A Probate Attorney Weighs In: What Happens to Investment Accounts During Probate?

When a person dies, their estate is usually left without administration. When the probate attorney takes over the administration of the estate, then the estate is said to be in probate. The administration involves organizing the estate, paying taxes, and clearing any debts the deceased had. In case of a will, the named will take charge of the estates.

First of all, whether an account goes to probate or not depends on two things. That is whether there has been a Transfer on Death designation or there are no beneficiaries listed. If there is no Transfer on Death designated or there is an issue with the beneficiary in the will, the account will be in probate. But, on the other hand, if the designated beneficiary has been named, the person takes full authority of the account, and everything else will be distributed according to the will. So, it is easier to name the beneficiaries to make the transfer on death easier and inexpensive to them.

If the beneficiary is not ready or cannot manage the investment account, you can place the account in a trust. You can also hire a professional to manage the account for them.

How Does the Probate Process Work?

Probate can work differently depending on the case at hand. This is because different people leave different instructions for distributing their wealth. This process becomes even more difficult if there are disputes of the estate left. The conflicts may be between the beneficiaries, the creditors, and the executor.

The process an executor takes follows these steps:

• The executor gathers all the information required on the estate. This information may include the size of the estate and any debts connected to it.
• Then they apply for permission to take control of the assets and distribute the inheritance according to the deceased’s wishes.
• Then any inheritance tax on the property is paid together with any taxes due.
• The grand on probate applied in step two is then issued to the executor to continue the process duly.
• If any debt is left by the deceases, they are paid off first.
• Finally, the remaining estate is distributed to the beneficiaries according to the deceased wishes.

This can be a straightforward process if all things are in order. However, it can take up to a year to be finalized. The process also depends on the size of the estate and whether there are any difficulties with dealing with it. One major complication may come from misunderstandings between the executor, beneficiaries, creditors, and the taxman. The longer the disputes take, the longer the probate.

How Much Does Probate Cost?

Probate usually takes a certain amount of time since it involves proving the worthiness of a will or resolving any challenges to it. When in probate, you deal with probate attorneys. The assets are frozen during the probate process until the courts decide. Therefore, considering the probate process takes up to an average of a year to be entirely done with, it can take a total cost of 3% to 7% of the entire value of the property. Of course, this all depends on the length of the probate and what your probate lawyer charges.

Who Can Apply for Probate?

Only an executor can apply for probate. AN executor is usually named in the deceased’s will to undertake this exercise. If you are the executor, you can contact a law firm such as Sean M. Tank to apply probate on your behalf if you do not want to participate in the administration. If your loved one dies without a will, the intestacy rules apply, and someone will be chosen to apply for probate. The state of dying without a will is called intestate.

Can One Change a Will?

Yes, you can change a will someone has left behind, but only to the portion that has been allocated to you. You will, however, be required to apply for a deed of variation to take this task on. However, there is a difference between changing and challenging a will. You can challenge a will in different circumstances. For example, if you deem the will has been forged. Forgery of wills is also possible, especially if you feel the distribution does not reflect the deceased’s intentions.

Another instance is whether the deceased was mentally okay when writing the will. This is a significant factor and is usually taken seriously. If the deceased was also under the influence when writing the document, you could challenge it in the court of law. Also, if you depended on the deceased financially and nothing has been left under your name, you could challenge it under the law as it is cluttered in the Inheritance act. Therefore, challenging and changing a will is not impossible if you have a valid reason and enough evidence to pursue it.

Rights of the Beneficiaries During Probate

The beneficiaries should always be well informed throughout the probate process. Any information should not be withheld from them. They can sue the executor if they feel their rights have been breached. They can also sue the executor in case they mismanage the estate.

The beneficiaries also have the right to know of any accounting on the estate and its value without error. They are usually in the will, and if a will is not left behind, they are chosen according to intestacy rules. You are also allowed only to view the will when the grant of probate is issued. However, most executors show the beneficiaries the documents when requested.

