Probate Necessary?

[PatrickA5]

I'm trying to figure out if probate will be necessary for my dad when the time comes. He's 96 and is doing fairly well - hopefully for a long time.

His situation:

All bank accounts are jointly owned between dad, me and my brother (only heirs).

Stocks accounts are all TOD

Car is jointly owned

House is TOD

The only property left that would be subject to probate would be household furnishings - worth maybe $5K, if that.

He has a Will leaving everything to my brother and I. Is probate even necessary in cases like this? Have others gone through this and not gone through any kind of formal proceedings? Thanks!

 

[pb4uski]

Probably not... most states have a small estate exemption where probate is not required... it is $10k where I live.

 

[gauss]

It appears that all of your "titled" property is either jointly owned or has a "beneficiary" associated. In this case, a death certificate should normally suffice.

Practically speaking the household furnishings would not require a probate unless maybe some third party is in control of these items.

 

[athena53]

I'm not a lawyer but DH had a will and I didn't put his estate through probate. He had no debts, the cars were in my name, he had a small IRA and I was the beneficiary, and he had about $225 in his checking account. (I was 15 years younger and managed the money so we were comfortable with this setup.) Bank of America must tap into the SS death database because they initiated contact with me and after I filled out various papers I got the checking account balance.

When my Ex died in 2010 (DS was next of kin and I wanted to take some of the work off of his shoulders), I consulted a lawyer. My Ex died penniless, mostly on public support and probably with debts. The lawyer said it wasn't necessary to open an estate and if a creditor found us and asked for money, we could tell them that they were free to open estate proceedings but there was no money to be had. Luckily, that never happened.

 

[braumeister]

OP's situation is exactly the same as mine when my mother died in 2012. I went into the county probate court office to double check and they confirmed no action was necessary.

But every state is different, so you should check your state's rules.

 

[Walt34]

The only property left that would be subject to probate would be household furnishings - worth maybe $5K, if that.

One thing to be aware of if there is a state estate tax then you may need to have the value of the furnishings assessed, even if no tax will be due. This was the case in MD when I handled my mother's estate. I think they just want to be sure you're not hiding some priceless artifact and calling it "furnishings".

 

[PatrickA5]

Thanks for the replies!

I ended up sending the lawyer that did my Will an email asking the same question. Much to my surprise, I got an immediate answer (with no charge!). She said that there's nothing to be done other than split up the furnishings or sell them.

Now, if I can only get my FIL's estate planning in the same position. He refuses to tell my DW much of anything about his finances. He has a sealed envelope with all of his accounts listed which is absolutely NOT to be opened until he's dead. Really?

 

[CardsFan]

Now, if I can only get my FIL's estate planning in the same position. He refuses to tell my DW much of anything about his finances. He has a sealed envelope with all of his accounts listed which is absolutely NOT to be opened until he's dead. Really?

My guess is that someone is going to be surprised.

 

[Bamaman]

If you really get down to it, probate is where a judge is giving the executor the authority to sign for the deceased in order to liquidate assets. Of course the judge will want to make sure debts, including taxes, have been paid.

The problem is real estate. If it is jointly owned with the kids, the "basis" will be what the property cost new. If the property is signed over to the heirs thru probate, the basis is the current market value at time of dad's death. The higher
the basis, the less taxes will be paid when the real estate is sold.

 

[pb4uski]

Bamaman, as I read the OP the real estate is TOD rather than jointly owned so the heirs would get a stepped up basis but the property avoids probate (much like a tax-deferred retirement account with beneficiary designations avoid probate).

 

[gauss]

Now, if I can only get my FIL's estate planning in the same position. He refuses to tell my DW much of anything about his finances. He has a sealed envelope with all of his accounts listed which is absolutely NOT to be opened until he's dead. Really?

I wouldn't sweat it too much.

The Probate Personal Representative should be able to figure it out. Pull old Income Tax returns, look at statements that come in the mail etc. (although if the statements come via email you may be scr*wd. Yahoo and other big email providers will not typically honor Probate documents to surrender passwords. Fortunately I had my Dads email setup with a domain that I controlled which forwarded to his yahoo account. I just changed where the email address pointed to so that I could begin receiving his email at a new location that I controlled).

Even if the Personal Representative does not find all the assets on the first go around, I believe there are eschetement laws in all 50 states that require the companies to turn over dormant account funds to the state to be held for the heirs to come forward and claim them.

A good question to ask him is that if a will exists in the envelope or not. If no will can be located, then assets will go by default to closest family members as defined by state law.

-gauss
"Experienced and Proud Personal Representative"

 

[CaliKid]

No probate but remember that with TOD the D is for death and not disability so if he ends up disabled for 5 years how will you access those funds to pay his bills? Most banks do not honor POAs unless it's their POA form.

 

[Senator]

As far as I know, the only thing you need to go through probate for is things that you cannot get changed into your own name without it.

Household items would not need probate. A C/D at a bank, in your father's name exclusively would. Property likely needs probate.

Of course, you can go through probate for anything you want to...

Transfer the assets. If you hit a situation where you need it, then do it.

 

[gauss]

No probate but remember that with TOD the D is for death and not disability so if he ends up disabled for 5 years how will you access those funds to pay his bills? Most banks do not honor POAs unless it's their POA form.

