~Required if you die with or without a Will~
~Does not apply if you have a living trust~
LIVING TRUST = PEACE OF MIND!
Assets can be distributed from a Living Trust almost immediately without the necessity of going through the court process of a probate which takes 6 months or longer. The cost of administering a Living Trust can be less than that of a probate.
Most people are not familiar with the administration of decedents’ estates and with the many steps to be taken before the estate may be distributed to the heirs and beneficiaries.
DEFINITIONS: An “Executor” is the person designated in a Will to administer a decedent’s estate. An “Administrator” is appointed to administer an estate either when there is no Will, when an Executor has not been named in a Will, or when the person named in the Will as Executor is unable to act. The term “Personal Representative” includes both Executors and Administrators.
DUTIES OF PERSONAL REPRESENTATIVES – In general, the Personal Representative’s duties are to collect, conserve, manage and control the assets of the estate, pay the debts of the decedent, pay all taxes due from the decedent and the estate, and distribute the balance of the estate according to the Will, or, if there is no Will, in accordance with the laws of Intestate Succession. Intestate Succession means that the State has provided statutes that set forth which of your heirs will inherit your estate.
PROBATE PROCEEDING – Technically, the administration of a decedent’s estate does not begin until the Will, if any, has been admitted to probate in the Superior Court and “Letters Testamentary” or “Letters of Administration” have been issued. Such “Letters” give the Personal Representative the authority to collect all of the decedent’s assets and gather them into the estate, pay bills and make distributions to the beneficiaries of the estate.
NOTICE TO CREDITORS – The law in California requires that the estate give notice to all creditors of the decedent to file their claims. The law in Washington makes this optional. If notice is filed with the court and then published in a local newspaper, Creditors have a period of four months in which to file their claims with the court. If a claim is not properly filed with the time limit, it is ordinarily barred and the estate does not have to pay it.
INVENTORIES AND APPRAISALS – A Personal Representative is required to prepare a complete inventory of all assets owned by the decedent at the time of death. The inventory is a very important document in the administration of an estate: It is the starting point for almost all tax returns and for the accounting which may be required to be filed with the court. The assets listed in the inventory, plus certain other non-probate assets (such as life insurance, joint tenancy property, and trust assets) comprise the decedent’s estate for tax purposes and must be appraised.
FEDERAL ESTATE TAXES – The U. S. Government levies an estate tax based on the decedent’s right to transmit property at death. The estate tax is normally paid by the estate, but may be allocated and charged to the beneficiaries of the estate 9 months after date of death. A return must be filed for the estate of a decedent if the estate has a gross value of over the exemption amount.
“Gross Value” includes the assets in the probate estate (listed on the inventory) and may also include certain assets such as life insurance proceeds, jointly-owned property, and assets previously transferred by the decedent in trust or otherwise.
The Federal estate tax is based upon the value of the assets included in the estate for tax purposes as of the date of death or, at the estate’s option, as of the date six months after the date of death. This tax must be paid 9 months after the death of the decedent.
LENGTH OF PROBATE: The probate court process can take as little time as 6 months or can continue on for years, depending on the complexity of the estate. Howard Hughes and Bing Crosby’s estates took years to complete. An alternative to consider to avoid the probate process, would be the implementation of a Living Trust prior to death.