Know that we have divided In three our kingdom, and ‘tis our fast intent To shake all cares and business from our age”
Shakespeare’s King Lear, Explaining the disposition of his Lands to his three daughters
It is an unfortunate part of life that we will all die and will likely see our parents go before us, possibly siblings, maybe a spouse along with others we know and love. An even more unfortunate part of that process is the legal and financial- usually intertwined, issues that arise with the passing of a loved one. Our time on earth is full of legal relationships and obligations and while our concern for them ends with death, those issues live on and can be especially troublesome for those who we leave behind to wrap up our affairs. It is an important part of preparedness to be ready for the one event that we all know is coming….
I’m an attorney of over 25 years in private practice. I do NOT practice Estate Planning or Probate law. I practice only in the State of Texas. The laws of your state may be different, your personal situation will always be important in making these sorts of legal decisions and for that reason you need to consult with a qualified attorney in your area. This article is NOT IN ANY WAY, SHAPE OR FORM to be construed as legal advice- guys I hate to say it, but you know I have to. In short, I don’t know what the Hell I am talking about and you probably shouldn’t read this or listen to a thing I have to say! And certainly, don’t act or rely on any of it. You aren’t my clients and I’m not your lawyer.
That said, there are a few basics that generally apply to end-of-life legal planning issues. The first is a set of basic legal documents that I think everyone should have. Honestly, it’s part of being an adult. You shouldn’t leave a big old mess for the people you love, it’s going to be stressful enough for them! Take responsibility for your affairs and do the right thing.
You will need a Will. There are alternatives to a Will, such as a Trust, consult an Attorney about which is right for you. A Will really is little more than a document that lays out how you want your earthly possessions- personal and real, divided up and who is to oversee that process. It can be simple or complicated- like most things in life. We’ll take the case of a married couple. Usually, they will execute a “sweetheart” Will- they will leave each other everything in case one dies before the other and if both pass everything will go to the children, if any.
The Will might also include specific bequests of personal property- say a firearm or a set of china to a child or a sibling, something that’s been in the family a long time, that sort of thing. This can often be handled by using a hand written document that “disposes of certain personal property”. Consult carefully with attorney here, typically this list must– 1. Be mentioned in the Will itself. 2. Be very specific about the property 3. Be in the handwriting of the Testator (prevents people from typing up a huge list of stuff and adding it to the Will) 4. Be attached to the Will itself. This procedure has the benefit of keeping the exact nature of the property and who is receiving it out of the public records.
The Will will also name a guardian for any minor children- both of their Estate (Property) and of their Person. The guardians do not have to be one and the same- you might name someone with a really good family of their own etc…as the guardian of their Person and your sister the Accountant as the guardian of their Property. Remember, if you have life insurance etc…the assets that a young child would inherit can be pretty substantial and they likely will not be able to manage them for a long time.
That brings up another issue- life insurance and most brokerage accounts (Your 401k account, investment portfolio) are governed by the rules of Contract. You have a Contract with those companies, they are going to disburse the money to whomever you name as beneficiary in that CONTRACT. Your Will, will not, over ride that Contract. They are going to pay whoever the Contract says they are to pay. Be sure to keep those things updated. You can designate your Estate as the beneficiary under the Contract, think about how you want to handle that.
A Will can include a Trust that will hold your assets until a beneficiary reaches a certain age or even allow for distribution of percentages at specified ages. There are few things worse than an 18 year old kid getting a pile of money from Mom and Dads’ estate. The Will can create a life estate in a piece of real property (land, house) where the beneficiary can live in that place until they pass and then it will go to someone else. The Will can include specific provisions for the deceased’s burial- type of service, treatment of their remains and other details.
The Will names an Executor- the person that will have the legal authority to act on the things you have said you want done. Typically, the spouse will act in this role but the Will should always name at least One and probably Two alternates. This is a critical person. They have to be reliable, scrupulously honest, know your wishes, and be able to tell people NO! It’s been my experience whenever someone passes, there is almost always some jockeying and positioning-even in good families, for “stuff”. Someone will always claim, “Uncle Charlie told me he wanted me to have that shotgun”—maybe he did, maybe he didn’t…. The executor needs to literally be able to change the locks on the house and tell people to chill the heck out until they are legally appointed and can begin the process of dividing up the estate according to the Will.
Most Wills will be silent on the disposition of “personal property” other than a few specific bequests. That leaves a lot of discretion with the executor for things like tools, firearms, jewelry and other household goods to be given away. Which brings up a good point- if you are “late in life” and you have a lot of “stuff” and you know that some of it might cause issues in the division….Give it away BEFORE you pass. Be very transparent about it- have a family meeting etc…tell everyone, “I’m giving Suzy the Cuckoo Clock, Joe is taking the Dogs Playing Poker Painting” and give it to them right then and there. Done.
