Most people think of wills when they think about estate planning. However, statistics show that up to seventy percent (70%) OF THE POPULATION DOES NOT EVEN LEAVE A SIMPLE WILL. For those who have thought about their estate planning needs, they may rely only on a simple will or on joint tenancy ownership to distribute their assets upon their death.
For those who do not plan for the distribution of their assets, state law determines who will receive their property. Distribution under the Intestate Succession Statutes may not achieve your goals or address your needs.
Our experience shows that people often believe that if they have a will then there will be no need to probate their estate. However, this is not the case. Wills guarantee probate. If you own property in your sole name at your death, your will is unable to transfer the property unless the will is probated.
Once a will is probated, the will becomes a public document. Anyone who wishes to view your will and see what you owned, may do so. In addition, wills can be easily challenged. Disgruntled heirs, feeling that they did not receive their fair share, may file an objection with the Court. In addition to family division, the filing of an objection usually results in added delay and expense. The probate process generates attorney fees, court costs and sometimes executor fees.
Wills may not control the distribution of all your assets. Joint tenancy property, payable on death (POD) designations, retirement accounts and life insurance pass by "operation of law." In addition, wills do not have any force during your lifetime and will only take effect upon your death. Therefore, they provide no opportunity for planning for disability during your lifetime.
Probate is the process of passing legal ownership of assets remaining in your name at your death.
It involves five basic steps:
Step One: Admitting the Will to Probate. To begin the probate process, a formal or informal petition, with an attached original will (if there is one), is filed with the Court.
Step Two: The Appointment of the Personal Representative. The Court will appoint either the named personal representative in the will or will appoint a person with priority according to state statute. The Personal Representative is responsible for handling the affairs of the estate and is usually assisted by an attorney. Traditionally, this person has been referred to as a executor for a male and an executrix for a female if the person died with a will.
Step Three: Inventory and Appraise Assets. Within ninety (90) days after the appointment of the Personal Representative, an inventory of the assets of the estate must be filed with the Court.
Step Four: Payment of Debts, Claims and Taxes. The Personal Representative is required to publish notice to creditors. Creditors are notified directly by mail if they are known and unknown creditors are notified by publication. Once the debts and claims have been submitted, they are paid unless they are disputed.
Step Five: Final Distribution and Closing of Estate. After the statutory waiting period for keeping the estate open has expired, and all debts and claims have been paid, the remainder of the estate is distributed to the beneficiaries named in the will. If there is no will, the estate will be distributed according to the intestate succession statutes. After the estate is distributed, the estate can be closed.
Traditionally, attorney's fees were calculated as a percentage of the gross estate. However, current law in Nebraska prohibits attorneys from charging a percentage of the estate. Fees are determined by what is reasonable and attorney's have the option of charging either a fixed fee or charging an hourly rate for services rendered.
As a general rule, attorney's fees in Nebraska do not exceed two to three percent (2-3%) of the gross estate. The personal representative is also entitled to receive compensation and, if paid, usually receives approximately one-half of what the attorney receives. However, many times the personal representative is a family member and typically does not take a fee for their services as personal representative.
One criticism of the probate process is that it can be very time-consuming. In Nebraska, the average probate usually takes approximately one year, but must be closed within 2 years.
If, at the time of your death, you own real estate in your name alone, a probate will be necessary in each state where you owned property. The probate of property in a state other than the state where you live is called an ancillary probate. Ancillary probates obviously lead to increased delay in settling the estate and lead to increased expenses as local counsel will likely be hired to handle the ancillary probate.
Revocable living trusts offer a solution to the problem of the ancillary probate. When an individual owns real estate in several states, the property can be transferred to his or her revocable living trust and escape the probate process.
No. Information regarding your estate is fully public both during and after the probate process. Private and public information is available for anyone who has an interest.
Yes, if done correctly. All assets transferred to your living trust before your death will avoid the probate process. To achieve this, title to assets is changed from the owner's name to the name of the trustee of the trust, who is usually the same person. For example, a transfer from John Doe to John Doe, Trustee of the John Doe Trust. Title to real property is changed by executing a new deed. For other assets, special transfer documents will be drafted in order to change ownership to the trust. Please keep in mind that this is a general rule. In some circumstances, as when dealing with retirement plans, ownership must not be changed as it will result in severe tax consequences. Do not attempt any funding of your trust without consulting an estate planning attorney.
Although title to your assets has changed, you will still have complete control over your trust property during your lifetime. You can amend or revoke your trust at any time. However, upon your death, there will be no need to probate the assets in your trust because they were not left in your individual name. Your trustee will distribute your assets as instructed without going through the probate process. Please keep in mind that even if the probate process is avoided, it may still be necessary to go through inheritance tax proceedings.
Individuals typically think of "probate" as something that happens after you die. However, administrative proceeds can also occur while you are living and are sometimes referred to as a "living probate."
A living probate can arise if you become mentally or physically disabled. A living probate is generally referred to as either a "guardianship" or "conservatorship." A guardian is someone appointed by the Court to look after the incapacitated person. A conservator is someone appointed by the Court to look after the assets of an incapacitated person.
Guardians and Conservators are usually required to post a bond and to provide annual reports and annual accountings to the Court. A living probate can be time-consuming and expensive. Most importantly, it can be easily avoided with proper estate planning.
Yes. A proper estate plan addresses the possibility of your disability. You can provide specific directions for your trustee to follow in the event of your disability. You can even provide a definition of when you will be deemed disabled. Since your assets are placed in your trust, there is no need for a conservatorship. When you add a valid Health Care Power of Attorney, you can avoid both a guardianship and a conservatorship.