Category Archives: Estate Administration

Many Ways to Transfer Property at Death

Many Ways to Transfer Property at Death

They say “Where there’s a will, there’s a way”, but there are a number of ways that property can be passed at death without a will. The probate court provides a process to pass on inheritance to the next of kin of the decedent when he dies “intestate” (without a will). Property can also be passed without probate court involvement if it is held “jointly with right of survivorship” (JWROS), with a designated beneficiary or in a trust.  Ohio law even provides that title to vehicles may pass directly to a surviving spouse without probate.

The first step in sorting out a decedent’s estate is to determine what assets he owned and how they are titled. Heirs or beneficiaries can then follow the procedures required to collect the assets.

Intestate Property

The probate court oversees the process of transferring property held in a decedent’s name alone. Without a will, anyone may apply to administer the estate. The closest relatives living in Ohio have first priority to be the administrator and must be notified or sign off for someone else to administer. The administrator is generally required to post a bond (an insurance policy that he will handle his duties properly) in order to protect all the heirs. Because there is no will to grant powers, the administrator will need to get probate court authority to sell or transfer assets. Once the bills have been paid, the administrator will distribute the remaining assets to the decedent’s next of kin in accordance with the Ohio Statute. The probate process can be complicated so it is best to have an attorney assist with the administration.

Joint with Right of Survivorship

Virtually any type of property can be held jointly with another person; real estate, a bank account, even a vehicle. Just because something is held jointly doesn’t mean the survivor gets to keep the asset when an owner dies, but this is often the case. Most times, a certified death certificate and an affidavit outlining the facts is all that is needed to collect survivorship property.

Designated Beneficiaries

A person can name beneficiaries who are to receive an insurance policy, IRA, annuity, bank account, stock account, house, car or other property when the title owner dies. The designation of a beneficiary is given directly to the insurance company, bank, brokerage, county recorder or whoever keeps the record of ownership. To claim the property, the beneficiary must contact that company or agency to make the claim. Claim forms and procedures vary greatly. Making a claim may be as simple as presenting a death certificate or may involve completing multiple page claim forms that require a medallion guarantee signature from a bank or brokerage. Each beneficiary may be required to make decisions about cashing or continuing the account and withholding for taxes.

In the case of an IRA, for example, a spouse may elect to roll the IRA into her own name, name her own beneficiaries, and wait until she needs to make required minimum distributions. If multiple children inherit an IRA, they can divide it into separate inherited IRA’s and each decide whether to cash out immediately or “stretch” it out for years taking only the required minimum distributions. Each holder of an inherited IRA or inherited Roth IRA must begin taking required minimum distributions immediately and should name beneficiaries for their own account.

Trust Assets

Assets titled to a trust are administered by the surviving or successor trustee as directed by the terms of the trust. If all of the creators of the trust have died and there is no one surviving who can revoke the trust, its’ terms become irrevocable and a federal tax identification number must be assigned to the assets. The Trustee must follow proper protocols for notifying beneficiaries, managing the assets and handling the taxes. A qualified attorney and accountant may be needed to advise the Trustee.

Vehicle Transfer to Spouse

Ohio law allows a surviving spouse to transfer an unlimited number of vehicles to herself so long as the total value is less than $65,000, and so long as there is no one else who owns the vehicle jointly with right of survivorship, is designated a TOD beneficiary or is named in the will to receive the vehicle. To transfer, the spouse must take her ID, the vehicle title or registration showing VIN number, and a certified copy of the death certificate to the county BMV title office, sign an affidavit and pay a small transfer fee.

Handling the transfer of a decedent’s property can be a complicated affair under the best of circumstances. The process can take weeks or even months. Dealing with the myriad of details while grieving the loss of a loved one can seem overwhelming. An experienced attorney can help to organize, understand and control the process.

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What Widows Need to Know

What Widows Need to Know

There are over 11.5 million widows in the US today, according to the US Census Bureau. These women have to adjust to all sorts of changes, including becoming the sole decision maker in matters of their finances. Many women are not comfortable handling money. The whole process can seem complicated and daunting, but it is important that you know what you own and how it’s held. Once you have tamed everything it should seem much less overwhelming in the face of tragedy.

