Estate Planning & Probate Avoidance by Your Estate Attorneys, Lawyers delivering peace of mind to clients through education and preparation from a Christian perspective
FAQ
Q: Why should I plan my estate?
- A: Disposition of property after death.
- A: Partial or complete avoidance of probate.
- A: Tax savings.
- A: Management of property during lifetime.
Q: What is probate?
A: Probate is the process through which a court oversees the distribution of one’s property after death. The court is called probate court.
Q: Does all property go through probate?
A: No. Jointly held property, trust accounts, pension benefits and life insurance proceeds go directly to the joint tenant or named beneficiary.
Q: Must an estate be probated?
A: Not necessarily. For example, if all property were held jointly with a spouse and the spouse survived, there would be no probate estate.
Q: Is there more than one method to probate an estate?
A: Yes. There are several procedures for smaller estates. For larger estates, you can specify in your will a preference for either independent or supervised probate. In independent probate there are no formal court hearings. The estate still must be kept open for at least five months to allow creditors to submit claims.
Q: How does one initiate the probate process?
A: A petition is filed with probate court. The petition can be brought by a surviving spouse, an heir, the personal representative (formerly known as “executor”) or a creditor (if no petition is filed within 30 days of the person’s death).
Q: Is one required to have a lawyer?
A: No, but it is usually helpful to seek such guidance. If a lawyer is retained, there will be attorney fees. These fees are payable by the estate.
Q: Do I avoid probate if I have a will?
A: No. Whether or not you die with a will, your estate will usually go through probate. If there is a will, the initial purpose of probate is to prove its validity. The person named in the will as personal representative is then appointed to proceed with administering the estate.
Q: What if I die without a will?
A: If a petition is filed, the probate court will appoint a personal representative to administer the estate. Generally, the surviving spouse (or a person of his/her choice) has first priority; the closest heir has next priority.
Q: What is the role of a personal representative?
A: A personal representative collects assets of the estate, pays debts and taxes, and distributes property as directed in the will. A personal representative is entitled to be paid from the estate for his or her service.
Q: Is the personal representative responsible for debts of the deceased?
A: Generally, debts are paid from assets in the estate. The personal representative is only responsible if careless. For instance, a personal representative might be liable if he or she distributes assets to beneficiaries before proper debts are paid.
Q: How long does it take to probate an estate?
A: The time necessary depends, among other factors, on the size of the estate, whether there is a surviving spouse and whether the validity of the will is questioned.
Q: What costs are involved in probating an estate?
A: The personal representative may charge a fee. If the personal representative seeks legal counsel, there will be attorney fees. A small filing fee and an inventory fee (based on the value of the probate estate) must be paid to probate court.
Q: Who is responsible for paying these costs?
A: Fees are paid by the personal representative from assets of the estate.
Q: What is joint tenancy with full rights of survivorship?
A: This is one way that property can be held by more than one person. A joint owner can’t sell his or her interest without the permission of all other owners. Upon the death of a joint owner, property automatically belongs to surviving owners; provisions in a will do not affect it.
Q: What are the rights of tenants by the entirety?
A: This arrangement is only possible between a wife and husband. Rights of the parties are the same as those between joint tenants with full rights of survivorship.
Q: What are advantages to holding property in joint tenancy with full rights of survivorship?
A: Property held in joint tenancy does not go through probate; it passes directly to the surviving owner(s). Having property in joint tenancy may also reduce inheritance taxes.
Q: Is there a disadvantage?
A: Yes, if the joint tenant is not your spouse. Should you decide to sell an asset held jointly (a home, for example), you would need the permission of each joint tenant and the spouse of each joint tenant. While it may be difficult to imagine, the possibility of future disagreement should be carefully considered.
Q: Can I protect myself if property is put in joint tenancy?
A: Partially. By using a declaration of trust, you decrease the possibility a joint owner will refuse to permit a future sale. The declaration makes clear the joint tenancy is created for estate planning purposes, with no intention to make a gift now.
Q: How do I put real estate in joint tenancy with full rights of survivorship?
