Trust and Estate Administration

Thursday, January 14, 2021

Probate Administration - Frequently Asked Questions

(This blog has been updated from the post dated August 8, 2012)  

1. What is probate? 
Probate is the process of proving the Will, appointing the Personal Representative, paying the decedent’s debts, filing applicable tax returns, collecting any monies owed the decedent, and identifying, valuing, and transferring the decedent’s assets. 

2. When is probate necessary? 
Probate is required if the decedent owned any real property interests held in the decedent’s sole name, or, if the decedent owned more than $50,000 of personal property, such as vehicles, artwork, bank accounts, investment accounts, etc., with no beneficiary, POD, or TOD designations.

Read more . . .

Thursday, November 19, 2020

Montana Transfer on Death Deed

Montana has replaced the Beneficiary Deed with the Transfer on Death (“TOD”) Deed. Both are intended to allow owners to transfer, effective upon death, their real property located in Montana to one of or more beneficiaries or grantees. The new TOD Deed is now the proper deed form to accomplish this result because the 2019 Montana legislature adopted the Uniform Real Property Transfer on Death Act which allows for and provides guidance for the use of a TOD Deed.

Just like with the former Beneficiary Deed, the TOD Deed allows an owner of real property located within the state to avoid the probate process for such real property by transferring the owner’s interest in the property to the beneficiaries named in the deed. To be effective, the deed must be recorded in the appropriate recording office prior to the death of the owner.

Read more . . .

Thursday, February 13, 2020

If A Decedent Dies Without A Will, How Are The Assets Distributed?

Each state has statutes called “Intestacy” statutes that are referred to when an individual dies without a Will. These statutes dictate intestate succession, which is how “probate” property is to be distributed to the decedent’s heirs. 

What is probate property, or, stated another way, when is a probate necessary? Generally speaking, probate is necessary when a person dies leaving property in his or her own name (such as a house titled in the name of the decedent) or having rights to receive property (such as a wrongful death claim or debt owed to a decedent). However, not all property in which the decedent has an interest will be subject to probate. There are certain kinds of property which pass to a new owner on death without going through probate, such as:

• Property which is owned by the decedent and another person as joint tenants with right of survivorship will pass automatically to the surviving joint owner without going through probate.
Read more . . .

Thursday, November 21, 2019

Myth: A Will Avoids Probate

Many people believe that once they have created a Will--whether drafted by an experienced attorney or using a do-it-yourself solution or online form--they have avoided probate. Unfortunately, they are wrong.

A Will is a way to designate a person to wind up your affairs once you have died, determine who will get your hard-earned savings and property, and, if necessary, appoint a guardian to care for your minor children. However, it is not self-effectuating. The Will has to be submitted to the probate court to formally determine its validity, appoint the person you have designated, called a Personal Representative, and begin the process of distributing your money and property.
Read more . . .

Thursday, July 11, 2019

State Taxation of Trusts

On June 21, 2019, the US Supreme Court ruled in North Carolina Department of Revenue v. Kaestner 1992 Family Trust that the presence of in-state beneficiaries alone does not permit a state to tax trust income that has not been distributed to the beneficiaries where the beneficiaries have (1) no right to demand the income and (2) no guarantee that they would eventually receive the income from the trust. 

In 1992, Joseph Lee Rice III created a trust for the benefit of his children. The trust was to be governed by New York law (Rice’s home state), with the initial trustee residing in New York and the trust custodians residing in Massachusetts. The original trust provided that the trustee would have “absolute discretion” to distribute the assets to the beneficiaries “in such amounts and proportions” as the trustee might “from time to time” decide.
Read more . . .

Thursday, January 17, 2019

A Checklist for Family of Immediate Tasks After the Death of a loved One (Originally posted May 16, 2014)

With my mother’s recent passing and helping my siblings identify and deal with matters as they came up, I was reminded of the checklist that I posted about 5 years ago.  Because it still has relevancy today, I am reposting it and encouraging all that come across it to share it with as needed.  

One of the services we provide at Scott, Tokerud & McCarty, P.C., is probate/trust administration of decedents’ estates.
Read more . . .

Friday, August 3, 2018

Think Twice About Adding Your Children to Your Bank Account or Other Assets

I see it often in our practice.  When people hear about the cost, delays and potential perils of the probate process, they often just add their children as co-owners on their bank accounts or their residence in order to avoid probate.  However, this should be done, if at all, only after careful consideration of the potential perils of joint ownership and the alternatives available to avoid probate.

I know, most people’s first thought in response to this is, “Why?  My children are good kids, they’d never steal from me.”  That’s probably true and I’m not trying to convince you otherwise.

Read more . . .

Friday, March 16, 2018

Refinancing your principal residence when owned by your revocable living trust

We occasionally get calls from clients who are trying to refinance their house which has been placed in their revocable living trust.  Most often it is because their mortgage lender wants them to supply assurances that, if the living trust owns the house, the trust gives the Trustee the power to mortgage the property and use the house as collateral so that the lender’s interest is secure, i.e., is protected and can be foreclosed in the event of the clients' default on the loan.

Sometimes the lender wants a letter from an attorney certifying certain things are true about the trust--that it is revocable, that is valid under Montana law, and the Trustee has certain powers including the power to borrow.

Read more . . .

Monday, August 21, 2017

The Beneficiary-Controlled Trust

The beneficiary-controlled trust (sometimes call an inheritor’s trust) is a vehicle for an heir to receive - and enjoy - an inheritance without the inheritance being owned outright by the heir and hence subject to claims of his or her creditors.  Thus, it is an asset protection tool.

 How does it work? Generally, an inheritance is bequeathed to a trust for the benefit of an heir, and the heir is the trustee as to all issues except distribution of funds to himself or herself.  That is controlled by a "distribution trustee" whom the heir names (and can remove).  The distribution trustee has the discretion to distribute income and/or principal to the heir.

Read more . . .

Friday, June 23, 2017

New IRS Ruling Extends Deadline to Elect Portability on Behalf of Surviving Spouse

The IRS recently issued Revenue Procedure 2017-34 which grants another round of relief for personal representatives who mistakenly forget to file an estate tax return that elects portability on behalf of the decedent’s surviving spouse. One of the major misconceptions with the portability of the estate tax exemption for surviving spouses is the method of acquisition. Many personal representatives believe the exemption is automatic, while the reality is that it must be requested by filing a federal estate tax return electing portability. The portability election applies to estates of decedents dying after December 31, 2010, if such decedent is survived to by a spouse.

Read more . . .

Friday, June 9, 2017

Standalone IRA Beneficiary Trusts for Inherited IRAs

It is pretty safe to say that almost everyone has heard of an individual retirement account (IRA), but not many people know about an IRA beneficiary trust.  Part of this may be that IRAs were not originally designed to be wealth transfer vehicles for anyone other than a surviving spouse.  However, in 2003, the IRS issued regulations permitting a non-spouse beneficiary who is inheriting an IRA to "stretch out" the taxable Required Minimum Distributions over his or her own lifetime.  This not only applies to traditional IRAs, but also to Roth IRAs and 401(k), 403(b), SEP and SIMPLE plans, which I will refer to herein generally as IRAs.

The ability to stretch out the distributions allows for the compounding of the investments inside the IRA, tax free, over a much longer period of time, thus, substantially increasing the amount of money that is ultimately distributed.

Read more . . .

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