            Know Your Money. In the case of finances, ignorance is not bliss. Organize all your finances and important documents. Find out where everything is, and how it’s held. Organize the information including passwords, companies, statements etc. This is important not only so you know where your assets are, but also so someone else could take care of your finances if you become incapacitated or pass away.

            Get All the Benefits You Can. As a whole, widows are one of the most impoverished groups in the country. There are many forms of assistance available to widows. Some may have been directly set up by your late husband, so contact any life insurance companies your husband may have had a policy with, and check to see if you are entitled to any widow’s benefits from his employer. Rollover your late husband’s IRA accounts into your name so as not to lose those tax benefits. You may want to check with the state for unclaimed funds. There also may be money available from Social Security or the Department of Veterans Affairs.

            Social Security Benefits. Widows may be entitled to receive Social Security benefits if the deceased spouse had earned enough work credits to qualify for Social Security benefits on his own. You can receive benefits as early as age 60, and can receive social security disability benefits as early as age 50.

            Veteran’s Benefits. If your husband was a veteran, it may be worthwhile to see what benefits you are entitled to. Veteran’s widows may qualify for assistance, but they have to apply for the funds. There are several Veteran pensions, and according to a VA estimate, only one in seven of veteran’s surviving spouses, who likely could qualify, actually get the monthly checks.

            Title all assets properly. As you’re sorting through paperwork, you may find assets that are still held in your late husband’s name or jointly titled to the two of you. If you have not yet done so, it is important that you get these assets transferred into your name alone. With joint assets, accounts with both your names, this can usually be done by taking a death certificate to the bank or department of motor vehicles and filling out the appropriate paperwork there. If there are assets in your late husband’s name alone you may need to open a probate estate.

            Set Up Your Estate Plan. Once you know where everything is, and it is all titled in your name, it is time to think about where you would like your assets to go when you pass away. Think about whether you would like your assets split equally between your children or if you would like certain individuals to inherit more or less. If you don’t have children, or are not close to them, think about who you would like to inherit when you pass away such as your siblings, nieces and nephews, close friends, or charities. Make sure you name new beneficiaries for any retirement account or life insurance policy you may have.

Take Care of Yourself. Most importantly, you need to figure out who you want to take care of you, should something happen. Who would be making your health care decisions for you if you were in the hospital? Who would manage your financial affairs should you no longer be able to? One of the things a widow has to adjust to is being on her own and taking care of herself. Make sure you have a good support system and a plan as to who would take care of you if you were unable.

When your husband passes away, everything changes. One of the changes is that you become in charge of handling your own estate. If you feel overwhelmed, an attorney can help you get everything in order. Remember, you are not alone.

How to Handle Your Inherited IRA

IRAs are becoming a common asset in estate plans, sometimes the largest asset
of the estate.  They can, however, be a tax trap for the unwary.  Inherited IRAs
are treated differently depending on the age of the decedent and who inherits the
proceeds.

Treatment of an IRA varies depending on whether the owner died before he was
to  take  the  Required  Minimum  Distributions  (RMDs)  (age  70  ½)  or  during  the RMD period.  There are four possible beneficiary designations.  The beneficiary can be a spouse, a non-spouse, both a spouse and non spouse or no beneficiary named.    Let  us  examine  how  distributions  would  be  handled  in  each  possible situation.

Spouse as Beneficiary

A spouse has four options with respect to the inherited IRA:

1.  Roll over – A spouse can roll over the IRA into her own existing or new
IRA.    She  can name her own  beneficiaries,  continue  contributing  to  this
IRA and need not begin RMDs until she, herself, is 70 ½.

2.  Remain  a  beneficiary –  On  the other hand, the  spouse  can  treat  the
IRA as a beneficial or inherited IRA and continuing the distribution pattern
of  the  deceased  owner.    This  might  be  advantageous  if  the  surviving
spouse is much older than the deceased spouse or is younger than 59 ½
and wishes to take distributions without penalty.

3.  Cash out the IRA – Amounts withdrawn would be immediately taxable.

4.  Disclaim  or  give  away  the  account  –  If  the  spouse  was  well  off
financially,  she  might  choose  to  forego  her  right  to  receive  the  IRA  and
allow it to pass to the contingent beneficiaries.  Doing so would spare her
the  income  tax  when  the  account  is  withdrawn  and  might  spare  her
children additional estate tax when she dies.  A disclaimer must be done
within nine months of the date of death.

