Wills, probate, joint property, estate taxes, selecting estate trustees/ attorneys for property, personal care and other issues may appear somewhat intimidating at first.
Fortunately, with a little guidance and preparation, dealing with such legal matters does not have to be so overwhelming. Planning ahead and revising your plan often will help avoid unnecessary grief and confusion in the end. ‘Estate Planning’ includes all of the following legal issues and documents.
Administration Of A Will
A Will is an instrument by which a person (the “testator”) makes a disposition of his/her property, to be performed or take effect after his or her death.
A well-drafted Will may provide for the welfare of the testator’s family, distribute the testator’s assets in accordance with his/her wishes and secure the efficient management of the testator’s property.
Handwritten Wills (“holographic Wills”) can be made by a testator without the services of a lawyer, but problems can arise if not done properly and/or in accordance with applicable legislation.
A properly drafted Will can be a simple, inexpensive way to address many estate-related matters and can make matters run much smoother upon death.
While there are many benefits to having a Will in place, there are some things that may not be accomplished in a Will. It is important to keep in mind that some items may not flow through your estate and thus may not be distributed in accordance with your Will.
During the estate planning process, it is important to speak with a lawyer experienced in such legal matters and knowledgeable of your unique situation.
A well designed estate can help minimize probate costs, estate taxes and can alert you to any potential statutory claims, that may impact your ability to deal with your assets as intended.
A lawyer can discuss any potential legal claims that a “dependant” may have under Law, and/or with respect to any potential claims or entitlements. An awareness of such responsibilities and rights can help prevent unintended consequences or surprises upon death.
In addition to certain statutory claims, there are other legal limitations that must be considered when drafting a Will.
Legal documents such as a marriage or cohabitation agreement, a separation agreement, or a shareholder’s agreement (with buy/sell provisions, or option agreements) may also affect your Will plan, and thus it is important that such information be shared with your representative(s) when designing an estate plan.
In addition to determining how your estate will be distributed, a lawyer can speak to you about choosing a Personal Representative (Executor), and the legal considerations involved in selecting an appropriate person (or professional) to administer your estate.
The potential responsibility and work involved in being a Personal Representative (Executor) can be significant, and thus appointing someone with the financial acumen and willingness to take on this responsibility is a must.
Often times, people assume they must appoint a relative or child to act as a Personal Representative (Executor) because it would be “an honor”. While it may be considered “an honor” for some, the primary considerations should be choosing someone with the patience, ability and willingness to carry out this responsibility.
Powers Of Attorney
A power of attorney is an instrument by which a person (principal) authorizes another person (the “Agent”) to act on his or her behalf. It is quite common for people to execute a power of attorney for healthcare and a power of attorney for property and finance at the same time of drafting a Will.
In a power of attorney for property, the finance the authority granted to an Agent, may be general in nature and thus may authorize the Agent to act on the grantor’s behalf in conducting his or her financial affairs. Alternatively, the power of attorney may be quite narrow, authorizing the attorney to perform specific acts, such as the sale of specific assets (house, car etc.), the conduct of banking, or the transfer of securities.
Similarly, in a power of attorney for healthcare, the authority granted to an Agent is the authority to make, on his or her behalf, decisions concerning the grantor’s personal care, such as healthcare, shelter, nutrition, clothing, hygiene and safety.
While you can appoint more than one attorney, it is important to decide whether they are to act “jointly” or “jointly and severally”. Depending upon where your Agent resides, such a distinction may have significant practical considerations.
Upon death, one of the first things to do is to gather as much information as possible. It is important to look for and gather any Wills, deeds, financial documents, notes and insurance policies, etc., that the deceased may have.
As a starting point, the testator should consult the testator’s lawyer as sometimes original Wills have been kept at the lawyer’s office.
Upon death, you may want to ask the lawyer to provide notarized copies of the deceased’s Will.
Before estate matters can be pursued (i.e. transferring a house or automobile, other legal matters), a copy of the death certificate is also required.
Please speak to the funeral home about obtaining certified copies of the death certificate (as some agencies will not accept photocopies).
Common questions from a newly entrusted/appointed Personal Representative are “What is probate?” – “Why do we need it?” – “Do we have to probate?”
Probate is a rather formal procedure, establishing the validity of the Will, and is the official “proving” of the Will.
Fortunately, not all Wills need to go through probate; such a determination will be dependent upon a testator’s unique situation. Probate asks for the court’s involvement. The process can have a large range of both cost and time required to complete, depending on the complexity of assets, debts, and disputes.
Generally in Utah state, if a person dies owning any real estate or has a total estate value of over $100,000, the estate must go through probate. However, there are exceptions and complexities, so it is best to consult an attorney.
