If you want ensure that your assets pass to your beneficiaries uncontested, in a timely manner and would also like to save your family thousands of dollars in unnecessary expenses at the same time, then you really need to avoid probate!!
Why do I need to avoid Probate? It's an age-old process so what's wrong with it?
Probate has come to mean not just proving the validity of a Last Will and Testament but the entire administrative process involving the passing of an owner's legal title to property to his beneficiaries after his death. The deceased's property is inventoried and creditors are identified and paid after the payment is made to the estate's attorney, executor and tax entities. Assuming that the Last Will & Testament is not contested, the probate process shouldn't take too long. However, if there are any complications, probate could end up taking years.
Let's take a quick look at some of the typical problems with probate:
(a) Probate can often cost up to $50,000!
In most states, probate fees are charged as a percentage of the "gross" value of an estate. These fees can typically range from 3.8% ( Utah) to 11% ( Alaska).
Probate fees are calculated on the gross value of a decedent's estate. So, if a home had a market value of say $1 million and a mortgage of $900,000, probate fees will be calculated on the $1million even though the net asset value is only $100,000! This can result in a gross inheritance of 100,000 with probate fees of $46,000 and this doesn't include filing fees and other costs. With property values at record highs, you don't have to be wealthy to incur substantially high probate fees.
(b) Probate takes too long!
Assuming that all the appropriate documents are in order, probate should, on average, take a year or so. However, this rarely occurs and, in practice, it can take between eighteen months to five years to settle an estate. For all practical purposes, the estate is frozen during that period and beneficiaries have to wait until probate is over before they can receive their inheritance.
(c) Probate creates unwanted publicity.
Everything in probate court is a matter of public record and details of a deceased person's assets, their creditors, as well as details of the persons who have received his assets and other family issues are open for daily inspection by the public!
(d) Probate allows Wills to be easily contested
Beneficiaries and heirs can become upset with their inheritance under a Legal Will and often hire attorneys to contest the Last Will. Because a Legal Will is on the public record, an attorney can easily evaluate the likelihood of a successful challenge to its validity or its terms before deciding whether or not to take a case. An attorney can therefore, and at relatively little cost, advise a client quite quickly as to whether they have a plausible cause of action. Because the likelihood of making an unsuccessful claim is substantially reduced, heirs and beneficiaries are much more likely to successfully make a claim.
HOW TO AVOID PROBATE?
Now that you know why you should avoid probate, let me show you the most effective way of doing it.
A Revocable Living Trust is an excellent tool for solving a number of issues confronting individuals and families today, including the avoidance of probate, the management of property during incapacity, the protection of property for beneficiaries who can't handle money on their own, protection from disgruntled heirs, the elimination or minimization of federal estate taxes and state death taxes, and the assurance that personal affairs will remain private.
A Revocable Living Trust is a type of trust created for the purpose of holding ownership of an individual's assets during that person's lifetime, and for distributing those assets after their death.
A Living Trust is quite easy to establish and operate. To create a basic Living Trust, you make a document called a declaration of trust, which is similar to a Last Will and Testament. You then name yourself as trustee and transfer whatever assets or property you want into that trust. Because you are named as the trustee, you maintain full control over your assets just as you did before you transferred the assets. You can still do whatever you wish to with them - manage them, sell them, or even give them away. The trust does not become effective until you die or become incapacitated.
After you, or you and your spouse (in the case of a joint trust) pass away, the trust identifies the person who will act as successor trustee. The successor trustee -- the person you appoint to handle the trust after your death -- simply transfers ownership of the assets in the trust to the beneficiaries named in the trust. In many cases, the whole process takes only a few weeks, and there are no lawyer or court fees to pay. When all of the property has been transferred to the beneficiaries, the Living Trust ceases to exist.
ADVANTAGES OF USING A LIVING TRUST
You will be able to Avoid Probate and the excessive legal fees and other expenses that go with it.
With a Revocable Living Trust, your assets will go directly to your beneficiaries after your death. Because the assets are owned by the Trust, they are not subject to probate administration, saving the money normally paid as probate administration expenses. There will be no probate attorneys fees or court costs.
You avoid probate and the drawn out distribution of your assets!