Non-spouse as Beneficiary

Before RMD – When the owner has named someone other than the spouse or
someone  in  addition  to  the  spouse  as  primary  beneficiary,  the  distribution  will
need to be made within 5 years of the last day of the year of the owner’s death,
unless the beneficiary elects to take distribution over a period not exceeding his
or her own life expectancy.  If there are multiple beneficiaries, the life expectancy of the oldest will be used.  To avoid this, the beneficiaries may segregate the IRA account so each can use his own life expectancy.  It is especially important to
separate the IRA if one of the beneficiaries is a charity as such entities have no life expectancy and must distribute within 5 years.

During  RMD  –  If  the  owner  was  already  receiving  RMDs,  the  remaining
distributions must continue to be made in the same way and cannot be spread
over a longer life expectancy.  Non spouses must keep the inherited IRAs totally
separate  from  other  funds  and  cannot  make  additional  contributions  to  the
account.

No Beneficiary Named

If no beneficiary is named or the named beneficiary has predeceased, the IRA
distribution will go to the owner’s probate estate.

Before  RMD  –  Since  the  estate  has  no  life  expectancy,  the  entire  IRA  would
need  to  be  distributed  no  later  than  the  last  day  of  the  5th  year  following  the owner’s  death.   The  administrator  of  the  estate  has  two  options:

(1)  he  could maximize the tax deferral by waiting until the end of the 5 year period to withdraw all of the money or

(2) he could spread the distributions out over the five year
period and spread out the tax liability.

During RMD – The estate administrator would have no option but to follow the predetermined  plan  of  the  deceased  owner.    If  the  IRA  owner  was  taking withdrawals over the term of his life expectancy, this would be continued by the estate beneficiaries.

Inheriting  an  IRA  can  be  a  real  windfall,  but  it  is  important  to  understand  and consider  the  options  available  to  take  the  best  tax  advantages.    Discuss  your options with your attorney and accountant immediately as the timing of elections is critical.

IRA  owners  should  consider  the  ramifications  of  their  choice  of  primary  and contingent beneficiaries on their family and loved ones.  Those with a charitable intent might consider designating a charity as beneficiary since charities pay no income tax on the IRA.  Designating IRA beneficiaries is an important part of your estate plan and should be discussed with your attorney and your accountant.

What to Expect When Administering an Estate or

The administration of a probate estate or a trust generally takes six months to a
year.  The fiduciary can expect that time to involve a period of great activity at the beginning, followed by a long period of waiting with little activity and then a period of great activity at the finish.  Complications such as disputes among beneficiaries, houses or other assets that are difficult to liquidate and insolvency (having more debts than assets) can extend the administration for years.  The administration can sometimes be expedited if there are very few assets or only one beneficiary.  The basic steps of administration are the same whether administering a trust or a probate estate, with or without a will.

TAKING CHARGE 

The first step is for the fiduciary to assume his or her role and secure the
paperwork necessary to show the world that he has the authority to step into the shoes of the decedent and act.  This involves applying to the court for letters of authority as executor (if named in a will) or administrator (if not named in a will) or signing an affidavit of successor trustee if named in a trust.  The new fiduciary will then need to secure a tax ID number from the IRS as the estate or trust is a separate entity and must file taxes for income received.

SENDING NOTICE 

The fiduciary next notifies those interested in the estate or trust.  This is an
important step as formal notice limits the time an individual can object to the
proceedings.  Executors will notify everyone named in the will as well as those who would inherit if there was no will.

INVENTORYING ASSETS 

The fiduciary must identify and list the assets of the estate or trust and send the
list to the court or the beneficiaries of the trust.  The fiduciary will then gather the assets together under his name and new tax number.  Additional court authority or other paperwork requiring a notary seal or medallion guarantee may be needed to do this.

PAYING THE BILLS  

Creditors have six months from the date of death to file their claims.  The
fiduciary should pay bills or dispute them.  If there is any chance that the estate will be insolvent, no bills should be paid until six months have passed.
 
