estate planning and probate

Areas of representation by the attorneys who practice in this area include estate planning and administration, estate litigation, financial planning, personal planning matters, and probate matters.

Wills

Most people know about wills and their basic purpose: to ensure that one’s hard earned assets go to the right beneficiaries when an individual passes away. However, wills can be used for a lot more than simply dictating who gets a person’s antique lamp collection. Here’s a list of some of the very valuable things a will can do:

• List who gets what. The most common purpose for a will is to name which individual, or group of individuals, will receive particular property belonging to a person when he or she passes away.
• Name guardians for children. Typically, a will is the document that states who should raise a person’s children if something happens to the parent. The will also usually contains at least one alternate in the event the first choice cannot serve.
• Establish trusts. In many cases, a person may not want a child or loved one to receive all of the property that they are inheriting at once. Or a person may want the beneficiary to be able to use the property for a while, and then for it to pass on to someone else. In that situation, an individual may choose to use a trust. A trust holds property on someone else’s behalf. In wills, trusts are commonly established for minor children, so that someone else can manage the children’s money until they reach a certain age when their parents believe they will be able to manage it. Trusts are also commonly used in second marriage situations; a person may want to allow a spouse to have access to certain property while the spouse is living, but for that property to ultimately pass to the decedent’s children. Trusts can help accomplish that goal.
• List funeral wishes. Although this is also done in other documents too, a will commonly states whether an individual wants to be buried or cremated, and where the body should be buried or the ashes should be spread. Sometimes, wills contain other information about funeral wishes too like where it should take place and even what readings might be recited.
• Tax planning. Wills can be great tools for tax planning in order to avoid federal or state estate or inheritance taxes. This can sometimes be accomplished by setting up various trusts.
• Naming executors and trustees. A will usually states who will be the executor of an estate, which is the person who will carry out a deceased individual’s wishes listed in the will. Wills can also name the trustee of any trusts established in a will, which is the person who will be in charge of carrying out the instructions of the trusts.

While wills can serve as powerful estate planning tools, they are only effective if they are properly drafted to suit the needs of each individual. An estate planning attorney can review all your options with you and establish a will in a manner that ensures your wishes will be honored.

Trusts

Many people have preconceived notions about trusts and believe that they are only for multi-millionaires who wish to leave large trust funds to their children. However, this is far from the truth; trusts can be invaluable tools in the estate plans of millions of individuals.

Trusts are simply an arrangement where one party holds property on behalf of another party. In an estate planning context, trusts are created by the person doing the estate planning (the settlor), who authorizes another person (the trustee) to manage the assets for the benefit of a third party (the beneficiaries). There are many reasons for establishing trusts including tax minimization or providing for the needs of underage beneficiaries.

Some types of trusts that may be useful in estate planning are:

• Trusts for minors. Many people leave money to their children or their grandchildren in a trust as part of a comprehensive estate plan. This is typically done to ensure the money is there for the children’s benefit while they are younger-for support, education, medical expenses, etc. Once the children reach a certain age or achievement level (such as obtaining a bachelor’s degree), they may receive money from the trust to do with as they please.
• Special needs trusts. Special needs trusts are tools that enable a person to leave property to an individual with special needs. Many individuals with special needs receive government benefits. If they were to suddenly inherit money, they would be disqualified in most cases from those benefits until the inheritance was spent. Special needs trusts protect those individuals government benefits while allowing them to have money for any extras they may need.
• Marital trusts. Married couples sometimes include trusts in their wills, or separately, for the benefit of their spouse, typically for two reasons: (1) taxes, and (2) property protection. In previous years, marital trusts were needed for some couples to take advantage of estate tax exemptions, and they may be needed in the future as the laws are expected to change. Marital trusts can also protect property from a spouse to ensure that it ultimately goes where it needs to go. For example, a husband with grown children from a previous marriage may decide to let his wife use his property after he passes, but puts it into a trust so that after she passes away it goes to his children.
• Revocable living trusts. Revocable living trusts are documents completely separate from wills although they often work hand in hand with wills to carry out the decedent’s wishes. Revocable living trusts are primarily used to avoid probate in states where probate is particularly cumbersome, or in a few other instances, such as when a person owns real estate in multiple states.
• Irrevocable life insurance trusts. Irrevocable life insurance trusts (or ILIT’s) can be used in order to move a person’s life insurance proceeds outside his or her estate for estate tax purposes.
• Spendthrift trusts. Spendthrift trusts are generally established to protect the beneficiaries’ assets from both themselves and creditors. These trusts usually have an independent trustee which has complete discretion over the distribution of assets of the trust.

As you can see, there are many different types of trusts, each of which can be customized to serve a valuable purpose in accomplishing the wishes of those making gifts or planning an estate. An experienced estate planning attorney can help you assess your finances and goals to determine the best vehicles to preserve your wealth and your legacy.

Probate

When a loved one passes away, his or her estate often goes through a court-managed process called probate, or estate administration, where the assets of the deceased are managed and distributed. If the assets of the deceased were owned through a well drafted and properly funded living trust, it is likely that no court-managed administration is necessary, though the successor trustee needs to administer the distribution of the deceased’s assets. The length of time needed to complete the probate of an estate depends on the size and complexity of the estate and the local rules and schedule of the probate court.

The probate process for each estate is unique, but usually involves the following steps:

• Filing of a petition with the proper probate court.
• Notice to heirs under the will or to statutory heirs (if no will exists).
• Petition to appoint Executor (in the case of a will) or Administrator for the estate.
• Inventory and appraisal of estate assets by Executor/Administrator.
• Payment of estate debt to rightful creditors.
• Sale of estate assets.
• Payment of estate taxes, if applicable.
• Final distribution of assets to heirs.

FREQUENTLY ASKED QUESTIONS

What happens if someone objects to the will?
An objection to a will, also known as a “will contest” is a fairly common occurrence during the probate proceedings and can be incredibly costly to litigate.

In order to contest a will, one has to have legal “standing” to raise objections. This usually occurs when, for example, children are to receive disproportionate shares under the will, or when distribution schemes change from a prior will to a later will. In addition to disputes over the tangible distributions, will contests can be a quarrel over the person designated to serve as Executor.

Does probate administer all property of the deceased?
Probate is primarily a process through which title is transferred from the name of the deceased to the names of the beneficiaries.

Certain types of assets are “non-probate assets” and do not go through probate. These include:

• Property in which you own title as “joint tenants with right of survivorship”. Such property passes to the co-owners by operation of law and do not go through probate.
• Retirement accounts such as IRA and 401(k) accounts where there are designated beneficiaries.
• Life insurance policies.
• Bank accounts with “pay on death” (POD) designations or “in trust for” designations.
• Property owned by a living trust. Legal title to such property passes to successor trustees without having to go through probate.

Do I get paid for serving as an Executor?
Executors are reimbursed for all legitimate out-of-pocket expenses incurred in the process of management and distribution of the deceased’s estate. In addition, you may be entitled to statutory fees, which vary from location to location and on the size of the probate estate. The Executor has to fulfill his or her fiduciary duties on behalf of the estate with the highest degree of integrity and can be held liable for mismanagement of estate assets in his or her care. It is advised that the Executor retain an attorney and an accountant to advise and assist him with his or her duties.

How much does probate cost? How long does it take?
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a will and the location of real property owned by the estate. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include Executors’ fees, attorneys’ fees, accounting fees, court fees, appraisal costs, and surety bonds. These typically add up to 5 to 7 percent of the total estate value. Most estates are settled though probate in about 9 to 18 months, assuming there is no litigation involved.