EHDH Estate Planning

Does Your Estate Have to Go Through Probate?

Probate is a court-supervised process intended to ensure the validity of a lasts will and to protect the distribution of assets after a person has died. If there is no last will, probate still takes place, according to the article “Probate—Courts protecting you after death” from Pauls Valley Democrat.

Every estate that owns property must be probated, unless the title or ownership of the property has been transferred before the person died by gift, if the property is owned jointly with another person, or if it passes by direct beneficiary designation. If a person died without a last will, probate still takes place, but the guidelines used are those of the state law where the person died.

In all cases, it’s better to have a last will and to decide for yourself how you want your assets distributed. For all you know, your state law may give everything you own to an estranged third cousin and her children, who are perfect strangers to you.

If you don’t have a last will, which is referred to as dying “intestate,” the court decides who is going to serve as your administrator. This person will be in charge of distributing all of your worldly goods and taking care of the business part of settling your estate, like paying taxes, selling your home, etc. Without a last will, the court picks a person, and it might not be the person you would have wanted.

Here are the basic steps in probating an estate, once the probate petition is filed:

Initial hearing. This is where the court affirms its jurisdiction and identifies all known heirs, and the personal representative is identified.

Letters Testamentary. This document is issued to the personal representative. This is a judge signed document proving to others, like banks and investment custodians, that the personal representative is legally permitted to handle your property and act on behalf of your estate. It’s similar to a Power of Attorney.

Probate. This court process collects, identifies, and accounts for all assets of a decedent. The representative must be mindful to document any money going in and out of the estate during the administrative process.

Written notice must be given to all and any known heirs. This can lead to relatives and others believing they have a claim on your estate and to then challenge the provisions of your last will with the court.

Notice is also provided to creditors, who have at least 60 days after notice is provided to make a claim on the estate. This timeframe varies by jurisdiction. In some jurisdictions, these notices are published in local newspapers, once a week for two or more consecutive weeks. Once they receive fair notice, general creditors who fail to file a claim lose their right to ever file a claim on the estate.

An estate plan is created with an eye to minimizing taxes, maximizing privacy for the family and heirs, and transferring ownership of assets with as little red tape as possible. Failing to properly plan can lead to a probate taking months, and in some cases, years.

Reference: Pauls Valley Democrat (July 1, 2021) “Probate—Courts protecting you after death”

How Do I Give My Car to My Heirs?

Despite the affection some car owners lavish on their vehicles, as far as the law is concerned, a car is simply personal property, as explained in a recent nj.com article that asks, “What is the best way to pass a car to your heirs when you die?”.

You can transfer the car to an heir, by mentioning it specifically in your will, or just using the phrase “personal property.” If it’s a collectable car, however, there will need to be a specific reference.

Typically, the executor of the estate (if there’s a will) or the administrator (if there’s no will) would either:

• Execute the bill of sale and the old title to sell the car to a third party; or
• Execute the old title to transfer the car to the person who inherits it in the will.

The executor should have an original document provided by the probate court that shows the executor's authority to act on behalf of the estate. This is called Letters Testamentary. If there is an administrator, Letters of Administration will also be required and should be given to the new owner.

 However, if the car is owned by both a husband and wife or by civil partners, the transfer can be made in New Jersey, for example, by sending a copy of the death certificate, the old title, and an affidavit supplied by the Motor Vehicle Commission confirming the status of ownership and the co-owner's death without the need for Letters Testamentary or Letters of Administration.

If the estate is small, under $50,000 in the case of the car passing to a spouse/civil partner or under $20,000 where the car passes to another heir, the documents required by the New Jersey Motor Vehicle Commission will include an Affidavit of the Spouse or Next of Kin, as filed with the probate court rather than Letters Testamentary or Letters of Administration, in addition to the old title.

To complete the transfer, the transferee will also need the odometer reading on the vehicle, the transferee's driver's license, her insurance information and payment of the fee charged by the Motor Vehicle Commission.

Because it’s so easy to transfer a motor vehicle, there’s no reason to put a vehicle in a trust prior to death. That’s only going to possibly increase insurance rates. Likewise, transferring the vehicle to a different owner prior to death, again could increase insurance rates.

However, there are several things that could cause a delay in the transfer of the vehicle's ownership. For instance, there could be a lien on the vehicle for an auto loan that would have to be paid before the car could be transferred. There also could be inheritance or estate taxes or other creditor claims that would need to be addressed, before a distribution can be made.

Other reasons your heirs could run into delays:

• If the old title can’t be found, someone will have to obtain a duplicate title
• Family members might fight about who should get the vehicle, unless that has been discussed and resolved in advance.
• If your executor is having trouble performing their tasks, because of grief or other reasons.

Talk with your estate planning attorney about this particular asset, especially if it has a great deal of sentimental value to the family. If there’s an issue with the title, take care of that in advance. Talk with your family members about the car, to preclude any disputes.

Reference: nj.com (November 13, 2018) “What is the best way to pass a car to your heirs when you die?”