Author: Mary

Estate, Probate and You

So, if you are lucky enough to have had a will for the decedent, the next step is to begin the Estate and Probate process. The will should state the person that the decedent wants to be their Personal Representative, usually with a couple of choices in descending order. This person will be charged with fulfilling the decedents wishes with respect to the dispersal of property and assets in accordance with the will and the relevant law.

A couple of definitions –

1. Estate -In context of probate, the estate of a deceased person consists of all the property, whether real or personal, owned by the person at the time of death.
2. Probate -The process of legally establishing the validity of a will before a judicial authority. In reality, it’s also the process of completing dispersal of the estate.

The Estate of a decedent is open for a period of time; in the state of Colorado in can be no less than 6 months. Simple estates can be closed in this time, but some take up to a year or longer. During this time you will marshall the assets of the estate, pay the creditors, liquidate assets that cannot be distributed as is (like giving a house to more than one person), pay the expenses of the estate (different from creditors), and file a final tax report. Doesn’t sound too bad, but there are quite a few pieces to bring together.

Inventorying the assets means finding everything of value and putting a value on it. $100,000 in savings, not so hard. A house; you get a qualified appraiser. But everything in the estate, including personal property, has to have an estimated value associated with it. So the Personal Rep has to complete an inventory of these things before 90 days has passed. (In our case, I’m doing the inventory since Stan does have a job to go to.)

It’s important to remember that the process of probate is a legal proceeding, therefore you should throw common sense out the window. Common sense says that if you have three apples and three people to give them to, each person gets an apple. In probate, you must establish the value of the apples, and then if the heirs want an apple, that cost is put up against their total share remainder of the estate. And if they don’t want an apple, the Personal Rep must attempt to get full value for the untaken apples and add that to the pot to be divided amongst the heirs. And I didn’t choose an apple in jest – every item in the estate has to be valued, and attempted to be sold if not desired by the heirs. So though the apples have minimal value, it’s not zero and the Personal Rep is required to show that he/she did due diligence to turn the apples into value or they are not doing their job.

Now it is clear that this is done to maximize that value of the estate for the heirs, but it’s a huge pain in the ass. So while you have mourning your loved one, you get to pick through and catalogue all their stuff – yuck.

The Personal Rep will also need to close the decedents accounts and start the process of transferring them into accounts in the name of estate. For the most part, that was not too difficult. Most companies wanted either a copy of the death certificate or the Letters Testamentary. But it can take a while to find them all. e.g. We have a toll road that goes to the airport. Most folks have an account with Express Toll and a transponder that talks to the overhead sensors to change you for your trip. But they don’t send out statements as often as many billers. So it wasn’t until I was preparing the car for dispersal that I saw the transponder and remembered to call them and cancel the account. And there was $13 on account, so that goes back into the estate.

A comment about creditors/expenses. For the most part, any bill that was created by the decedent before their death is a debt of the estate. Those are paid, but they are down the list a bit. Expenses of the Estate, like paying for the funeral or buying death certificates, things that tend to happen after the death, are paid further up the list. It’s sometimes hard to keep them straight.

So, what does all this mean? You need to choose a person to be your Personal Representative that is organized, has some understanding of money, has reserves of patience, and has the emotional stamina to make it through the job. If you have few personal possessions – say you have moved into assisted living and have a small suite of furniture and clothes – closing your estate should be fairly easy. If you have a 3000 square foot house and 50 years of accumulated stuff, closing your estate may drive your Rep to drink (if they don’t already). And please, for goodness sake, do not appoint a Personal Rep if you have not asked them to take the job. That just seems mean.

Some of these issues are avoided when one spouse dies and the rest of the estate is given to them, but that’s only temporary. If you die with a small estate – $20,000-$50,000, varies by state, some of this can be avoided. But “Glad I’m poor, so my heirs have an easy probate,” isn’t really a good start.

If any of this doesn’t make sense, please ask. And as always, I’m not a lawyer (I just talk a lot), so do not rely on my ranting as advice.

Introduction

So just to get this out of the way up front – these posts are not about dying in a metaphorical sense. God, no god, afterlife, reincarnation not the focus of my words. This is about the nuts and bolts of what has to be done after someone dies. This process can be so mind numbing that I wish to whack my head against the wall, so I’m reframing this as a lesson for myself and others in how to get through this process with sanity intact.

A couple of disclaimers

1. I am not a lawyer, financial professional, CPA or professional in the funeral-industrial complex. Don’t take my words as gospel, they’re just guidelines (or maybe suggestions as the movie says).
2. I am living and dealing with probate and estate law in the state of Colorado. Other states may do things differently. If I know there’s a difference because of the state, I’ll try to make that clear.
3. In this case, we are dealing with a single person who has died. Many of these things are made easier with a surviving spouse, since most property can be fairly easier transferred to a surviving spouse. But most of us will eventually deal with the death of a single parent at some point.
4. I’m happy to answer questions, if I can. Feel free to ask.

And a final disclaimer – I am writing about this process with the consent of my husband, whose mother, Jo Ann, is the one that died. I will refer to her by name, but I will try to keep personal details to a minimum.

Lesson 1 – What should I have and where should I put it?

Though many people never get around to it, there are papers you can create that will make dealing with your death easier for those left behind. The number one document folks think of is a will. No doubt, having a will will facilitate everything that comes after. There are  upfront costs involved in having a lawyer prepare a will, but they are nothing against the extra costs that can be incurred by not having one. There are online services that can create wills at lesser costs and they are better than not having a will, but they are not as good as one created by a lawyer. (No I am not being paid by any law firm. Consumer Reports just reported as much.)

Part of having a will, however, it telling someone where it is. Reasonably, someone other than you should know where your will is. In Jo Ann’s case, she hadn’t told us, but she did tell her lawyer where it would be. But she never got the will to where she said it would be. We did find it, but it would’ve been nice to avoid the search.

As part of her will, Jo Ann also created an advances medical directive, something we didn’t need to use, but I am glad she had made those wishes known to us. There were other document that would have made it easier for us to conduct her affairs if she had been incapacitated.

In addition to the will, the survivors should be able to find life insurance policies, pension & IRA statements, house deeds & mortgages, medical insurance cards, social security numbers, income tax returns, birth certificate, divorce papers, military records, CDs, bank statements & check book, vehicle titles, and unpaid bills. And that’s not the entire list, just the highlights. You are going to need to contact all these folks, eventually.

We had things pretty easy. Jo Ann was very organized with her bills and finances, so we didn’t have to look too far to find stuff. But amassing all that stuff took time.

And then there’s what to do with the remains. Now this is a conversation most people would rather die than have, which is why so many do die without talking with anyone. When the will is written, the wishes of the decedent can be written in, but that doesn’t much info to the survivors about what type of service if any the decedent may have wanted. I’m one of those who think that if you don’t make these choices while you are alive, and then tell your loved ones what you want, you’re just going to make things harder for them when you die. Seems like a cruelty from beyond.

If you served in the military, you may be entitled to military honors at your funeral. If there’s a question as to whether you want such honors, let your loved ones know. It might be something that matters to them more than to you.

Finally, having access to the deceased’s phone book and calendar is very handy. There may be appointments to cancel, friends to call or accounts to cancel that may only show up in these places.

There are more papers to follow, but those will appear in later lessons.

Next up – Lesson 2 – Estate. probate and you.