When to Get Help From a Probate Attorney

Lack of a well-written will could lead to losing part of your estate to the state, leaving very little to your beneficiaries. It’s important to appoint someone to take care of your estate and handle the probate process to make sure you do not lose your assets to the state. By making these plans in advance, you can be rest assured that your beneficiaries will receive the assets as you intended and be well taken care of after you’re gone. Making these plans for your loved ones could be one of the best gifts you can give them, and you’ll have peace of mind as well.

What Your Probate Lawyer Can Do to Help the Search for Assets

There are things your probate lawyer can do for you to uncover assets. There are laws to protect against the wrong person accessing the money. Your probate attorney can contact the places where the money is at and provide the power of attorney documentation. Here are some of the things they can help with finding the unclaimed money.

There are times when complications come up. When those moments happen, your lawyer can help you gain access. Other times, steps need to happen for your assets to release. That may very well take an attorney who specializes in this area. Your probate lawyer can handle that for you.

They have access to the information of where to look as well. Sites that offer this help often lack many of the places that your probate attorney knows about. The attorney can help you locate the most secretive places that your loved one had their assets at. Which gives you more money in your pocket while waiting for probate to end.

How Power of Attorney and Your Probate Attorney Work

The unclaimed money locations are available for everyone to find. To get the money, though, you need to follow a specific procedure and provide the right documentation. If you’re asking yourself how your probate attorney can help, you aren’t alone. They can then give the person who is the power of attorney the assets.

While you can search for yourself, your probate attorney knows all the pitfalls that sometimes come up. Oftentimes, your lawyer is already on retainer, which allows you to access their services for this as well. Let your probate lawyer help you access the money you need while your money is in probate.

How Do Unclaimed Assets Happen in the First Place?

Most of these assets come from bank accounts and other things that the deceased forgot about. Oftentimes, a small amount of money can end up left in a balance of an account. That balance then gains in size through investments that they simply weren’t aware of. The same thing can be true for you as well. You may very well have assets somewhere, growing over time.

Other times, it can come from insurance policies that exist from your deceased loved one. If they forgot about the policy with a company, the value of these policies can be large. When it remains unclaimed over time, those assets get declared as unclaimed. The location of the assets tries to contact the beneficiaries or next of kin, but mailing addresses can cause issues with their efforts.

If you have the right to those assets, you can provide proof of that, and receive those things. These can help you pay bills during the probate time period. It’s immediately yours, and you won’t need to go through probate to receive the assets.

Where Can You Look for These Assets?

There are sites online that link to those unclaimed assets. The state treasury has a list of them as well. If you want a deep search, though, you really do need a lawyer who specializes in finding these. Your probate attorney can handle that for you.

The U.S. Treasury holds savings bonds that go unclaimed as well. Like the other locations, unclaimed assets have a specific time period for people to claim. They also reach out to the address on file. If there is no response, it becomes unclaimed. With proper documentation for the beneficiary or the original owner of the bonds, you can access them.

Failed banks and credit unions must hold assets for a certain period of time. After that, they go to the Federal Deposit Insurance Corp.’s site. You can search this location as well. This along with several locations all hold assets when the original owner fails to show.

In fact, most financial institutions have clauses in their membership agreements that cover this exact thing. Even pensions have a specific protocol for distribution to the recipients or beneficiaries. The same thing applies to 401(k) plans. It’s fairly simple to check and see if former employers had a pension on file for the deceased as well.

In some cases, life insurance policies might not be things you are aware of in the will. A loved one might not have a will at all. That’s one of the conditions that a probate lawyer can help with. If you are wondering if there is a life insurance policy set to pay you when your loved one died, you can search for those as well.

Federal Tax Refunds are often overlooked as well. When you have power of attorney, you can put their social security into the IRS website to search for unclaimed refunds. Depending on the time of year that your loved one died, this can be easily forgotten. It’s worth asking your probate attorney about it if you are unsure about your position in that search.