If you avoid probate, the courts maintain will have no control over the Trust's assets, and therefore cannot tie up the assets in a lengthy (and costly) probate process. The Trustee simply distributes assets to named heirs free from the probate process, but only if those assets have actually been placed inside the Trust.
Avoid unwanted publicity.
Your Revocable Living Trust is not open to inspection by the public and, as a result, no-one becomes aware of what assets you have, who you passed those assets to, who you owed monies to and what specific family arrangements you may have had in place.
Reduce the likelihood of disgruntled heirs contesting your wishes.
With a private family trust, the contents are not publicly known. Attorneys are less likely to spend their own time and money pursuing a lawsuit with unknown probabilities of success.
Prevents court control of your assets when if you ever become incompetent.
A growing number of older citizens are putting their assets into a Living Trust because they want to avoid being placed under a court-appointed guardian if they become unable to manage their affairs. If you become disabled or are unable to manage your estate, your Living Trust avoids the need for a court-mandated conservatorship. The successor trustee you have named in the trust will manage your affairs without government interference and expense. The trustee occupies a position of trust and confidence and is subject to strict responsibilities. This is usually higher standard of performance than one who is dealing with his or her own property. Without the express written permission, the trustee cannot use trust property for any other reasons than those specified in the trust agreement and must hold the trust property solely for the benefit of the beneficiaries.
Other Advantages: -
A Living Trust can also provide for the care, support and education of your children by turning over assets to them at an age chosen by you. Even insurance proceeds can be paid to the trust so your successor trustee can manage them for the benefit of your family.
You can avoid statutory restrictions on bequests of property. You can reduce or eliminate estate taxes.
Revocable Living Trusts are inexpensive and easy for you to set up and maintain.
You can revoke or amend your Living Trust at any time!
You can prevents court control of inheritances received by your children and appoint someone to manage property left to them.
You can restrict and control how your estate is managed and even spent after your death.
You will have the peace of mind of knowing that you have avoided probate and the possibility of having your assets frozen for years in the probate process!!!
So, as you can see, a Revocable Living Trust is one of the best ways for you to provide for the special needs of your family AND ensure that your estate is not depleted through costly and drawn out probate proceedings. Just call your lawyer to find out more or visit http://www.global-wills.com/trusts.html.
Martin O'Donoghue
Director and Corporate Counsel
Global-Wills.com
martin@global-wills.com
Martin O'Donoghue, lawyer and co-founder of http://www.global-wills.com, has helped thousands of people avoid probate through the use of Revocable Living Trust Agreements. Global-Wills.com helps people to strategically secure the financial future of both them and their family through the provision of international estate planning and asset protection products, forms, resources and information.
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Wednesday, February 21, 2007
Obtaining probate
Note: the information in this article applies to England and Wales only.
This guide is an introduction to obtaining probate after someone's death in order to administer their estate.
When someone dies, their finances, assets and belongings (i.e. their estate) have to be sorted out and distributed among those who are entitled to them. The person(s) appointed as executor of the deceased person's will must attend to the administration of this, but in order to obtain the legal authority to do so they must apply to the Probate Registry for a Grant of Representation. This document provides proof to the organisations that the executor will be dealing with in the administration of the estate that they are legally entitled to do so.
Probate is the term for the legal process of establishing the validity of a will, but it is also used to refer to the administration of the estate of a deceased person, whether or not they have a will. At least one of the executors of the estate will have to obtain a Grant of Representation to gather the assets, pay any outstanding debts and distribute the remaining estate among the entitled parties.
Normally the deceased will have appointed executors of the estate are in their will, but if there is no will (i.e. the person died 'intestate'), it will be the next of kin or the next closest relative in the following order who is deemed responsible for the administration: spouse or civil partner, adult son or daughter (or their children if over 18), parents, brothers or sisters (or their children if over 18), grandparents, uncles or aunts (or their children if over 18).
There can be up to four executors, but two is the norm. Only one need apply to obtain a Grant of Representation.
You don't need a solicitor to help you apply for the grant (although it can save you a lot of time and stress during such a traumatic period). You should be able to do it yourself if the estate isn't complicated. Below is some guidance on the application process.
There are three different types of probate or grant of representation, all of which are applied for using the same process. The first is probate, which is granted to the executors named in the will. The second is a letter of administration (with will), which is granted in cases where someone other than an executor named in the will applies for the grant (e.g. if the executor is too ill or unable to carry out the administration), and the last is a letter of administration, which is granted in cases where there is no valid will. All of these grants carry the same legal status to allow the executor to deal with the estate of the deceased.
