Tag: estate administration

The Complicated Process of Estate Administration

Written by kwmlaw on October 8, 2019. Posted in Kelly & West News.

Estate administration is not easy. The days following the death of a loved one are an emotional and challenging time for the family of the deceased. The last thing they want to have on their plate is the process of claiming their loved one’s assets.

Most people assume someone’s belongings go directly to the family without any hiccups; however, probate — or the process of transferring legal ownership — can be challenging. Here are a few of the things you should know if you’re handling a decedent’s estate.

Do I really need to do this?

Many Harnett County residents assume they don’t need to go through probate. People often think that if you’re not rich and don’t have much, there’s no need to manage an estate. But that’s not true. If you have a house, car, or bank account, your family or someone may have to go through the probate process as any form of personal property that is titled, such as a car, will have to be transferred by the court. Even if your loved one had a Will, someone may still have to administer the estate.

How long does probate take?

Even when families are proactive and establish a Will, estate administration can take up to 12 months or longer.

Assets in Multiple Locations

If your loved one lived in one state, but also owned property in other states, you may need to go through probate in each state.

Meanwhile …

Your family member may be leaving you his or her money, car, or house. Even though you won’t yet have possession of those items, you may still have to make payments on a car or house and must pay property taxes, too, thus incurring a burden without the benefit during the time the assets are tied up in probate.

Public Records

Wills are public documents, meaning anyone can access them through the courthouse. If you are forced to enter probate, you will be required to register lots of information that you may prefer not to be public knowledge. That includes asset information about the deceased, personal information regarding the beneficiaries, and many other details. Administering an estate also requires you to fill out a lot of paperwork and provide documentation such as:

Bank statements;
Bank signature cards; and
Car titles and DMV records.

How much will estate administration cost?

Many people dive into estate administration, thinking it might not be so bad. After all, you may not want to pay a lawyer to manage it. However, if you go about the process on your own and make a mistake, it will likely cost more to hire a lawyer to fix it — and that is IF it can be fixed. While, yes, there is a cost to have someone handle the estate, it will go much faster when you hire an attorney, and it means a lot less work for you!

We recommend Harnett County residents set up a Trust in advance so their families can avoid this process. You can learn more about that here. Or, contact us if you need help with your loved one’s estate.

What’s the Difference Between an Executor and a Beneficiary and Can They Be the Same?

Written by kwmlaw on November 20, 2018. Posted in Kelly & West News.

Executors and beneficiaries have a unique relationship under the law. An executor manages a deceased person’s estate and a beneficiary is an individual who will inherit that property. While the executor and beneficiary can be the same person, you should give it some thought when drawing up your Will.

The Executor’s Role

An executor is an individual who is in charge of managing a deceased person’s estate. An executor’s duties include gathering assets, notifying creditors, paying valid claims, and distributing assets to beneficiaries.

An executor has a fiduciary duty, which means an obligation of utmost loyalty; he or she must not take actions that would benefit him or herself or other beneficiaries at the expense of the other beneficiaries. The executor must ensure the deceased’s assets are accounted for, debts paid, and estate taxes filed, if necessary. The executor is also responsible for ensuring there are as much of the deceased’s assets to distribute to the beneficiaries as possible.

Even if a person is named as the executor, he or she does not have to accept that position. He or she may decline the appointment immediately or during the process if unable to complete the executor’s responsibilities. An executor is also able to consult with attorneys, accountants, and other professionals to ensure the estate is being properly managed.

A Beneficiary’s Rights

A beneficiary is the individual or individuals named in a will that will inherit property from the deceased. Anyone can be a beneficiary, a spouse, children, other relatives, friends, and even charities.

Beneficiaries have rights that entitle them to information about the estate from the executor. Beneficiaries may ask what assets are included in the estate, how much debt the estate must pay, and which assets will be used to settle the said debt. Asking for ongoing reports from an executor is perfectly normal.

Can the same person be the executor and beneficiary?

Yes, the executor and beneficiary can be named as the same person in the Will. It’s perfectly normal and legal. It’s actually a common approach because the executor should be someone you know and trust and it’s common sense that your beneficiaries fall into that column.

Conversely, an executor may be someone you know that is not a beneficiary. Maybe you want your four children to inherit everything, but instead of putting one of them in charge, you name your sister or best friend to act as an independent executor.

Downsides

The beneficiary is the one who benefits from the executor’s work, so if you have a number of beneficiaries, it may be easier to separate those roles in order to simplify relations among all parties.

The executor has an equal responsibility to each beneficiary to ensure the property that the deceased wanted them to have, gets passed on. If one of the beneficiaries is also the executor, this process can become difficult, especially if assets must be sold to pay debts. Closing an estate and dividing assets can become increasingly difficult if there are multiple beneficiaries with one of them acting as executor.

Making the Choice

Choosing your executor is important. You want to be confident that whomever you choose will be able to carry out the role of finalizing your estate and doing so fairly. Remember, being an executor may involve calculating the value of your estate, calculating any taxes owed, selling or transferring property or investments to pay off debt, and that’s all before the duty of distributing your estate to your beneficiaries.