Whether to spend your time and effort planning to avoid probate may or may not be an appropriate goal; depending on the size and complexity of your estate. Even if avoiding probate isn’t necessary, putting a plan in place for the care of children and distribution of assets, is important to prevent disputes among family and to provide for loved ones. Regardless, the more information you share with your attorney and your personal representative, the more likely you are to have an estate plan that best fits your needs.
This guide is not intended to be a substitute for specific individual tax, legal, or estate settlement advice, as certain of the described considerations will not be the same for every estate. Accordingly, where specific advice is necessary or appropriate, consultation with a competent professional is strongly recommended.
Question #1 What Is Probate?
Probate is a legal process where your named Personal Representative goes before a court and does several things:
• Identifies all property legally owned by the deceased.
• Appraises the property and pays all debts and taxes.
• Proves that the Will is valid and legal and distributes the property to the heirs as the Will instructs.
Typically, probate involves paperwork and court appearances by lawyers. The lawyers and court fees are paid from estate property, which would otherwise go to the people who inherit the deceased person’s property.
Probate usually works like this: After your death, the person you named in your Will as Personal Representative or, if you die without a Will, the person appointed by a judge, files papers in the local probate court.
The executor proves the legal validity of your Will and presents the court with lists of your property, your debts, and who is to inherit what you’ve left. Then relatives and creditors are officially notified of your death.
Question #2 Why Is Probate Necessary?
The primary function of probate is transferring title of the descendant’s property to their heirs and/or beneficiaries. If there is no property to transfer, there is usually no need for probate. Another function of probate is to provide for the collection of any taxes due by reason of the deceased’s death or on the transfer of their property.
The probate process also provides a mechanism for payment of outstanding debts, taxes of the estate, for setting a deadline for creditors to file claims (thus foreclosing any old or unpaid creditors from haunting heirs or beneficiaries) and for the distribution of the remainder of the estate’s property to ones’ rightful heirs.
Question #3 How Long Does Probate Take?
The duration varies with the size and complexity of the estate, the difficulty in locating any beneficiaries of the Will, if there is one, and under law.
If there is a Will contest, or anyone objects to any actions of the Personal Representative, the process can take a long time. Some legal matters have taken decades to resolve.
Question #4 What Is The Probate Process Of An Uncontested Will?
Typically the person named as the deceased’s Personal Representative (a more formal term is “Executor” or “Executrix”) goes to an attorney experienced in probate matters, who then prepares a “Petition” for the court and takes it, along with the Will, and files it with the probate court.
The lawyer for the person seeking to have the Will admitted to probate, typically must notify all those who would have legally been entitled to receive property from the deceased. If the deceased died without a Will, plus all those named in the Will, and give them an opportunity to file an objection to admitting the Will to probate.
A hearing on the probate petition is typically scheduled several weeks to months after the matter is filed.
Depending on who the named beneficiaries are, how long before the death the Will was signed, whether the Will was prepared by an attorney, who supervised the “execution” of the Will, and/or whether the Will was executed with certain affidavits, it may be necessary to bring in the persons who witnessed the deceased’s signature on the Will.
If no legal objections are received, and everything seems in order, the court approves the petition, appoints the Personal Representative, orders that taxes and creditors be paid, and requires the Personal Representative to file legal reports with the court, to assure all the deceased’s property is accounted for and distributed in accordance with the terms and conditions of the Will.
Question #5 Who Is Responsible For Handling Probate?
In most circumstances, the executor named in the Will takes this job. If there isn’t any Will, or the Will fails to name an executor, the probate court names someone (called an administrator) to handle the process – most often the closest capable relative, or the person who inherits the bulk of the deceased person’s assets.
If no formal probate proceeding is necessary, the court does not appoint an estate administrator. Instead, a close relative or friend serves as an informal estate representative. Normally, families and friends choose this person, and it is not uncommon for several people to share the legal responsibilities of paying debts, filing a final income tax return and distributing property to the people who are supposed to get it.
Question #6 Should I Plan To Avoid Probate?
Probate can be costly and time consuming, but sometimes strategies to avoid legal probate can be even more costly or have other downsides. Sometimes probate is the most efficient legal option. The answer varies depending on which state you live in, what assets you have, and where you would like those assets to go upon your death.
One option to avoid probate is to transfer all of your assets into a revocable living trust, of which you are the trustee, which contains many of the same directions and guidelines as a Will. There are many benefits and drawbacks to doing so, so seek guidance from an experienced estate planning attorney regarding your specific situation.
One instance where the benefits often outweigh the drawbacks is if you own real estate in more than one state. Typically, an estate will need to go through probate in each state in which you own real property, so expenses can add up quickly.
Another instance where a trust may be of help is if you are elderly or disabled and want a better mechanism than power of attorney for someone to manage your assets legally for yourself or your family.