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Probate & Estate Administration During COVID-19

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Probate Challenges and Estate Administration Roadblocks During COVID-19 Corona virus Pandemic

Many of our clients are in the midst of settling the estate of a deceased loved one or have just had a loved one pass away and are wondering what comes next. An event such as this has both personal and legal consequences. Below are observations on issues that may immediately present themselves.

Immediate steps may be limited by circumstance. If someone has just died and the cause of death is unknown, public health officials may limit the immediate steps one would usually take until the cause of death is determined and no known COVID-19 risk exists. Depending on circumstances, there may be some delay in physically getting access to the premises, securing them and searching for a will and other documents if they are not in possession of the family or the decedent’s attorney. It is always wiser to have one’s original estate planning documents safely secured off the premises and make sure a trusted individual has access to the storage place.

Once access is permitted, secure the premises if they become unoccupied. Subject to the necessary steps to ensure everyone’s safety (which may include disinfecting) the nominated personal representative may take steps, such as changing locks, necessary to secure the physical contents and financial documents which may remain in the home. These steps can be taken before one’s official appointment. If additional or condominium fees must be paid to allow enough time for an orderly inspection, appraisal, or the like, this can be treated as an expense of the estate.

The legal process of estate administration can begin and continue. While the probate courts of the states in which we conduct estate administrations have limited or closed off physical access to the public, emergency hearings (conducted telephonically) continue and many routine documents can be e-filed. Routine non-contested wills can still be allowed; while reduced staffing at courts may stretch the time frames somewhat, these processes, at least for the present, continue as before. Where that time frame may cause harm to a beneficiary or in some cases, the assets, if the court deems such circumstances an emergency, a hearing to rush the appointment of a temporary fiduciary, called a “executor” or “special personal representative,” can be requested.

Most financial activities can be conducted. With overnight shipping, and technologies such as scanning, secure e-mail, electronic funds transfers, and electronic document signatures, most financial transactions can be conducted virtually once the identities of the parties are established in a fashion compliant with the financial institution’s practices. Thus assets can be transferred to estate or trust accounts, sold and reinvested if desired in order to properly pay estate expenses and distribute funds to beneficiaries. Notarizations still require physical presence although there is a move afoot to accept signatures performed over a videoconference.

Once appointed, electronic communications are vital. As a fiduciary, personal representatives and trustees must take special care to maintain transparency and good chains of communication with each other and the beneficiaries. In a typical administration, one or more introductory or status meetings may occur between co-fiduciaries and the attorney, some with beneficiaries present. Since these will not occur during this unprecedented time, most communication should be in writing. Email has become the standard, often with multiple co-recipients.

Need to speak to an attorney about issues your confronted with during the Pandemic, call our office 401-274-0300 for a no cost phone consultation.

Probate Process – The Pain After The Passing

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Probate Process and Probate Courts – Dealing With A Deceased Assets

What is the probate process?

Probate is the process by which a deceased person’s property, known as the “estate,” is passed to his or her heirs and legatees (people named in the will). The entire process, supervised by the probate court, usually takes about a year. Although distributions from the estate prior to its closing is possible – it would be done at the risk of the executor so it is often avoided until the claims period has expired and a court has approved the terms of distribution to the heirs and beneficiaries.

What propertprobate process4y is subject to the probate process?

The probate estate includes all property held in the decedent’s name. Certain kinds of property, such as property owned jointly by the deceased and another person, life insurance, and property held in trust, are not part of the probate estate and are not subject to the probate process. For example, jointly owned bank accounts pass automatically to the surviving joint owners upon the death of one of the owners without going through probate. The nonprobate property, however, is part of the decedent’s taxable estate (see below).

How is the probate process started?

First, a petition for probate of the will must be filed with the probate court, along with the original will and a certified copy of the death certificate. Each City and Town in Rhode Island has its own probate court and the petition should be filed with the probate clerk of the city or town the decedent lived in. Notice must be mailed to all of the decedent’s heirs at law (usually the surviving spouse, children, and children of any deceased children), to those named as beneficiaries in the will, the Division of Medicaid Assistance and, if a charity is involved or there are no heirs at law, to the Attorney General. Notice must be also published in a local newspaper. If no one objects by a deadline set by the court, the personal representative or executor named in the will is appointed by the court.

What does the personal representative/executor do?Probate

The personal representative or executor is responsible for collecting the probate property and for paying any debts of the estate. The personal representative or executor must file with the probate court an itemized list, known as an “inventory,” of the probate property, including the value of each item. The personal representative must file an estate tax return within nine months of the date of death. This is true even if no estate tax is owed, if the decedent owned real estate or the personal representative wants his or her final accounting (see below) allowed by the probate court. Creditors of the estate have one year from the date of death to bring claims against the estate. Personal representatives generally wait until this claim period has expired to complete distribution of the estate according to the terms of the will. As his or her final responsibility, the personal representative must file an accounting with the probate court showing the income and expenditures of the estate administration.

The probate process is one that many people wish to avoid because of the time and expense involved. Through the drafting of a proper estate plan, many of the issues and inconveniences can be avoided. Contact our office to discuss the probate process in greater detail and a estate plan that best works for you.

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Estate Executor Not Liable For Unpaid Taxes

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Executor Faced With A Tax Bill Without Any Funds To Pay It

NEWS FLASH:  Executor of an estate was subject to federal estate tax, but didn’t have enough assets to pay the tax. (Many of the estate assets were not probate property, such as joint accounts owned with persons other than the decedent’s spouse.) The estate tax return (Form 706 was filed, but the estate tax wasn’t paid.

To satisfy the estate tax, the executor obtained a restraining order over jointly-owned accounts and sought contributiestate-taxons from estate beneficiaries. Eventually, contributions from two beneficiaries and funds from the joint accounts were received and then used to pay federal and state estate taxes and an amount distributable to a beneficiary.

The IRS issued a notice of fiduciary liability to the executor, saying he was liable under IRC Sec. 6901 for the amounts distributed to the state and the beneficiary. The Tax Court disagreed, determining that because the estate wasn’t insolvent at the time of the distributions, the executor wasn’t personally liable for the federal tax deficiency. Scott Singer, TC Memo 2016-48 (Tax Ct.).

Concerned about the impact of taxes on your estate plan? Contact out office to discuss your options!