property and tax-preparer fees), mortgages, reverse mortgages, taxes and even funeral expenses have to be paid off before heirs can inherit anything from the estate.” Unfortunately, most bereaved relatives aren’t aware of the laws on this subject, and debt collectors take advantage of that ignorance.

The best way to avoid this painful interaction is to have a proper estate plan. “Most of the headache can be avoided with a will… If you make it well known who owns what, both in terms of assets as well as liabilities, you can prevent a lot of this from taking place outside of your control.” The article also recommends taking preemptive action. “After the death of a parent, send a letter or call the banks and credit card companies to cancel cards and let them know that the cardholder has died.”

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If you are the executor of the estate of a decedent who died in 2010 you may think you’re in the clear. After all, there was no estate tax in 2010 right? Making distributions should be a piece of cake. Wrong. Because of the estate tax election available on the estates of 2010 decedents, administering those estates will actually be more work than you may think.

The repeal of the estate tax in 2010 also brought with it a repeal of the “step up in basis,” meaning that heirs selling inherited assets were taxed based on the original acquisition cost of the assets, not on their value as of the date of the taxpayer’s death. This generally resulted in a higher tax paid on assets than the normal estate tax rate—not good for taxpayers. But 2010 estates don’t have to go by these rules. The legislation passed in December of 2010 gave 2010 estates the opportunity to elect whether they wanted to use the 2010 estate tax laws, or the new laws for 2011. This article in Forbes explains what this means:

“The 2010 Tax Relief Act restored the estate tax for individuals dying in 2010 with a $5 million per person exemption and a maximum rate of 35%. It also repealed the modified carryover basis rules for property acquired from a decedent who died in 2010. However, estates of individuals dying in 2010 can elect zero estate tax and the modified carryover basis rules that would have applied before they were repealed. That means the basis of assets acquired from the decedent would be the lesser of the decedent’s adjusted basis (carryover basis) or the fair market value of the property on the date of the decedent’s death.”

In general this tax election is a good thing, it allows executors to choose which tax formula will cost the beneficiaries the least in taxes; but it does mean a lot more paperwork and a lot more attention to detail. If you are the executor of an estate of a decedent who died in 2010, don’t hesitate to call us. We can answer your questions and help you explore your options.

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Serving as executor or trustee of a will or a trust is an honor… but it’s also a job—a BIG job—and not one to be taken lightly. The role of executor or trustee can be one of great financial power, but it carries with it a heavy fiduciary obligation. Fiduciary obligation means that an executor or trustee must act in the best interests of the beneficiaries; it means that although the executor or trustee may be doing all the work, he or she may see very little return on that work, which is all for the benefit of the named beneficiaries.

If you have been nominated (or are currently serving) as an executor or trustee there are a few things you’ll want to remember as you go about your duties:

1. The will or trust is your guide, the mission statement by which you should operate; read and understand the document completely, and have an attorney help you, if necessary.

2. You need to be pro-active—to an extent. If you are managing a large amount of money or assets over a period of time it is probably not in the best interests of the beneficiary to let those funds sit in a savings account. Create (with an advisor, if necessary) a financial plan for the trust assets.

3. Although you may be handling the estate assets, you should not have any personal financial dealings with the trust. You should under no circumstances borrow from or lend money to the trust. Keep your finances separate!

4. Communication and transparency is key! Keep detailed records of all of your actions and transactions regarding the will or trust, and send regular reports to the beneficiaries. Regular communication prevents unhappy surprises or angry lawsuits in the future.

5. You don’t have to do it alone. If you were picked as a trustee because of your financial knowledge and experience—great! But if you were picked because you are the oldest, or the most responsible, or the favorite you may feel overwhelmed by the job ahead of you. Don’t try to muddle through alone, get the help and support of an experienced attorney or advisor.

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With all the recent news about what will happen with estate taxes, the process of probate has come up quite a bit. Sometimes probate is mentioned in a low-key, matter-of-fact kind of way; at other times it is presented as something scary, and to be avoided at all costs. We know our readers have seen the term often enough here in our blog, but under the circumstances we thought it a good idea to go back to basics, and have a discussion of exactly what is probate, and what’s all the fuss?

Probate is the process by which the court determines the legal property of a person who has died, and facilitates the distribution of those assets. It sounds like it should be simple, but even in the best of circumstances there are procedures that must be followed to the letter, and the actual process (depending on the size of the estate and the laws of the state in which the property is being probated) can take anywhere from 6 months to a few years.