The process of Probate is pretty straightforward. Once the Decedent has passed, the Will is filed with the appropriate Court. A posting is made that notifies potential creditors that the decedent has died and his Estate is being divided up. The notice essentially tells people to make a claim against the Estate if they have one. There will be a hearing set to officially appoint the Executor, usually 30-45 days from the initial filing- this gives any creditors time to get the notice and file their claims. The hearing is pretty informal, last one I had the Judge was dressed in a Hawaiian shirt and sandals..…The attorney will ask a list of simple questions of the Executor- “Are you the person named as the Executor?”, “When did the Decedent pass?”, “Is this their Will?
At the end of the hearing the Judge will confirm the Executor and instruct the Clerk of Courts to issue Letters Testamentary to the Executor. The Letter Testamentary is nothing more than a letter from the Clerk stating that the Executor is legally entitled to act on behalf of the Decedent. Usually there is a small charge for each Letter, the Executor presents them to people or entities that he needs to do things for him. He would present one to a Bank for example to open a safe deposit box or to convert the decedents accounts to an account for the Estate.
The next step will be an inventory of Claims and Assets. The Executor, along with the Attorney will compile a list of what assets the Estate has and any debts owed. Typically, this would include bank accounts with amounts in them, vehicles, real property (House, Land) and a general description of personal property and the values of each. Careful here. The Probate filing, including the Will itself is a PUBLIC DOCUMENT. There are some things the whole world doesn’t need to know. For example, instead of listing- “Barrett M82a1 .50 Caliber Rifle”….the Executor might list, “Sporting Goods valued at XYZ”.
Then the Executor and Attorney will file a Disbursement form with the Court. Basically, it shows what bills were paid, who got what and when. Every beneficiary should sign a form stating they actually got what they were supposed to when it is delivered to them- this protects everyone.
The biggest reason not to have a Will or admit it to Probate is usually cited as being cost. Again, I can’t speak to everywhere but locally a simple will- typical family who owns a house, few cars, some personal property, bank account or two etc…is going to run you $1,500-$2,000. That will include Wills for a Husband and Wife along with Powers of Attorney. You can often do significantly better on pricing by finding someone who does not specialize in Wills, again, these are forms-often included in a bundle of software an Attorneys’ office will purchase even if they don’t do many Wills. Most competent attorneys can properly fill in the blanks. That’s the issue with the cheapo DIY Online Wills. Yes, they can make a perfectly serviceable Will- BUT, you have to know what to put in the blanks! –Most people don’t.
You should update your Will as often as you have significant life changes- death of a spouse, divorce, re marriage, major change in assets- most folks can go 10-15 years between wholesale changes. If a small change is needed you can always have an Attorney draft a Codicil which is attached essentially to the original will making some changes to it, cheaper than re doing the whole thing.
Probating the will itself will cost $300 to file the papers and the attorney will typically charge a flat fee of $2,000-$3,000.00 to qualify the Executor and file all the documents needed. It’s actually a pretty simple legal procedure in most cases but there is a lot of paperwork and data compilation (mostly forms, computer generated) that has to be filed.
Not having a Will can be a HUGE problem. The biggest problem involves the largest financial asset that most people have- their home. The problem is really simple- most people have to get a loan to buy a house. When they go through a bank, the bank, oddly enough, because the land/home represents their security for the loan if the borrower does not pay, wants to make sure the seller actually OWNS THE PLACE! (I have a Lovely Bridge I’d like to sell you, any takers?) The bank will verify ownership through a Title Search. They will find out who the last officially registered owners of the property were. If the names of those folks aren’t on the sale documents- BIG PROBLEM, no loan!
A probate filing is inserted in the Title Records and says, “Yes, Imma Thompson who was the owner of the place has died and son Joe is now the proper owner (or Estate Executor) who can sign sales documents”. The Probate filing provides certainty of ownership the bank can rely on. The probate filing also clears titles to vehicles although many states have a procedure for signing over vehicle titles without a probate.
For smaller estates, in Texas, we have what’s called a Small Estates Affidavit which is a much less intensive and less expensive filing that allows people with only a few assets to avoid full blown probate proceedings. Many states have a similar, small estates provision, just have to consult an attorney here as to which way to go.
Those are the broad strokes of Wills and the Probate process in Texas. I strongly recommend that you seek out a competent local attorney and discuss with them how best to handle your estate. I’ll try to get something up about Powers of Attorney and Advanced Directives shortly.
American Yeoman