 
FILING THE TAXES 

The fiduciary is responsible for the decedent’s final income tax returns.  He or
she must also file tax returns for income received by the estate or trust.  If no income is received under the new EIN, the tax number can be canceled when the administration is finished.  If taxes are due after the estate or trust is finished, income will be reported on the taxes of the beneficiaries in proportion to the share they received.

The fiduciary may also need to file Ohio Estate Tax for decedents who passed
away prior to January 1, 2013 or for estates valued at more than $5.25 million dollars.

DISTRIBUTING AND ACCOUNTING 

In order to finalize the administration the fiduciary will present an accounting
showing assets received, bills paid and distributions made for approval by the court and/or the beneficiaries.  Final distributions should not be made until any objections have been settled.

The administration of a probate estate or trust can be a daunting task undertaken at a very difficult time.  A knowledgeable attorney can ease the way by letting you know what to expect, preparing the necessary paperwork and answering your questions along the way.

What to Expect When Administering an Estate or Trust

The administration of a probate estate or a trust generally takes six months to a year. The fiduciary can expect that time to involve a period of great activity at the beginning, followed by a long period of waiting with little activity and then a period of great activity at the finish. Complications such as disputes among beneficiaries, houses or other assets that are difficult to liquidate and insolvency (having more debts than assets) can extend the administration for years. The administration can sometimes be expedited if there are very few assets or only one beneficiary. The basic steps of administration are the same whether administering a trust or a probate estate, with or without a will.

TAKING CHARGE

The first step is for the fiduciary to assume his or her role and secure the paperwork necessary to show the world that he has the authority to step into the shoes of the decedent and act. This involves applying to the court for letters of authority as executor (if named in a will) or administrator (if not named in a will) or signing an affidavit of successor trustee if named in a trust. The new fiduciary will then need to secure a tax ID number from the IRS as the estate or trust is a separate entity and must file taxes for income received.

SENDING NOTICE

The fiduciary next notifies those interested in the estate or trust. This is an important step as formal notice limits the time an individual can object to the proceedings. Executors will notify everyone named in the will as well as those who would inherit if there was no will.

INVENTORYING ASSETS

The fiduciary must identify and list the assets of the estate or trust and send the list to the court or the beneficiaries of the trust. The fiduciary will then gather the assets together under his name and new tax number. Additional court authority or other paperwork requiring a notary seal or medallion guarantee may be needed to do this.

PAYING THE BILLS

Creditors have six months from the date of death to file their claims. The fiduciary should pay bills or dispute them. If there is any chance that the estate will be insolvent, no bills should be paid until six months have passed.


FILING THE TAXES

The fiduciary is responsible for the decedent’s final income tax returns. He or she must also file tax returns for income received by the estate or trust. If no income is received under the new EIN, the tax number can be canceled when the administration is finished. If taxes are due after the estate or trust is finished, income will be reported on the taxes of the beneficiaries in proportion to the share they received.

The fiduciary may also need to file Ohio Estate Tax for decedents who passed away prior to January 1, 2013 or for estates valued at more than $5.25 million dollars.

DISTRIBUTING AND ACCOUNTING

In order to finalize the administration the fiduciary will present an accounting showing assets received, bills paid and distributions made for approval by the court and/or the beneficiaries. Final distributions should not be made until any objections have been settled.

The administration of a probate estate or trust can be a daunting task undertaken at a very difficult time. A knowledgeable attorney can ease the way by letting you know what to expect, preparing the necessary paperwork and answering your questions along the way.

Ohio’s Probate Modernization Act

Ohio’s probate statutes have been updated to bring more efficiency to the probate process and modernize the language of the law.  The new laws will apply to estates of decedents who die after January 13, 2012.  Many of the provisions are revised to make the statutes gender neutral and to update archaic language such as “lunacy”, “forthwith” and “chattels”.  Other provisions adjust time limits on certain actions; limiting the time allowed for extensions (6 months maximum), reducing the time for admitting an oral will (from 6 to 3 months) and the time one can wait to file a will without penalty (from 3 years to 1 year).  Some of the most significant changes expand or limit the rights of creditors, fiduciaries and beneficiaries.

CREDITORS

Creditors will be entitled to question a fiduciary under oath and to receive notice of the filing of accounts.  Actions brought against the fiduciary for failure to pay debts of the estate may be transferred from probate to the General Division of the court.

