Table of Contents
Probate
Probate can be a simple or complex topic, depending on the circumstances. When a loved one passes, and property remains in their estate, many times a probate case (lawsuit) will be started. A probate case helps legally divide property, and to give that property to heirs, friends, and creditors.
1. What happens?
Typically, someone files a motion with the court, seeking permission to distribute the estate property. Then, a judge makes court orders about how to open, administer, and close out the estate.
Usually Probate cases have the following phases:
- Filing a Petition: Someone, usually the executor named in the deceased person’s will or an interested party, files a petition with the probate court to open the probate process.
- Notification: The court notifies heirs, beneficiaries, and creditors that the probate process has begun.
- Inventory of Assets: The executor compiles an inventory of the deceased person’s assets, including real estate, bank accounts, investments, personal property, and any other assets they owned.
- Appraisal of Assets: The value of the deceased person’s assets is determined through appraisal or other valuation methods.
- Payment of Debts and Taxes: The executor uses the deceased person’s assets to pay off outstanding debts, including funeral expenses, taxes, and creditors’ claims.
- Distribution of Assets: Once debts and taxes are settled, the remaining assets are distributed to the heirs or beneficiaries according to the deceased person’s will or state intestacy laws if there is no will.
- Closing the Estate: After all debts are paid, assets are distributed, and the court approves the final accounting, the probate court issues an order closing the estate.
2. How long does it take?
Probate can take from a few months, for a simple estate, to several years, for more contested cases.
3. How do I avoid probate?
Avoiding probate with insurance, annuities, and trusts involves careful estate planning strategies. Here’s how each of these tools can help:
Insurance Policies: Life insurance policies generally pass outside of probate if they have designated beneficiaries.
To avoid probate: Ensure the policy has named beneficiaries, such as a spouse, children, or a trust.
Keep the policy up to date with current beneficiaries.
Consider setting up a life insurance trust (ILIT) where the trust is the beneficiary, providing additional control over the proceeds and potential estate tax benefits.
Annuities: Like life insurance, annuities can pass outside of probate if they have designated beneficiaries.
To avoid probate: Name beneficiaries on the annuity contract.
Keep the beneficiary designations updated. Consider using a trust as the beneficiary for added control over the distribution of annuity proceeds.
Trusts: Trusts are powerful tools for avoiding probate because assets held in trust are not subject to probate proceedings.
To avoid probate with trusts: Transfer assets into the trust during your lifetime.
Designate the trust as the beneficiary of life insurance policies, annuities, and other assets.
Ensure the trust is properly funded and administered according to its terms.
Consider using a revocable living trust to maintain control over assets during your lifetime while avoiding probate at death.
By utilizing these tools and strategies, you can effectively avoid probate and ensure that your assets are distributed according to your wishes in a timely and efficient manner. It’s essential to consult with an estate planning attorney or financial advisor to create an estate plan tailored to your specific needs and circumstances.
4. Where do I take the will?
If there is no will, a person can go to court and file documents to distribute the estate property.
Guardianship
Guardianship can be difficult, especially because a possible loved one or dependent is alive, and yet, still incapable of handling their own affairs. So, if a family member is unable to make and communicate responsible decisions regarding his personal care or finances due to a mental, physical or developmental disability, guardianship may be needed.
1. What happens?
Usually guardianship cases have the following phases:
- Filing a Petition: Someone asks the court to appoint a guardian for a person who can’t make decisions for themselves.
- Medical Evaluation: The court checks if the person really needs a guardian by getting a doctor’s opinion.
- Notice and Hearing: The court tells everyone involved about the case and holds a meeting where evidence is presented.
- Appointing a Guardian: If the court agrees, they pick someone responsible to make decisions for the person who needs help.
- Guardianship Order: The court decides what decisions the guardian can make and what they can’t.
- Monitoring: The guardian reports to the court regularly about what they’re doing. The court keeps an eye on things to make sure the guardian is doing their job right.