To apply for a grant (whatever type), obtain form PA1 from Her Majesty's Revenue and Customs. On the form you'll need to list the full value of the person's estate - although you may not be able to give accurate details at this stage. If so, write 'estimate'. This means doing a bit of investigation and getting in touch with organistions with whom the deceased had money saved or invested, or to whom the deceased owed money. You'll also need to give valuations for property, jewellery and other household belongings.
When you send the form to the Probate Registry you'll need to include a cheque to pay for the fee (currently £130), a certified copy of the death certificate (a photocopy is not acceptable), and the will and any codicils (amendments to the will).
Note that the Probate Registry will not return the will to you as it becomes a public document once it has been 'proven' or declared to be valid, so it's a good idea to keep a copy yourself. However, you will receive an official copy of the will when the grant is issued to you.
Your application will be reviewed and you'll be asked to attend an interview. At the interview you'll be asked to confirm the details of the estate by swearing an oath. You may be asked some questions regarding the estate and you're free to ask any questions yourself.
The whole application process can take a few months. It's important to note that inheritance tax must be paid within six months after the end of the month in which the person died, and normally it must be paid at least in part before the grant is issued. To work out what needs to be paid, obtain forms D18 and IHT200 from either the Probate Registry or Her Majesty's Revenue and Customs and send them to Her Majesty's Revenue and Customs.
When you've received the grant (and it's best to get several certified copies of it), you can then apply to banks, building societies, pensions providers and other financial institutions with whom the deceased had money saved or invested to request that the assets are released. You'll also need to contact organisations to whom the deceased owed money in order to pay them back. It can be quite a time-consuming process, and you are allowed to claim expenses from the person's estate for carrying out the work, but you can't charge for your time involved.
There are some cases in which a grant is not required, for example if all the deceased's assets are held in joint names with a surviving partner or spouse, or if the estate is very small and no inheritance tax is due (some organisations will release funds of up to around £5,000 without a grant). You may want to have a brief consultation with a solicitor to obtain advice before you proceed with the application for a grant of representation.
Before you make the decision to take on this large task yourself, consider the advantages and disadvantages of employing a solicitor to do so - it could save you a great deal of time and effort, and perhaps money. For example, the solicitor's fees can be charged to the estate, but if you were taking care of the probate yourself you wouldn't be able to claim for your time - this could be an issue if you have to take time off work. You also wouldn't have to attend an interview at the Probate Registry, and the process is often quicker as solicitors are used to dealing with probate and can easily handle issues or complications should any arise. Also, the probate fee is often lower when an application is made through a solicitor. Weigh up these factors before deciding how you want to proceed.
by Benedict Rohan
This guide is an introduction to obtaining probate after someone's death in order to administer their estate.
When someone dies, their finances, assets and belongings (i.e. their estate) have to be sorted out and distributed among those who are entitled to them. The person(s) appointed as executor of the deceased person's will must attend to the administration of this, but in order to obtain the legal authority to do so they must apply to the Probate Registry for a Grant of Representation. This document provides proof to the organisations that the executor will be dealing with in the administration of the estate that they are legally entitled to do so.
Probate is the term for the legal process of establishing the validity of a will, but it is also used to refer to the administration of the estate of a deceased person, whether or not they have a will. At least one of the executors of the estate will have to obtain a Grant of Representation to gather the assets, pay any outstanding debts and distribute the remaining estate among the entitled parties.
Normally the deceased will have appointed executors of the estate are in their will, but if there is no will (i.e. the person died 'intestate'), it will be the next of kin or the next closest relative in the following order who is deemed responsible for the administration: spouse or civil partner, adult son or daughter (or their children if over 18), parents, brothers or sisters (or their children if over 18), grandparents, uncles or aunts (or their children if over 18).
There can be up to four executors, but two is the norm. Only one need apply to obtain a Grant of Representation.
You don't need a solicitor to help you apply for the grant (although it can save you a lot of time and stress during such a traumatic period). You should be able to do it yourself if the estate isn't complicated. Below is some guidance on the application process.