FIDUCIARIES

Fiduciaries’ rights will be expanded to allow them to use or purchase property from an estate or trust.  Investment options will be expanded to allow a broader range of asset classes such as credit union accounts and foreign investments.  Commissioners appointed in a Release from Administration will be permitted to sell property.  Individuals who are not Ohio residents may be appointed guardian of the person.  Fiduciaries that conceal assets or fail to keep the court informed of their current address will be removed.  The new rules establish procedures to ease the process for replacing fiduciaries.

BENEFICIARIES

Beneficiaries will also be able to examine fiduciaries under oath.  They may be able to avoid probate in collecting the last wages of a loved one, or transferring certain real estate.  Allowing an auditor’s evaluation to be used rather than hiring an appraiser will save on estate administration costs.

It’s important that our legislature update statutes periodically to keep pace with society’s changing needs and customs.  It’s equally important that you choose an attorney who keeps abreast of these changes.  Major changes to Ohio’s Trust and Power of Attorney statutes are also expected in 2012.  March’s Update on the Law will address those changes and how they will affect our clients.

Dealing with the Details


A Practical Guide to Managing the Death of a Loved One

The time following the death of a loved one can be overwhelming. Not only are you dealing with shock and bereavement, but there are a seemingly endless number of tasks and decisions which need to be made. Within the first twenty four hours, you need to deal with making arrangements for the body, and notifying the proper people. The immediate days following the death will be focused on the funeral or memorial service arrangements. Soon after the funeral you will need to tackle various financial and legal issues that come with dealing with the estate. Many people find it very difficult to be sure they have taken care of everything. Although we cannot do these difficult tasks for you, the following can help walk you through the decisions that will need to be made and the things that must be done.

If the Death Occurs in the Hospital

Hospitals and nursing homes are very experienced with death, and should be able to handle most of the details for you, so that you can focus on taking care of yourself and your family.  The doctors will pronounce the death and take care of the details of making arrangements for the body.  Things you should consider are which funeral home you would like them to contact, whether or not organ donation is appropriate, and if an autopsy is desired.  Autopsies usually cost money and can cause the family more grief than closure.  You should consider an autopsy:

  • If the person died from a medical problem that was not diagnosed before death.
  • You have questions about an unexpected death.
  • Your loved one died from an inherited disease and you or other family members may be at risk.
  • You believe there may have been medical malpractice.
  • The cause of death may affect legal matters.
  • You have doubts about the diagnosis made before death.

If the Death Occurs at Home

Almost everyone wants to die at an old age, in their own home, in their sleep.  Unfortunately no one wants to be the one to find them once they have.  Most people who pass away outside of the hospital are found by a loved one.  Many times amidst the shock and grief the finder does not know who to call or what to do.

If a person dies unexpectedly at home or at work, first call 911 or the emergency phone number in your area.  They will send out the police and an ambulance.  The police will hold an investigation, and the paramedics can pronounce the death.

If the death was expected due to old age or terminal illness, and signs of death have clearly set in, the best bet would be to call the Police, not 911.  By calling 911 an ambulance will be sent, and this can be an unnecessary expense and delay the ambulance from helping someone in danger.  The police can arrange for the coroner to come out to the house. In all cases, a medical professional must pronounce the death so you will need either a doctor or a coroner.  If there is any doubt the person may not be dead, call 911 immediately and attempt CPR.  If the person was under the care of a hospice program, call the hospice organization instead of 911 or the police.

Finding a loved one dead is a very traumatic experience.  Call someone you trust to come and sit with you while you wait, to watch you for signs of shock and help answer any questions the police or paramedics might have.

Within the First 24 Hours

Upon the passing of a loved one, the first 24 hours usually feel like a blur.  Time seems to stop and go very quickly at the same time.  Most things can wait while you deal with your shock.  However a few practical things need to be done.

  • Make short term arrangements for the decedent’s minor children, pets, or other dependents.
  • Arrange for care or disposal of perishable property (food, plants, etc.).
  • Secure decedent’s property from theft and vandalism.
  • Have the post office change the decedent’s address, or hold mail.

