Saturday, June 14, 2014

Probate - Is It Really a Dirty Word?

-->
PROBATE

WHAT IS IT AND IS IT REALLY NECESSARY?



We often hear people say that they don't want their estate to be tied up in probate court. There is a popular television financial “advisor” who has made a great deal of money preaching that listeners should avoid probate at all costs and that it is financially unwise to permit their estates to go through probate. This is at the same time that the “advisor” is selling “one-size-fits-all”/ “do-it-yourself” trust and will kits. Given the prevalence of such views, it's important to have a no-nonsense, down to earth discussion about what probate really is.

What is probate?

Probate is simply a legal procedure to ensure that your wishes, as the author of your will, are honored. Similarly, it is also a way that your rights, if you are the beneficiary or an heir of an estate are protected. An impartial judge through court procedures supervises this process, and an executor (if there is a will) or an administrator (if there is no will) will be appointed by the judge to do the work necessary to handle the affairs of the deceased person. The executor of administrator usually designates an attorney to assist with the legal filings required in a probate matter.

What is an estate?

Your estate is simply all the assets you own and all of the debts that you owe on the day of your death. This includes household goods, bank accounts, retirement accounts, motor vehicles, and other personal property, but also real estate such as your home, timeshares, oil and mineral rights, and other rights to real estate.

Do all estates have to be probated?

State law and probate rules provide procedures for all levels of estates. In Iowa, unless there is real estate, estates with the gross value of less than $50,000 can be probated informally through an affidavit process. Estates between $50,000 and $100,000 are permitted to go through an expedited small estate procedure with a minimum of supervision by the judge. Finally, estates with a value of over $100,000 are required to go through a more formal and regulated probate procedure.

What will it cost me to probate the estate?

In most cases, it will not cost the heirs or beneficiaries anything to have an estate probated. The fees, court costs, and expenses come from the assets of the estate itself. In Iowa, for estates with a value of over $100,000 the attorney’s fees will be approximately 2% of the gross value of the estate. If, however, the attorney is required to provide assistance over and above what is normally required, then “extraordinary fees” may be awarded. This type of situation could occur, for example, if someone challenges the will or if complex real estate matters need to be attended to. In estates valued at under $100,000, the attorney can charge a reasonable fee based upon the attorney’s hourly rate. In most cases this will be over 2% because much of the same work must be done as in a larger estate.

What if I die without a will, does my estate still have to go through probate?

Yes, all estates must be probated. The procedures are very similar both for an estate with a will and those without a will. If there is a will, this is called a "testate estate." If there is no will, then it is called an "intestate estate." Unfortunately, however, because the deceased person has left no direction for the court, the personal representative appointed by the court will have much less flexibility and need more court approval for items than if the deceased person had actually just left a will.

How long does it take to Probate a Will or an Estate?

In his book, Bleak House, about life in Victorian England, British author Charles Dickens describes an estate that took generations to work its way through the courts. Fortunately, that is not the case in modern America. Although, there are circumstances such as when there are appeals and disputes among the heirs, or people who believe that they should be heirs that can give rise to a probate case taking many years, most probate matters can be finished within one or two years. If it is a small estate, then it is not unusual for it to be closed in a matter of months.



What if the deceased has a will, but did not want to pay a lawyer to help write it?

All wills are carefully scrutinized to ensure that Iowa law was followed relating to execution and content of the wills. This is especially true when a will was executed without legal guidance. Potential red flags in a will are the failure to acknowledge children of the deceased, or execution irregularities. Examples of these are situations where the will was witnessed on a different date than it was notarized. Sometimes individuals who are beneficiaries have also acted as witnesses. Finally if the will was not notarized, then it may be necessary to find the witnesses and have them execute affidavits or in some instances give in court testimony. This can make probate of the will more difficult and possibly much more expensive.

Do I need to hire a lawyer to help me go through probate court?

There is no law that requires you to hire a lawyer to help you to probate a deceased person’s estate. Nevertheless, probating that estate will go much quicker and smoothly if an attorney who understands the probate system is involved. This is a situation where trying to save a little bit of money could cost a great deal of aggravation.

What if the person who died had no property or belongings of value?

Even if the person who died had no property or belongings of value, you should nevertheless consult with an attorney to determine if anything needs to be done. It may be that the person who died was owed money by others, or had claims to property that was not actually in their possession. In any event, that person’s will should be filed with the clerk of court in the county where the deceased last resided.

If I don’t like how the executor or administrator is handling the probate case, can I hire my own attorney and contest what they are doing?

Yes, any heir, person who believes they should be an heir, co-executor, or co-administrator can hire their own attorney. You should be aware though, that if you do, you are personally responsible for the fees, not the estate, and the judge is not required to approve the fees.

© Rod Powell 2014

No comments:

Post a Comment