Because of the work involved, and the fact that an executor can be found personally liable if anything goes awry, choose carefully and ask their permission first. Whichever route you go, it is vital that the executor and all beneficiaries have a clear understanding of their rights in regards to an estate in order for things to go as smoothly as possible.

If you have any questions about your estate or need help choosing the appropriate executor, please contact us.

Avoid These 5 Common Mistakes When Creating Power of Attorney

Written by kwmlaw on October 25, 2016. Posted in Kelly & West News.

A power of attorney (POA) document authorizes another party (the attorney-in-fact) to make certain financial, legal, and business decisions on your behalf if you are unable to do so. If you decide that you need someone to help you with these affairs, it is important to have an accurate, well-detailed POA so that nothing is left for question. We compiled a list of common mistakes we see in our practice and hopefully we provide you with some insight so that you don’t run into any complications along the way.

1) Not Making a Power of Attorney

Many people think you only need a power of attorney when you are older or hospitalized, but that isn’t true. Military personnel should create one while they are deployed, in case they become unable to handle their affairs. You may need one if you are traveling overseas, and need someone to pay your bills, especially if you are single. Consult with an attorney if you are unsure whether or not a POA is right for you.

2) Not Creating the Correct POA

There are different kinds of POA documents that are needed in certain situations. Make sure you create the right one. Do you need someone to make general financial decisions on your behalf? A General POA is probably right for you. But what if you don’t want the attorney-in-fact to have too much power? Consider a Limited POA. When will it become effective? Research Durable or Springing POA to help you make your decision. Do you need someone to handle your health care affairs? There’s one for that too.

3) No Flexibility in POA Structure

Powers of Attorney need to be drafted with as much flexibility as possible to allow for “crisis planning.” If you have to enter a nursing home unexpectedly and don’t have long-term health care or a sufficient monthly income, you will need a flexible POA so that the attorney-in-fact can handle your financial decisions. This is very important, especially because nursing home care can start at $6,300 per month. The key to a well-drafted POA is to make sure it is broad enough to avoid a guardianship if you have to qualify for government assistance to pay the nursing home bill. Otherwise, you may still need a guardianship anyway, which makes the whole process of qualifying for government benefits much more difficult.

4) Not Updating Your POA

There are a number of instances where you will need to update your POA. You will need to rewrite your POA if you move to a different state so that it complies with state laws, and if you want to change any details or give your attorney-in-fact a different set of powers. You may need to revoke your current POA and create a new one if you wish to establish a new attorney-in-fact, which happens quite often. Make sure you notify all accompanied parties of any of these changes so it will prevent possible hiccups. Companies that delegate your affairs need to be notified.

5) Giving Up Too Much Control

You must review your choice of attorney-in-fact carefully. Whomever you appoint to this position can end up with a lot of power regarding your financial and business affairs. Your Power of Attorney choice will need to be someone you trust, who can handle making tough decisions when you are unable. Make sure you give him or her the right amount of power. Don’t give someone any more information than what he or she needs to make your POA secure.

Get a free information sheet with everything you need to know about Power of Attorney. Just fill out the form on the right tab of this page: /power-attorney/.

Peter Karmanos And His Living Trust. What Went Wrong?

Written by kwmlaw on July 6, 2016. Posted in Kelly & West News.

The owner of the Carolina Hurricanes, Peter Karmanos, is being sued by his three sons for borrowing more than $100 million out of their trust fund. If you have been following the Carolina NHL franchise, you may have noticed that the numbers (fiscal and physical) have been down since the Stanley Cup win in 2006. Peter Karmanos has allegedly been using the money in various forms of supporting the franchise.

You may be asking yourself: If it is his money in the trust, what’s the big deal? Well you must understand how trusts work and you better read all of the fine print before signing one — even if you are a multi-millionaire.

The truth is that there are many different kinds of trusts. The two broad categories of trusts include testamentary and living trust. The testamentary trust is set up with a will and is only established after the grantor’s death. Living trusts are established through the grantor’s lifetime and are separate from a will. We are going to focus on living trusts for now. *Please contact us if you would like more information on testamentary trusts.

Like a will, the living trust is a document that describes your wishes regarding your assets, dependents, and heirs upon your death. But, the living trust allows you to bypass the probate process — the lengthy, court supervised process of administering an estate. The details of the trust mean everything. When creating a living trust, you (the grantor) must decide whether you want to establish a revocable or irrevocable trust.

Revocable Trust – Allows the creator to retain power over the assets. Under these conditions, the grantor is able to change or revoke the terms of the trust at anytime and transfer assets in and out of the trust as the grantor desires.

Irrevocable Trust – The assets no longer belong to the grantor, but to a separate entity and are no longer accessible by the grantor. The grantor is no longer able to make changes to the trust, in most cases.