There are several people you will need to notify.  The first person you should call is someone to be with you during this difficult time.  This person can also help you by calling people for you or helping you write the obituary. There are many people who should be notified, and many different ways to do so. Make sure you do the following:

  • Notify immediate family and close friends.  You may want to have someone else do this.
  • Prepare an obituary and purchase a space in the newspaper where the decedent lived. If the decedent spent a significant time in another area, you may want to take one out there as well.
  • Notify the decedent’s work, and social groups.
  • Don’t forget to notify electronic contacts, such as people connected through email or facebook.

The Funeral

There is a lot of planning that goes into funerals, and it happens very quickly at the most stressful time possible.  The first thing you should do is see if the decedent prearranged a funeral or had specific final wishes.  You should contact the Funeral Home and make an appointment within the first 24 hours.  Make sure to keep records of all payments for funeral and other expenses.  Arrange for a house sitter during the funeral and calling hours to prevent break-ins from people who read obituaries to prey on the bereaved.  The funeral home will order certificates of death from the state department.  Make sure to order at least 3 copies.

The funeral home will ask you to make a lot of decisions.  Do not worry about making the “wrong” decision.  Ask a trusted friend or family member to go with you to the mortuary to advise and support you in making the funeral and burial arrangements.  If the deceased did not make arrangements in life you will have to make the following decisions:

  • Whether the person should be cremated or buried.
  • What clothing & jewelry the deceased should wear.
  • If the burial will be in a cemetery plot, vault, or mausoleum.
  • Selection of the urn or casket.
  • Will the casket be opened or closed.
  • Where and when calling hours will be.
  • Some Fraternal Orders and the Military may offer special ceremonies.
  • If there is family tension, the funeral director should be aware of the relationships of people attending to seat them appropriately.
  • What flower arrangements and pictures or photo albums to be displayed.
  • Who will give eulogies, and serve as pall bearers.
  • What music will be played and what prayers will be read.
  • Make arrangements for grave site transportation.
  • Selection of the grave marker.
  • If there will be a wake or other gathering to celebrate the life of the deceased.
  • Catering concerns.
  • How to accommodate out of town relatives.

After the Funeral

The days before the funeral you should not worry about the estate or finances.  Focus exclusively on taking care of yourself and your loved ones and allow yourself to grieve. It is important to take care of yourself emotionally and physically.  Even though it seems trivial and difficult to do in such times, make sure you allow yourself time to sleep, exercise, eat, and for personal hygiene.  If possible, don’t make any life changing decisions, such as to move or change jobs, for at least a year.  Counseling and support are available for the spouse, children, close relatives and friends of the decedent.  Make sure to plan ahead for events that tend to retrigger grief, such as holidays or birthdays.

While your loss will be felt long after the funeral is over, within the first few weeks you need to start dealing with the decedent’s estate. Be careful before accepting any telephone or mail solicitation.  Be especially wary of overly pushy solicitors who pressure you to make decisions immediately or pay fees.  Fraudulent invoices may be received and should be scrutinized carefully for validity.

Contact Social Security and any other government agencies, retirement plans, or benefit programs to let them know the person has passed.  Notify life insurance companies and annuity companies of the death and request claim forms.  If a mortgage life insurance policy on the home exists, notify the mortgage holder and insurance company of the death.

You should collect and organize all the bills and debts of the decedent. Close all electronic accounts, if the client shopped online or had their bills paid electronically.  Cancel all services that are no longer needed, such as cable, internet, and cell phone.  Watch for utility bills, such as heating bills for the house. These will need to be paid to keep up the house until you can sell or transfer it.  Notify credit card companies of the death and cancel credit cards on which decedent was the only signer.  Do not pay any of decedent’s debts until you have consulted your attorney.

See if the decedent had a Will or Trust.  The original will is usually kept in a safe deposit box, in the attorney’s office, or in a file at home.  It is also possible the will was filed, during the decedent’s lifetime, with the court for safekeeping.  Try to find the original signed document if possible.  If more than one will is found, keep them all. Do not write on the original will.

When you are ready, call an estate attorney. She can help you manage the estate administration and determine if an estate tax return or final income tax return should be filed.  You do not need to contact the same attorney who wrote the will. Choose an attorney you trust and feel comfortable with.  Dealing with the details following the death of a loved one can be overwhelming, but you don’t have to do it alone.

Written by:
Kyla A. Williger
Attorney at Law
330-686-7777