Frequently Asked Questions
If a person has a will does the Estate still need to go through Probate?
Yes. Having a will does not avoid the need for going through probate for those assets titled in an individual’s name at his/her death. Typical assets that need to be probated are titled assets in an individual’s name alone (bank accounts, Certificates of Deposit, mutual funds, vehicles, U.S. Savings Bonds), titled assets owned with someone else as tenants in common, or assets like life insurance or retirement accounts that do not have a beneficiary designated. Assets owned jointly with rights of survivorship will pass directly to the joint owner upon a person’s death. Assets with a beneficiary designation such as a life insurance or retirement account will pass to the named beneficiary. A surviving spouse can transfer the title to a family purpose household vehicle.
What is Probate Administration?
Probate administration is a court process where the Executor/Administrator submits a will, or if no will, a Petition to administer the estate upon an individual’s death. The petition is filed generally in the County and State where the decedent last resided or in the State where the decedent owns real estate. There are certain interested parties that need to be notified of the probate, such as persons named in a will, the statutory heirs at law and any creditors of the decedent. The duties of the Executor/Administrator vary but include posting a bond, filing an inventory, finding and notifying interested persons and creditors, gathering and/or selling assets, paying all legitimate debts, filing tax returns, and filing accountings. There is a minimum 6 month time period for probates in New Hampshire to allow creditors the opportunity to file claims. Once all the duties are taken care of the Executor/Administrator will request permission from the court to distribute the decedent’s assets according to the decedent’s wishes as stated in the will or pursuant to the intestate statute.
Can Probate be Avoided?
Yes. Probate is only necessary for titled assets that are in the name of the decedent alone. Probate can be avoided in many ways. Assets can be titled in joint ownership with someone else, beneficiaries can be listed on certain assets, a transfer on death (TOD) or payable on death (POD) designation may be used on some assets, and property can be gifted during lifetime, with or without retaining any interest. However, many of these techniques have unintended consequences – joint ownership may subject your assets to a joint owner’s creditors, listing a minor or spendthrift as beneficiary on an account may not be wise, and gifting during your lifetime can cause potential tax consequences or complicate Medicaid eligibility. Another way to avoid probate is to create a Revocable Living Trust also known as a Grantor trust.
What is a Revocable Living Trust or a Grantor Trust?
A Revocable Living Trust is a document that allows a Grantor to transfer all assets to the trust but retain ownership, control and beneficial use of the assets while the Grantor is alive and competent. The Grantor names a person to take care of things if he/she becomes incompetent or upon death, called a Successor Trustee. The Grantor states his/her wishes as to distribution of his/her assets as he/she sees fit with conditions on distribution if necessary due to minority, disability or other reasons. If all assets are properly transferred to the trust, a Revocable Living Trust can avoid probate. Administering a Revocable Living Trust after the Grantor’s death is generally private, not subject to court monitoring and allows for quicker distribution than if an estate has to go through a probate. A Revocable Living Trust does not however protect assets from creditors.
What is a Durable Financial Power of Attorney?
A Durable Financial Power of Attorney is a very powerful document allowing the Principal to name an Agent to take care of the Principal’s finances. Although the intention is that the Power will only be used in the event the Principal is unable to attend to his/her financial affairs due to a mental or physical disability, a Power of Attorney is generally effective as soon as it is executed, therefore the Agent should be someone the Principal trusts completely. There is no court oversight or bond. Agents have fiduciary duties to the Principal that he/she must uphold and if those duties are violated, the Agent can be responsible for civil and criminal penalties. A Durable Financial Power of Attorney properly drafted and executed can help avoid a Guardianship proceeding in the event of incompetency.
Disclaimer: The answers to these FAQs are for general informational purposes only and are not intended as legal advice or the establishment of an attorney-client relationship.