A: A deed must be executed by the present owner or owners. The deed need not be recorded in the county Register of Deeds to make the change effective.
Q: Should an automobile be put in joint tenancy?
A: Probably not. A joint tenant, as partial owner, will be jointly liable if an accident results in a lawsuit.
Q: Can bank accounts, stocks and bonds be put into joint tenancy?
A: Yes.
Q: Is there a disadvantage to having a joint bank account?
A: Yes, if the account is not with your spouse. Usually, each joint tenant can withdraw money from the account. Substantial withdrawals can be made without your knowledge or approval.
Q: Can I add someone’s name to my bankbook but prevent this person from withdrawing money?
A: Yes. You can put savings or certificate accounts in trust.
Q: What is a trust?
A: A trust is a written agreement wherein you give a trustee power to manage certain property for a beneficiary. There are several types of trusts.
Q: What are the purposes of trusts?
A: Purposes include controlling assets after death, avoiding probate, providing for disability, and reducing taxes.
Q: How would I put a bank account in trust?
A: Banks have simple forms that can be used. You may name yourself as trustee, and whomever you wish to receive the money at your death as beneficiary. You are free to deal with the funds as you like – you can even close the account. No one else can withdraw money. At your death money in the account will go to your named beneficiary without going through probate. If you want information about putting other property in trust, consult a lawyer with expertise in estate planning.
Q: What property may I give away during my life?
A: You may give away any property you own alone. If married, you may need the signature of your spouse. If property is jointly owned, the permission of each joint tenant is necessary.
Q: If property is specified in my will, can I give it away during my life?
A: Yes.
Q: Can I give a house to children but reserve the right to live there?
A: Yes. The interest retained by you is known as a life estate. An advantage is that the asset will not go through probate. But there are potential disputes. If a gift reserving a life estate is made, a detailed document should be drafted concerning responsibility for taxes, special assessments, and maintenance costs.
Q: What are the purposes of a will?
A: The primary purposes are to provide for distribution of your property after death, and to designate a personal representative to see that your wishes are carried out. A will may also be used to appoint a guardian for minor children.
Q: Must I have a will?
A: There is no legal requirement that you have a will, or use any estate planning device.
Q: What happens if I die without a will?
A: Property held in joint tenancy will pass directly to the co-owner(s). Life insurance proceeds and pension benefits will go to the named beneficiary. The personal representative will pay debts and taxes, and distribute the balance of your estate according to Michigan statute. This law provides your estate plan.
Q: What are the requirements of a valid will?
A: There are three types of wills. Each type of will is equally valid. A handwritten will must be dated, and signed at the end. A formal will can be typewritten. It must be signed, and witnessed by at least two people who also sign. A beneficiary under the will should never be a witness to its signing. A statutory will is a form. It is relatively simple to use, but allows limited choices. The form is available from your state legislator at no cost. How would my property be divided under the terms of a statutory will? You could leave up to two cash gifts to people or charities. You could write a list, separate from your will, of personal and household items, naming whom you wished to receive each item. All the rest of your property would go to your spouse; if your spouse died before you, all the property would be divided equally among your children.
Q: Which type of will should I choose?
A: That depends on the size of your estate and your wishes concerning distribution of your property. For example, a statutory will is inappropriate if your estate is large enough to merit tax planning and the use of trusts, or if you do not want your children to get equal shares of your property. In such cases, it is usually helpful to consult with a lawyer.
Q: How much does it cost to have a lawyer draft a will?
A: Cost depends on how complicated the estate plan is, and on the individual lawyer. The fee for a simple will may be $250. Before hiring a lawyer, be sure to ask about his or her fee.
Q: Using a formal will, can I give my property by will to whomever I please?
A: Yes, with two exceptions. First, a spouse has certain rights in the estate, regardless of the provisions of a will. A spouse almost always has a choice of taking under the will, or taking a share set forth by law. Second, a will does not affect property held in joint tenancy or life insurance policies with named beneficiaries.
Q: Can I exclude my children from sharing in my estate?
A :Absolutely. If you decide to exclude one or more children, mention this in the will. You need not state a reason.