Choosing between the two really depends on the goals and objectives of the grantor; however, most people opt for a revocable trust, unless they need an irrevocable one to accomplish a specific goal or objective. Most trusts actually allow borrowing, as long as it is in best interest of the beneficiaries. It all depends on the type of trust, and how it is set up. The actual borrowing of the money wasn’t the big issue for Peter Karmanos. You may be eligible to borrow money from a trust fund but annual payments of principal and interest are due. It is reported that Peter Karmanos has failed to make these payments that were due in 2014 and 2015. It is because of this that his sons called in the lawsuit.

Each trust is specific, unique, and set up accordingly for the grantor and the beneficiaries. Some trust terms may even waive the duty of the trustee having to pay the money borrowed back. An estate attorney can be a huge problem solver when dealing with the complications associated with setting up a trust. You must pay attention to all the details regarding your trust. Be knowledgeable about what you’re signing and know what you can and cannot do. We would love to meet with you and discuss your possibilities. Contact us for a free consultation to learn more about what type of trust may be right for you and your family.

Estate Administration: Save Your Family From Years Of Court Problems With A Revocable Living Trust

Written by kwmlaw on May 23, 2016. Posted in Kelly & West News.

Most people assume that after creating a Will, their family will be all set. Everyone will get what they are supposed to get based on what instructions they leave in their Will.

Unfortunately, the process of dealing with an estate after someone dies is not that simple. Your family can spend months or even years finalizing everything — even when you have a Will in place. Here’s why: the Will goes through several steps in court before the Executor can distribute your assets to whomever you direct. So yes, your instructions will be carried out, but it may take a while.

Revocable Living Trust

Your family can avoid this annoying estate process if you create a Revocable Living Trust. A Trust is considered a separate “person” or separate legal entity in the eyes of the law. Title (your ownership) is transferred to this separate “person” called the Trust. That way when you (the Grantor), die, the Trust still exists. And because you didn’t own anything — the Trust does — there is nothing to go through court, making the process much simpler and faster — and your family won’t have to ask for the court’s permission.

Another benefit: a trust is private. Wills are filed with the Court and therefore become public documents but the trust document (called the Trust Agreement) is a private document and is not filed in any court or put on public record. Also, what most people don’t know is that when a Will is probated with the court, the court requires quite a bit of information before probating the Will such as the deceased person’s name, social security number, family information, bank account information, real estate information and other information about whether the deceased person has assets, such as life insurance, that will be paid outside the estate. A trust avoids having to provide the court with this information.

Costs

Creating a Revocable Living Trust is more expensive. A Will costs about $300 to $750 to prepare; however the probate process runs about $1,500 to $15,000, depending on the size of the estate, making the total about $1,800 to $15,750.

A trust costs between $2,000 and $7,500. This means in a larger estate, having a trust can actually be less expensive. Those with smaller estates might consider the higher cost, worth it for the privacy and the ease of administration as discussed above.

Whichever route you choose is up to you based on your personal feelings on the matter, your budget, as well as the size of your estate. Regardless of which option you choose, it’s important to have some documentation in place so your family knows what to do when you pass. The gift of a well-drafted estate plan is one of the best gifts you can give your family. We’re happy to answer any questions you have about setting up a Will or a Trust. Give us a call for a free consultation.

The Ultimate Checklist to Plan Your Estate

Written by kwmlaw on February 23, 2016. Posted in Kelly & West News.

Estate planning is not something most of us want to do. Planning what will happen after we are gone reminds us that we will not be around forever. But it’s important to make these decisions now so that your family is prepared. Start your estate planning as soon as possible so you can protect your family from any obstacles that may be encountered along the way.

While many people assume estate planning is complicated, it does not have to be an onerous process. Use this handy checklist to help you and your family know what documents you may want to consider. Not everyone will need all of these items, but this list is a great place to start when discussing your estate with your Kelly & West attorney.

The policies and documents you may need include the following:

Will

Who is going to inherit your property? Who will be named guardian of young children? How will your estate be divided among family members? A Will states your answers for all of these questions and more.

Trust

Trust can help you make decisions that go into effect before your death and avoid administering your estate with the court after you die. It explains in detail, how and when assets pass from the trustee to the beneficiaries. It simplifies the process for your family and provides extra protection for you and your loved ones.

General (Financial) Power of Attorney

This document gives an agent the power to act on your behalf, either now or when you become incompetent. This document can be durable and last through incompetency or it can spring into effect only if you become incompetent.

Health Care Power of Attorney

This document grants your agent the power to make medical decisions on your behalf. Who your doctor will be, what treatments you will receive, and what hospital you will use, are just a few examples of the powers your health care attorney can have.

Living Will

A living will has no power after your death. It does, however, state your wishes regarding life support and feeding through tubes should you have no chance of recovery. Living wills are especially important for cases where you become unable to communicate your wishes.

Limited Power of Attorney

A document providing specific powers that an attorney may have. Selling property, collecting debts, and other financial transactions are some of the common uses of a Limited Power of Attorney.

Make sure you keep all of these documents and policies organized so you will be prepared for anything. Start planning today so your family members have a better tomorrow.