For years I’ve heard people complain about the horrors of the probate process. So, before I started getting involved in probate work myself, I had the worst of impressions and was gripped with a fearful anticipation of what awaited me. In fact, probate isn’t really such a big deal, in itself. I will say that some counties are worse than others *cough Queens cough* but generally the clerks are delightfully helpful and are simply concerned with ensuring that the right people are inheriting the right property.
So, what IS the trouble with probate? My experience has been that the real trouble with probate lies in failure of the deceased to set their families or friends up for success. This can happen in a variety of ways, and is surely unintentional. The real blame, if you want to call it that, lies at the feet of the attorney who helped prepare the estate in the first place - unless of course good advice was provided and simply ignored. As they say, you can lead a horse to water but you can’t make it drink. The fact is that petitioning for and receiving letters testamentary - the document granted by the court with authorizes someone to manage the estate - can take weeks to months to receive. During that time, depending on the assets in the estate, there can be major issues developing that compound the complications in an already complicated situation. That being the case, I’d like to discuss some common situations which may lead to these complications, in the hope that those reading this can better prepare their families for the inevitable.
Lack of Liquidity
When you die, there are a variety of potential expenses that may make access to immediate cash a vital necessity. Funeral expenses need to be paid. If there’s real estate, there could be taxes, mortgage payments, common charges, or maintenance fees. Many executors have to hire an attorney - like us - to help probate the estate, so legal fees become an issue. Ensuring there’s liquid cash available for these needs is usually pretty simple - but it needs to be made a priority.
Ongoing businesses
Many people own their own business, or have other income generating assets that require ongoing management. These need to be considered before death as well. The agreements which govern those businesses should be reviewed to ensure that the estate plan is in line with whatever procedure the company has for the death of an owner/partner/member. This is also an ideal opportunity to double check that buy-sell agreements are appropriately in force and funded (typically with life insurance).
Rental Property
With a rental property, there may be a variety of issues that come into play. Rental income needs to be collected and deposited. Tenants have issues themselves - heat, leaks, etc. - and someone has to help them. As noted above, taxes and mortgage payments have to be made. These are all things that can be prepared for in advance.
Out of State Real Estate
Since real property is probated in the state where it exists, failure to plan properly could inadvertently lead to multiple probate proceedings. This can easily be solved in multiple ways, depending on the client’s situation. It’s much harder and more expensive to deal with this issue after the owner has passed away.
Disorganization
This is a problem for everyone. During probate, the executor has to collect all the assets of the estate… but how do you know what and where all the assets are? Well, in practice, most people have to dig around through their family’s paperwork to see if they can find financial statements. It’s potentially a maddening process, and it’s totally avoidable. Keep copies of your financial statements in one place. Even if they aren’t the most recent statements, they’ll serve as a good resource for someone looking to find them once you’re gone. You might also consider making a list or spreadsheet and keeping a copy in the same place you keep your estate documents. That way, when your executor finds your will they’ll have a roadmap telling them exactly where to find everything you own.
Computers, Phones, and Online Accounts
This is the final frontier for estate planning, in my opinion. The first thing that must be done is ensuring your estate documents provide the proper authorization for your executor to access your devices and accounts - otherwise they’ll be committing a federal crime simply by typing in your password. Devices may contain “property” in the form of documents, pictures, media, etc., which may be passed on. Additionally, online accounts (Gmail, Amazon, Netflix, etc.) will have to be closed out as well. It may seem like an insane ask, but having a list somewhere of all your online accounts will allow your loved ones to do their best in probating your estate properly.
The Point?
The point here is that it’s a lot easier to deal with the complexities of your estate while you’re alive than it is for your family to deal with it after you’ve passed away. It’s an act of tremendous generosity and consideration to prepare your estate in advance. It’s hard enough to lose someone we love without the stress of probate. So, please, consider those you love and make sure your estate plan is in order as soon as possible.