There are three different types of probate or grant of representation, all of which are applied for using the same process. The first is probate, which is granted to the executors named in the will. The second is a letter of administration (with will), which is granted in cases where someone other than an executor named in the will applies for the grant (e.g. if the executor is too ill or unable to carry out the administration), and the last is a letter of administration, which is granted in cases where there is no valid will. All of these grants carry the same legal status to allow the executor to deal with the estate of the deceased.
To apply for a grant (whatever type), obtain form PA1 from Her Majesty's Revenue and Customs. On the form you'll need to list the full value of the person's estate - although you may not be able to give accurate details at this stage. If so, write 'estimate'. This means doing a bit of investigation and getting in touch with organistions with whom the deceased had money saved or invested, or to whom the deceased owed money. You'll also need to give valuations for property, jewellery and other household belongings.
When you send the form to the Probate Registry you'll need to include a cheque to pay for the fee (currently £130), a certified copy of the death certificate (a photocopy is not acceptable), and the will and any codicils (amendments to the will).
Note that the Probate Registry will not return the will to you as it becomes a public document once it has been 'proven' or declared to be valid, so it's a good idea to keep a copy yourself. However, you will receive an official copy of the will when the grant is issued to you.
Your application will be reviewed and you'll be asked to attend an interview. At the interview you'll be asked to confirm the details of the estate by swearing an oath. You may be asked some questions regarding the estate and you're free to ask any questions yourself.
The whole application process can take a few months. It's important to note that inheritance tax must be paid within six months after the end of the month in which the person died, and normally it must be paid at least in part before the grant is issued. To work out what needs to be paid, obtain forms D18 and IHT200 from either the Probate Registry or Her Majesty's Revenue and Customs and send them to Her Majesty's Revenue and Customs.
When you've received the grant (and it's best to get several certified copies of it), you can then apply to banks, building societies, pensions providers and other financial institutions with whom the deceased had money saved or invested to request that the assets are released. You'll also need to contact organisations to whom the deceased owed money in order to pay them back. It can be quite a time-consuming process, and you are allowed to claim expenses from the person's estate for carrying out the work, but you can't charge for your time involved.
There are some cases in which a grant is not required, for example if all the deceased's assets are held in joint names with a surviving partner or spouse, or if the estate is very small and no inheritance tax is due (some organisations will release funds of up to around £5,000 without a grant). You may want to have a brief consultation with a solicitor to obtain advice before you proceed with the application for a grant of representation.
Before you make the decision to take on this large task yourself, consider the advantages and disadvantages of employing a solicitor to do so - it could save you a great deal of time and effort, and perhaps money. For example, the solicitor's fees can be charged to the estate, but if you were taking care of the probate yourself you wouldn't be able to claim for your time - this could be an issue if you have to take time off work. You also wouldn't have to attend an interview at the Probate Registry, and the process is often quicker as solicitors are used to dealing with probate and can easily handle issues or complications should any arise. Also, the probate fee is often lower when an application is made through a solicitor. Weigh up these factors before deciding how you want to proceed.
by Benedict Rohan
Sunday, February 18, 2007
Probate Auctions on E-bay
Probate Information
Whenever a person dies and leaves behind debt creditors, the administrator or executor of that person's estate faces certain challenges in quickly selling real and personal property in order to satisfy creditors. The probate process is long and drawn out, and every shortcut available should be sought in order to shorten the amount of time that property is tied up in the process. Recently, with the great success of E-bay, people have discovered a quick and efficient way to unload property in order to satisfy debts. Not only has E-bay made the general premise of auctioning easier, it has also made it more understandable and desirable to the masses.
It is the jurisdiction's Probate Court's responsibility to ensure all probate assets are collected, maintained, and distributed among the decedent's heirs, beneficiaries, and/or creditors in accordance with the will of the decedent as expressed through that person's testamentary will and the laws of that jurisdiction. This process is known as the administration of a decedent's estate, and it can cause great difficulties to even the most experienced executor. Once the person dies, the executor or administrator must first make an accounting to the Probate Court to determine the value of decedent's estate. Second, they must seek to pay any taxes or debts owed. Only after the debts and taxes are paid, do the decedent's heirs or beneficiaries get any of the probate property. As the probate process can often take more than a year, using E-bay, or other comparable online services can assist in satisfying the creditors and debts owed by the estate. However, it should be pointed out that under Massachusetts law, creditors do have one-year to make any claims against the estate.
