Estate Planning: Chapter 4 Probate Process

Probate fees include what?

- Appraisal fees for probate assets, for example, real estate, business interests, - Court filing fees, - Attorney's fees, and - Other administrative expenses.

Which of the following techniques can be used to avoid ancillary probate for a real estate investment in a state other than that of the decedent's residence? 1. JTWROS 2. Revocable living trust 3. Tenant in common 4. Tenancy by the entirety 5. Testamentary trust

1, 2, 4 Property owned as JTWROS or by tenancy by the entirety will not pass through probate. Revocable trusts do not go through probate. A testamentary trust is created in accordance with instructions contained in a person's will.

The estate may be closed after what occurs?

1. All claims and debts have been paid, 2. All taxes have been paid, 3. All property has been distributed, and 4. A final accounting or report is filed with the court.

When most people think of probate court, they think about the probate of the estates of the decedents. What are three other major areas of focus for the probate process?

1. probate of estates and the supervision of trusts 2. Guardianships and conservatorships 3. commitment of the mentally ill

Which of the following type of property is included in a decedent's probate estate? a. Life insurance owned by the decedent on his/her spouse b. A POD account c. A Totten trust d. Property held by tenancy by the entirety

A The life insurance policy is subject to probate unless there is a contingent owner (very rare). The probate process determines the new owner of the policy.

intestate estate

An individual who has died without a will

For the personal representative of either the testate or intestate estate, what does administration usually involve?

An inventory of all probate assets, payment of creditors' claims, and distribution of the probate estate according to the terms of the decendent's will, or according to the laws of intestacy, if the decedent dies without a will

What additional procedure is required to dispose of real estate of the decedent that is located in a state other than that of the decedent's residence?

Ancillary probate procedure is required. Ancillary probate is needed if property is located in more than one state even if the decedent did not execute a will

What are four time delays that estate owners face?

Complications involving: - property disputes - tax returns - accounting - property receipts

Keeping an inventory of all probate assets, payment of creditors' claims, and distribution of the probate estate according to the terms of the decedent's will, or according to the laws of intestacy if the decedent dies without a will, are functions of: A. The personal representative B. The Probate Court C. The decedent's spouse, if surviving D. The estate's attorney

Correct Answer: A. The personal representative Explanation: Administration of the probate estate occurs only after the letters testamentary have been issued to the personal representative. The administrative functions of the personal representative are an inventory of all probate assets, payment of creditors' claims, and distribution of the probate estate according to the terms of the decedent's will, or according to the laws of intestacy if the decedent dies without a will.

The greater the amount of property that is transferred inside the probate estate, the smaller the amount of administrative and legal expenses incurred by the estate. A. True B. False

Correct Answer: B. False Explanation: Costs involved in the probate of an estate are likely to be higher than if probate is avoided because most administrative and attorney's fees are based on a percentage of the value of the probate estate. Additional costs also may be involved if the probate procedure includes appointments of guardians, conservators, or appraisers. Therefore, the greater the amount of property that is transferred outside the probate estate, the smaller the amount of administrative and legal expenses incurred by the estate.

Publishing a probate notice in a newspaper is enough to avoid litigation by unnotified creditors. A. True B. False

Correct Answer: B. False Explanation: The U.S. Supreme Court ruled that mere publication in a newspaper was and had failed to provide written notice or actual notice of the deadline for filing creditor's claims. Therefore, to avoid litigation by unnotified creditors, attorneys and other representatives of the estate should provide written notice or actual notice to all creditors of a decedent's estate.

Robert resides in Texas but has some real estate in Florida. He wants to avoid the ancillary probate procedure while disposing of his real estate in Florida. What options does he have? 1. Write provisions in his will that clearly states to whom the real estate should be transferred to after his death. 2. Gift the real estate to another person. 3. Place the real estate in a trust at some point in his lifetime. 4. Write a provision in the will that attempts to dispose of the property during his lifetime in an attempt to avoid an ancillary probate procedure.

Correct Answers: 2, 3 Explanation: Robert has only two options — either to gift the real estate to another person, or to place it in a trust at some point in his lifetime to avoid ancillary probate procedure. He cannot choose the other two options because for a will to dispose of real estate located in a state other than that of Robert's residence, the property has to be subjected to ancillary probate procedure. In his will, Robert can direct who should get the real estate in Florida, but an ancillary probate procedure will be necessary. A provision in the will that attempts to dispose of the property in an attempt to avoid an ancillary probate procedure is null and of no effect.

What type of property does ancillary probate affect? a. Personal property b. Stocks or bonds c. Business interests d. Real property

D Ancillary probate is required for real property that is located in the non-domicile (other) state. The business interests are not specified and may not include any real property.

Which of the following type of property is included in the probate estate? a. Pension plan with a named beneficiary b. Life insurance owned by a decedent with a named beneficiary c. Joint tenancy with son and daughter d. Ownership of corporation

D Assets passing by beneficiary designation are not subject to probate. Ownership of stock (sole ownership) is subject to probate.

What additional costs may be involved in the probate procedure?

May include appointment of guardians, conservators, or appraisers. Many of these costs can be eliminated if the probate process is avoided - the appointment of guardians is always a part of the probate process, therefore, probate substitutes will NOT avoid the cost associated with that selection

Can a will dispose of real property of the decedent located in a state other than that of the decedent's residence?

Yes, a valid will can be used to dispose of separately-owned assets wherever the assets are located. However, in order to dispose of real estate which the decedent owned as a separate asset, the estate will be subject to an additional procedure

What does the provision of legal titleholder do?

helps to avoid property or title disputes

Ancillary probate

is a proceeding which disposes of the decedent's real estate, that is owned in a state other than the decedent's state of domicile.

A testate estate

is one where the separately-owned assets of the decedent's estate transfer under the provisions of the will. Although the surviving spouse is often named as the petitioner for testate estates, any interested party may file the petition and initiate the probate process.

What are the common reasons for probate settlement?

judicious settlement of beneficiaries' disputes in the probate court and provision of legal titleholder to the client

In both testate and intestate estates, all creditors of the estate have an opportunity to file their claims with the probate court. Generally, if a creditor fails to file a claim within a stated period of time following the admission of the will to probate (_______ months), or following the appointment of the personal representative (_______ months), the creditor's claim is barred.

six

Once an interested party has been given notice and fails to contest the probate process within __________ months from the date of the last publication that the will has been admitted to probate, the interested party is barred from raising any further challenges to the probate of the will

six months

Once the will has been established as valid, the letters testamentary are issued to the personal representative. The personal representative is also known as what?

the Executor (male), or Executrix (female)