You may wonder why probate can take so long, especially if the deceased person has left a will making their wishes clear. A good will can certainly make the process easier, but even with a will, there are certain steps that must be followed to complete the probate process, some of which can be very time consuming. Some of these steps include:

• The appointment of an executor or personal representative
• Verification of the will
• Taking an inventory of assets belonging to the deceased
• Giving notice to creditors
• Paying valid claims against the estate
• Preparing and paying taxes
• Notifying beneficiaries
• Distributing the assets to the beneficiaries or heirs

If you think that just reading the above paragraph takes your breath away, imagine the confusion of having to actually go through all of those steps—and possibly more!

Whether or not your estate will eventually be subject to a lengthy or expensive probate often depends on a number of factors: the size of your estate, how your assets are held, and how cooperative your next of kin may be. But one way to increase your chances of avoiding probate is to have clear (and clearly valid) estate planning documents, including a will, power of attorney, and possibly a revocable living trust.

If you are concerned about probate, or would like to know more about how you can protect your assets and help your loved ones avoid a lengthy probate, contact our office—or a qualified estate planning attorney in your home state—to discuss your options.

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Coping with the death of a loved one can be a crushing task. There are so many things to do and details to remember; all of this at a time when each small task can serve as a reminder of your loss. At such a time it can be helpful to know that you’re not going through this alone; there are a number of people who can help when you begin to feel overwhelmed. To relieve some of the stress, and help ensure that no important task is forgotten, we offer a list of people to call after the death of a loved one:

Funeral home - This will likely be your first call. The funeral home you or your loved one has selected will be able to help you with a lot of the immediate details and tasks. The funeral director will also be able to help you obtain 10-20 copies of the death certificate, something you will need later.

Family and Friends - This probably goes without saying. Not only will you want to notify family and friends, but they can also help with a lot of the endless tasks and overwhelming details. Don’t be afraid to delegate.

Veteran’s office (if deceased was a Vet.) - If the deceased was a Veteran you may have to stop benefit payments; you may also be able to get assistance with the funeral or memorial service.

The deceased’s employer - You will need to do this not only to inform the employer of the death, but also regarding termination of health insurance.

Attorney or Tax Professional - You will need to know what to do about probating the deceased’s estate, filing tax returns, dealing with bank accounts, etc. An attorney or tax professional can help. It is especially important to find out if your loved one had any existing estate documents.

Office of Social Security - If your loved one was receiving benefits you’ll need to stop payments. You will also want to find out if survivors are entitled to any benefits.

Insurance company of the deceased – You will probably need to file a claim. This is something your attorney or accountant may be able to help with.

Local Newspaper - You’ll want to publish an obituary or notice of death, as well as information about the funeral or memorial service.

Credit card companies and utilities - Give notification of death and pay off any remaining balances.

Bank - Arrange to change any joint accounts or to open an account in your name. Do not close any accounts right away!

Although this list is a good starting point; a complete list of people to call and things to do will depend on where the deceased lived and the details of their estate. Contact your loved one’s estate planning attorney (or your own) to ensure that nothing is left to chance.

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Many clients are shocked when they see the sheer volume of paper in a truly well-done estate plan.  A trust by itself can be hundreds of pages, not to mention the other 6 to 16 documents you may or may not have—depending on your family situation. You may find that the “simple” estate plan you thought you were getting has turned into something of a size that would rival War and Peace!

It didn’t always used to be this way.  The last will and testament of the great Jane Austen, for example, was only one paragraph long:

I Jane Austen of the Parish of Chawton do by this my last will I testament give and bequeath to my dearest sister Cassandra Elizabeth everything of which I may die possessed, or which may be hereafter due to me, subject to the payment of my Funeral expences, & to a Legacy of £50. to my Brother Henry, & £50 to Mde de Bigeon – which I request may be paid as soon as convenient. And I appoint my said dear sister the executrix of this my last will & testament.

Jane Austen

April 27 1817

Although this simplicity may have worked in 1817 England, it isn’t practical in the here and now.  Things just aren’t that simple anymore.  First of all, although Austen appoints her sister Cassandra as the executrix of her will, the will itself neglects to specify what powers are included in that appointment, leaving Cassandra effectively unable to carry out Austen’s wishes.  Secondly, the will neglects to make alternative provisions—what if Cassandra had unexpectedly died before Jane? Also notably lacking (from our contemporary perspective) are any provisions for estate taxes. And finally, discerning readers may notice that the will does not include the signatures of any witnesses, something which is absolutely necessary in order to execute a valid will today (with the exception of holographic wills, which are often created in emergency situations, are entirely hand written, and do not require the signatures of witnesses.)

We all may long for simpler times, especially when it comes to something most people think will only benefit their heirs and not themselves; but many of the rules and regulations that are dismissively thought of as “hoops to jump through” are there for your best interest.  They exist to protect your heirs and your legacy from fraud, misuse, greed and neglect.  Far from being a chore, creating a thoughtful and legally valid will these days is actually an act of love… One might even say it’s a matter of sense and sensibility.

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