Most of us at one time or another, must take on the responsibility of wrapping up the affairs of a loved one who has died. The essence of the job is to carry out the deceased person’s wishes to collect the person’s assets, pay debts and taxes, and distribute what’s left to the people or institutions the person wanted to inherit it. That’s how an estate is settled. Because an executor is in charge of someone else’s money, the law imposes a high ethical standard. An executor also called personal representative must be completely honest and always act in the best interests of the estate. You must also deal with the people who inherit under the terms of a will or, if there isn’t a will, under state law. And if necessary, you must shepherd the estate through probate court proceedings, probably with the help of a lawyer and other experts.
The death of a parent can revive dormant rivalries between siblings. Grudges and perceived wrongs from the distant past can feel as fresh as they did years ago. As executor, you can’t control family fights over inheritance, or insulate yourself from potential blowback from unhappy family members.
What you can do is communicate early and often. Here are some guidelines:
• Tell Everyone the Rules: Let family members know that there are going to be some decisions that require collaboration. They will have the opportunity to provide input at that time. But there are also going to be decisions that you as executor will have to make on your own, and you’ll keep them informed of those, too.
• Trust your Instincts About Your Tribe: If you know from the outset that family dynamics could complicate probate, consider bringing in an objective third party to help mediate. It doesn’t have to be an estate attorney, just someone who can remain neutral and help resolve family fights over inheritance with patience and detachment.
• Don’t Allow the Process to Consume You: Probably the most important thing you can do is to take care of yourself through this difficult and emotional process. Set parameters around the time that you’ll focus on probate issues, and then respect those boundaries so you can also keep up with the rest of your life.
Avoiding the delays and costs of probate is much easier than you think. Here are some basic tips to keep more of your estate in the hands of the people who matter most.
• Write a Living Trust: The most straightforward way to avoid probate is simply to create a living trust. A living trust is merely an alternative to a Last Will. Unlike a will, which merely distributes your assets upon death, a living trust places your assets and property in trust which are then managed by a trustee for the benefit of your beneficiaries it allows you to avoid probate entirely because the property and assets are already distributed to the trust. A trust also enables you to avoid the cost of probating a will. One of the main drawbacks of a will is the cost of probating it or passing it through the courts. In probate, there are court fees taken from the gross estate the amount of the entire estate before the debts are paid out. This fee can often be as high as ten percent of the total estate which often is better used paying trustee fees and burial costs. With a living trust you avoid these court costs all together.
• Name beneficiaries on your retirement and bank accounts: For some, a Last Will is often a better fit than a trust because it is a more straightforward estate planning document. Yet, just because you have written a will doesn’t mean that all of your assets have to pass through probate. What most people don’t realize is that many of our most valued assets allow us to name beneficiaries. In fact, you may not have realized that the bank account you opened when you got your first job probably enables you to designate a beneficiary that is payable on death. All you need to do to get yourself started is to request and fill out the payable on death forms that your brokerage company or bank can provide.
• Joint Tenancy with a Right of Survivorship: Another great way to keep your real estate out of probate is to consider holding your property jointly. If you and a spouse or significant other is thinking about purchasing a first home or even already own you own house, owning jointly allows the property to pass automatically to your significant other without having to go through probate. It doesn’t matter if you are married or not. If the property is designated a jointly held property it is going to go to the surviving member of the couple. Of course you will want to make sure you designate this ownership clearly. You may also want to look into Tenancy by the Entirety and for married couples in Community Property states you will want to investigate designating co-owned property as Community Property with a Right of Survivorship. Not everything you own will automatically go through probate. The obvious assets that will need to be probated are those with a title that is in your name only. These might include bank accounts, investments, home, other real estate, vehicles, etc. If yours is the only name on the title and you are deceased, only the probate court can take your name off the title and put someone else’s name on.
Assets that generally do not go through probate are jointly owned assets that transfer to the surviving owner, assets that have a valid beneficiary designation, and assets that are in a trust. However, these assets do not always avoid probate.
• Jointly Owned Assets: Jointly owned assets that transfer to the surviving owner do not go through probate. This kind of joint ownership is “joint ownership (or joint tenants) with right of survivorship.”) But if the surviving owner dies without adding another owner, or if both owners die at the same time, the asset must be probated before it can go to the heirs.
• Beneficiary Designations: Some assets including insurance policies, IRAs, retirement plans and some bank accounts let you name a beneficiary. When you die, these assets will be paid directly to the person you have named as beneficiary without probate. Well, that is the way it is supposed to work, but it doesn’t always happen that way.
• Trust Assets: Assets in a trust, like a revocable living trust, avoid probate. However, if you have a trust in your will (called a testamentary trust), your assets will not avoid probate. The will and your assets will have to go through probate before the trust can go into effect. Any assets you leave out of your living trust will probably also have to go through probate.
How to Settle an Estate
If you’re the executor of an estate, here’s what you’ll need to do.
• Find the will: Sometimes finding the will is easy and sometimes it’s not. Look in desks and filing cabinets (home and office), fireproof boxes, and anywhere else the deceased person was likely to stash important documents. If there’s a safe deposit box, even if you don’t have a key you will be allowed to open it for the sole purpose of looking for the will. If there is no will, property will pass through intestate succession.