Conservatorship/Guardianship if he is truly incapacitated?

It will need to be overseen by the Probate Court (apparently unless you live in Nevada - google "April Parks" & prepare to get sick to your stomach if you don't get the reference)

-gauss

 

[PatrickA5]

Bamaman, as I read the OP the real estate is TOD rather than jointly owned so the heirs would get a stepped up basis but the property avoids probate (much like a tax-deferred retirement account with beneficiary designations avoid probate).

Correct. It's a TOD and we should get the stepped up basis even without going through probate. I'll probably have a few realtors come out and give some quotes at that time.

 

[PatrickA5]

No probate but remember that with TOD the D is for death and not disability so if he ends up disabled for 5 years how will you access those funds to pay his bills? Most banks do not honor POAs unless it's their POA form.

Well, my DW does have a POA for him. But, it's one of those "Springing" POA's that requires at least 2 doctors to certify that's he's totally incapacitated. So, I foresee some complications before we even get to the point where the POA is effective. Then, as you said, banks sometimes only want to use there own POAs.

 

[PatrickA5]

No probate but remember that with TOD the D is for death and not disability so if he ends up disabled for 5 years how will you access those funds to pay his bills? Most banks do not honor POAs unless it's their POA form.

Sorry, OP here. I'm getting confused on my own postings. The original post was about my own father. We are joint account owners on all of his bank accounts and CD's. So no problem getting money to use. The TOD was on his house and brokerage account. I've already worked with Scottrade and have the POA and TOD on their forms. The TOD on the house just requires an affidavit and death certificate recorded with the county. So, as far as my own father is concerned, everything is in great shape. My father-in-law is a different story.

 

[PatrickA5]

I wouldn't sweat it too much.

The Probate Personal Representative should be able to figure it out. Pull old Income Tax returns, look at statements that come in the mail etc. (although if the statements come via email you may be scr*wd. Yahoo and other big email providers will not typically honor Probate documents to surrender passwords. Fortunately I had my Dads email setup with a domain that I controlled which forwarded to his yahoo account. I just changed where the email address pointed to so that I could begin receiving his email at a new location that I controlled).

Even if the Personal Representative does not find all the assets on the first go around, I believe there are eschetement laws in all 50 states that require the companies to turn over dormant account funds to the state to be held for the heirs to come forward and claim them.

A good question to ask him is that if a will exists in the envelope or not. If no will can be located, then assets will go by default to closest family members as defined by state law.

-gauss
"Experienced and Proud Personal Representative"

Father-in-law has a will, but we've never seen it. He says everything is 50/50 between the two daughters. At one point he said he was going to put a new car title with DW as joint owner, but at the last minute "his lawyer told him not to". He's a nice man and I like him a lot, but he's a little paranoid about his money.

 

[CaliKid]

Conservatorship/Guardianship if he is truly incapacitated?

It will need to be overseen by the Probate Court (apparently unless you live in Nevada - google "April Parks" & prepare to get sick to your stomach if you don't get the reference)

-gauss

Conservatorships (probates during life essentially) are more cumbersome and sometimes more expensive than probates after death. Plus who wants all their business being PUBLIC? No thanks.

 

[gauss]

True - But I wanted to point out that people have options in how they deal with these issues.

Often Estate Planning industry only provides one side of the story.

 

[pb4uski]

Conservatorships (probates during life essentially) are more cumbersome and sometimes more expensive than probates after death. Plus who wants all their business being PUBLIC? No thanks.

I've been a guardian twice and what you write is definitely at odds with my experience. Cost was next to nil... some court filing fees and a fee for the ward's attorney.... less than $500 in total as I recall.

While the guardian files financial reports with the court and they are available to the judge and court staff, they are not available to the public. I have no idea what you are talking about and I suspect that you have no idea what you are talking about.

 

[CaliKid]

I've been a guardian twice and what you write is definitely at odd with my experience. Cost was next to nil... some court filing fees and a fee for the ward's attorney.... less than $500 in total as I recall.

While the guardian files financial reports with the court and they are available to the judge and court staff, they are not available to the public. I have no idea what you are talking about and I suspect that you have no idea what you are talking about.

You are lucky. There's no need to make it personal and suggest I don't know what I am talking about. I know exactly what I am talking about as I have worked in the industry for 25 years and seen thousands of cases. In California it is hugely expensive with tremendously cumbersome rules to do a conservatorship. They re-wrote the laws about 10 years ago and made it even worse than before. Now you have to file original bank statements with the court, fill out dozens of forms, doctors report, etc.... It's ridiculous. It's not a DIYer thing in CA and it's not even for lawyers who don't do it all the time. It's a huge mess to avoid. I am not trying to make it adversarial with you just trying to help. I make my money by more people going to probate court so doesn't matter to me what people do. I a just trying to offer free help when I comment on these issues. I live very well and will retire young thanks to people going to probate court during life or after death.

 

[pb4uski]

Good for you.

Not everyone lives in California and just because California is overregulated doesn't mean it is overregulated everywhere.

 

[CaliKid]

Good for you.

Not everyone lives in California and just because California is overregulated doesn't mean it is overregulated everywhere.

I agree.