Even a quick browse through E-bay listed properties presents many real properties for sale which are currently in probate. Utilizing E-bay and other online auction tools can allow a person to achieve the greatest value for the estate, since auctions can be held across the country, creating a true marketplace for the decedent's property. Online auction sites allow for the administrator or executor to realize a more accurate value for what is being sold. This tool can actually demonstrate that the executor has fulfilled his or her fiduciary duties. However, when selling real probate property over an online auction site, the administrator of the estate should first seek court approval. While auctioning off real property from a probate estate will help move the process along, it might not have a substantial effect on the overall speed of the probate process itself, though it can be of assistance in clearing up creditors and determining priority of payment. The true value of sites such as E-bay lies in their ability to allow the seller to achieve the greatest amount for the property as possible. While only hundreds might attend an auction in person, E-bay allows thousands of people to participate in the auction, all the while driving the price up and leaving more money to the estate.
The valuable advocate must have a clear understanding of the best ways in which to assist their clients or their client's estate in obtaining the best value for any property in probate. Utilizing newer technologies in order to gain value or speed the hassles of probate can create substantial good will in the eyes of the client or their estate. The role of the effective attorney is to reduce problems and headaches and to make life easier for clients. If an attorney can also reduce costs, increase value and speed along the probate process, he or she just might have found lifelong clients. Additionally, having a clear understanding of available technologies can help to assist executors of estates in fulfilling their fiduciary duties of successfully executing the intent of the decedent.
by Nicholas J. Deleault
Whenever a person dies and leaves behind debt creditors, the administrator or executor of that person's estate faces certain challenges in quickly selling real and personal property in order to satisfy creditors. The probate process is long and drawn out, and every shortcut available should be sought in order to shorten the amount of time that property is tied up in the process. Recently, with the great success of E-bay, people have discovered a quick and efficient way to unload property in order to satisfy debts. Not only has E-bay made the general premise of auctioning easier, it has also made it more understandable and desirable to the masses.
It is the jurisdiction's Probate Court's responsibility to ensure all probate assets are collected, maintained, and distributed among the decedent's heirs, beneficiaries, and/or creditors in accordance with the will of the decedent as expressed through that person's testamentary will and the laws of that jurisdiction. This process is known as the administration of a decedent's estate, and it can cause great difficulties to even the most experienced executor. Once the person dies, the executor or administrator must first make an accounting to the Probate Court to determine the value of decedent's estate. Second, they must seek to pay any taxes or debts owed. Only after the debts and taxes are paid, do the decedent's heirs or beneficiaries get any of the probate property. As the probate process can often take more than a year, using E-bay, or other comparable online services can assist in satisfying the creditors and debts owed by the estate. However, it should be pointed out that under Massachusetts law, creditors do have one-year to make any claims against the estate.
Even a quick browse through E-bay listed properties presents many real properties for sale which are currently in probate. Utilizing E-bay and other online auction tools can allow a person to achieve the greatest value for the estate, since auctions can be held across the country, creating a true marketplace for the decedent's property. Online auction sites allow for the administrator or executor to realize a more accurate value for what is being sold. This tool can actually demonstrate that the executor has fulfilled his or her fiduciary duties. However, when selling real probate property over an online auction site, the administrator of the estate should first seek court approval. While auctioning off real property from a probate estate will help move the process along, it might not have a substantial effect on the overall speed of the probate process itself, though it can be of assistance in clearing up creditors and determining priority of payment. The true value of sites such as E-bay lies in their ability to allow the seller to achieve the greatest amount for the property as possible. While only hundreds might attend an auction in person, E-bay allows thousands of people to participate in the auction, all the while driving the price up and leaving more money to the estate.
The valuable advocate must have a clear understanding of the best ways in which to assist their clients or their client's estate in obtaining the best value for any property in probate. Utilizing newer technologies in order to gain value or speed the hassles of probate can create substantial good will in the eyes of the client or their estate. The role of the effective attorney is to reduce problems and headaches and to make life easier for clients. If an attorney can also reduce costs, increase value and speed along the probate process, he or she just might have found lifelong clients. Additionally, having a clear understanding of available technologies can help to assist executors of estates in fulfilling their fiduciary duties of successfully executing the intent of the decedent.
by Nicholas J. Deleault
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