• File the will with the local probate court: Make a copy for yourself, and then file the original with the probate court. Even if you don’t think you’re going to need to conduct a formal probate court proceeding, you’re required by law to deposit the will with the court.
• Notify agencies and business of the death: For example, you should notify:
I. the post office
II. utility companies
III. credit card companies
IV. banks, and
V. Other businesses with which the deceased person had an account.
• Inventory assets and get appraisals: You’ll need a thorough inventory if you conduct a probate court proceeding. In any case, it will help you keep track of valuables, determine how you can transfer different items because you’ll note how title to assets is held, divide property among beneficiaries who are supposed to get equal shares typical with siblings, and determine whether or not the estate will owe state or federal estate tax.
• Decide whether probate is necessary: To make this determination, you’ll have to tally up the value of the property subject to probate, see how title is held, and learn your state’s rules on what estates qualify for simplified procedures. If you need to conduct a probate court proceeding, you can probably get help from the court’s website or other materials. You may also want to hire a lawyer to help with probate paperwork or to help solve any disputes among beneficiaries or creditors.
• Coordinate with the successor trustee: If the deceased person left both a will and a living trust, as many people do, you’ll need to work closely with your counterpart who’s in charge of trust assets, the successor trustee. A living trust is like a will in that it lets someone leave property to named beneficiaries. The big difference is that trust property doesn’t have to go through probate before it can be turned over to the people who inherit it.
• Communicate with beneficiaries: Your court, or a lawyer, can help you notify beneficiaries. If the estate goes through probate, you’ll have to send very particular kinds of notices to a certain group of people. Whether or not there’s a court proceeding, it’s always a good idea to be in regular communication with beneficiaries.
Beneficiaries can grow unhappy or suspicious of wrongdoing when they aren’t kept in the loop about what’s going on with the estate. Even if nothing is going to happen for a while, let them know you’re moving ahead as fast as you can to get them their inheritance. Don’t surprise them with big moves like selling real estate if they think you’re incompetent or dishonest, they can go to court and try to have you removed.
• Take good care of estate assets: This is a key part of an executor’s job. You must keep real estate well maintained, small valuables secure, and everything of value insured. Keep investments safe the goal is to avoid losing money, not to reap big returns.
• Collect money owed to the estate: This will take some time to fill out paperwork and make phone calls, but it should be pretty straightforward. You can deposit the money you collect in the estate bank account.
• Pay bills owed by the estate: You’re responsible for paying legitimate bills, as there is enough money in the estate to pay them. You don’t have to pay the deceased person’s debts out of your own pocket. If you think there won’t be enough money to go around, stop paying bills and get some guidance from the court or an attorney about which debts should take priority.
• Deal with taxes: You’ll need to file income tax returns for the deceased person and possibly for the estate. The deceased person’s tax preparer can be a big help here. If the estate was very large you may also need to file estate tax returns. Smaller estates may owe a separate state estate tax; it all depends on where the deceased person lived and owned property.
• Distribute the assets: When the debts and taxes are paid, they help in the distribution of the remaining assets.
Estate Settlement Process
As you start the estate settlement process you may need to select an attorney. Select an attorney that is familiar with estate law and has experience in the settlement of estates or trusts. Select one that you think will be comfortable to work with. The process may take an extended period of time depending on the complexity. Just because an attorney prepared the will does not mean they should be retained as the estate’s attorney. However, they may have insight into the thought process of the deceased. Keep in mind that the attorney does not work for the heirs. The attorney has a fiduciary obligation to work for the deceased since they are no longer there. Before retaining an attorney there should be a discussion about the fees. If you don’t have a will when you die, a surviving spouse may not receive all of your assets. This depends on if you had children and if all of your children were also your surviving spouse’s children. If you and your spouse had no children or all of the children are also children of the surviving spouse, then your spouse gets your entire estate If you die without a surviving spouse your children will inherit your entire estate. If a child predeceased you the heirs of that child will inherit his or her share. If you leave no descendants then your estate goes to your living parents. If no living parents then to your siblings or their children. If not, then to your grandparents or their descendants.
Working together with the attorney, the executor will need to inventory all of the assets. Within ninety days after qualification by the personal representative, unless a longer time is granted by the court, the personal representative shall file with the clerk a report and inventory of the property of the decedent, so far as the same has come to the knowledge of the personal representative. The report and inventory shall be verified or affirmed under penalty of perjury. After the list is complete a value will need to be placed on the assets. The gross estate contains all of the property owned outright by the individual (bank accounts, stocks, mutual funds, frequent flyer miles, retirement accounts, IRAs, life insurance, etc.), property transferred with retained powers (i.e. life estate), and some transfers within three years prior to death.
The main responsibility of the executor is to collect, preserve, manage and distribute the property along with paying expenses, debts, taxes and other court approved allowances such as support for the surviving spouse and minor children.
Utah Probate Lawyer
When you need legal help with a probate case in Utah, please call Ascent Law LLC for your free consultation (801) 676-5506. We want to help you.
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States
Telephone: (801) 676-5506