- Changes: The guardianship might end or change if things get better for the person, if the guardian can’t do their job anymore, or if other important things happen.
In short, guardianship court cases are about getting help for people who can’t take care of themselves, making sure someone trustworthy is in charge of their affairs, and keeping an eye on things to make sure it’s all done properly.
2. How long does it take?
Guardianship can take from a few months, for a simple estate, to several years, for more contested cases.
3. Which type of guardianships exist?
Two basic types of guardianship are “person guardianship” and “estate guardianship”. A “guardian of the person” is appointed by the court when a disabled individual cannot make or communicate responsible decisions regarding his personal care. This guardian will make decisions about medical treatment, residential placement, social services and other needs. The court appoints a “guardian of the estate” when a disabled person is unable to make or communicate responsible decisions regarding the management of his estate or finances. The guardian will, subject to court supervision, make decisions about the ward’s funds and the safeguarding of the ward’s income or other assets. Depending on the decision-making capacity of the disabled person, the court can appoint a limited guardian who is granted the power to make only those decisions about personal care and/or personal finances that the court specifies. The court can also appoint a plenary guardian who generally has the power to make all decisions about personal care and/or finances for the disabled person. A temporary guardian may be appointed by the court for the period between the filing of a petition for guardianship and the conclusion of the court hearing where the need for guardianship is decided. Temporary guardianship, which lasts no longer than 60 days, is a means to ensure that an alleged disabled person receives immediate protection. It is intended only as a short term remedy and is utilized only where a demonstrated harm or emergency exists.
4. How can insurance, annuities, trusts help in guardianship cases?
Insurance, annuities, and trusts can play significant roles in guardianship court cases by providing financial support, stability, and protection for the ward (the individual under guardianship) and their assets. Here’s how each of these tools can help:
Insurance:
Life Insurance: Life insurance can be used to provide financial security for the ward in the event of the guardian’s death. If the guardian is the primary caregiver and provider for the ward, life insurance proceeds can ensure that there are funds available to support the ward’s ongoing needs, such as housing, healthcare, and education.
- Long-Term Care Insurance: If the ward requires long-term care due to age, disability, or illness, long-term care insurance can help cover the costs of care, including nursing home care, assisted living facilities, or in-home care services.
- Disability Insurance: Disability insurance can provide income replacement for the guardian if they become unable to work due to illness or injury, ensuring that they can continue to support themselves and the ward financially.
Annuities:
- Guaranteed Income: Annuities can provide a source of guaranteed income for the ward, ensuring that they have funds available to cover their living expenses and other needs over time. Annuities with specific payout options, such as lifetime income or certain period payments, can be structured to meet the ward’s unique financial requirements.
- Medicaid Planning: Certain types of annuities, such as Medicaid-compliant annuities, can be used as part of Medicaid planning strategies to help the ward qualify for Medicaid benefits while protecting assets for the guardian or other beneficiaries.
Trusts:
- Asset Protection: Trusts can be established to protect the ward’s assets from creditors, lawsuits, or other risks. By placing assets in a trust, the guardian can ensure that they are managed and distributed according to the ward’s best interests and protected from potential threats to their financial security.
- Special Needs Trusts: If the ward has special needs or disabilities, a special needs trust can be created to supplement government benefits without jeopardizing eligibility. The trust can provide for the ward’s supplemental needs, such as medical expenses, therapy, education, and recreation, while preserving eligibility for means-tested benefits like Medicaid and Supplemental Security Income (SSI).
- Management of Assets: A trust can appoint a trustee to manage the ward’s assets and make financial decisions on their behalf, ensuring that the assets are used wisely and in the ward’s best interests. This can be particularly helpful if the guardian is unable or unwilling to fulfill this role effectively.
In guardianship court cases, insurance, annuities, and trusts can provide essential financial support, protection, and management for the ward and their assets, helping to ensure their well-being and financial security under the guardianship arrangement. It’s essential to consult with legal and financial professionals experienced in guardianship law and estate planning to determine the most appropriate strategies for the ward’s unique circumstances.