Should You Use a Finder Site?

If you’re wondering about using a finder site, you’re not alone. Many people use them. The big thing is to avoid those sites that charge to find it. There are sites that take a portion of the finding too. Both of those are fraudulent. Don’t do it. You never need to pay money to search.

If you have a probate attorney handling the estate of your deceased loved one, use their help. It’s detailed and offers a great way to find the money you need while going through the probate process. It can be the difference between having money to pay for your loved one’s funeral expenses and needing to have them cremated.

Your probate attorney can help you in finding unclaimed money during probate. They have information about the process when things get messy legally. The places to find unclaimed money are well-known by them, too. They have extensive experience in this field. When you require them to handle accessing the money you’re entitled to, you might as well ask for their help in this process as well.

According to research, there are around 1,127,181 disabled adult children in the U.S. If your child is among these children, you may want to request a probate lawyer to help you set up a special needs trust. Such a trust will help you ensure that your child continues to get financial support even in your absence. Below are more details on this type of trust.

What Are Disability Trusts for Special Needs Adult Children?

A disability trust for a special needs adult child is usually a type of legal arrangement that can help you ensure that your disabled child receives the financial support they need even after you die. When you set up this kind of trust, you will not have to worry about reducing your disabled child’s eligibility for the disability benefits offered by public assistance programs.

It is important to set up this trust for your disabled child, especially if they receive the support offered by the government to individuals with disabilities. For instance, setting up this trust should be a priority if your child receives supplemental security income, Medicare, or Medicaid. Setting up the trust will help you pass assets to your child without necessarily raising their income which could trigger loss of eligibility for the financial aid offered by the government.

Who Can Use Disability Trusts?

You should set up a special needs trust for your child if they fall in any of these categories.

• The child is terminally ill.
• The child has a mental health condition.
• The child is suffering from a chronic health condition.
• The child is battling alcohol or drug addiction.
• The child is generally not self-sufficient.
• The child is a chronic gambler.

How Disability Trusts Work

You should choose a trustee when you decide to set up a special needs trust for your disabled child. This trustee will have complete control over the disability trust. The trustee will oversee the disbursement of funds placed into this trust and its overall management. The party will also ensure that the funds and assets held in the trust do not pay for shelter and food expenses.

If the disabled child has assets and the assets are placed into the disability trust, these assets will be subjected to the repayment rules of Medicaid. However, if all the assets placed into the trust belong to the child’s parents or any other third party, the assets will not be subject to any repayment rules.

How the Money You Set Aside in a Special Needs Trust Will Be Used

Giving your disabled child funds will increase their income, triggering loss of eligibility for disability benefits. That is why money put in special needs trusts is not given to disabled people directly. Instead, it is used to cater to the expenses not catered for by Medicaid, Medicare, and supplemental security income. Some of the expenses that will be paid using the special needs trust income include:

• Dental and some other medical expenses
• Recreation and entertainment services
• Payments for personal care attendants
• Cars
• Traveling costs
• Education
• Home furnishings
• Rehabilitation Services

You can request your trustee to give your child funds directly if need be. In such a case, the trustee should ensure that the funds given to the beneficiary are not much since they will still be counted as income.

The Benefits of Disability Trusts

Setting up a disability trust for your disabled child will benefit you and the child. For instance, when you set up this trust, you will get some reassurance that your assets and money will be used to help your disabled child even after you die.

Setting up a disability trust for your disabled loved one will also help reduce the potential for financial mismanagement or abuse. For instance, think about a situation whereby your adult child is addicted to drugs or gambling. If such a child gets a cash inheritance, they are likely to use this money to feed their addictions. However, if you set up a special needs trust for this child, the chosen trustee will ensure that this child’s inheritance is only used for the intended purposes. That will reduce the chances of financial mismanagement or abuse.

According to law, money and assets put in special needs trusts can never be seized by lawsuit winners and creditors since these trusts are usually irrevocable. Therefore, when you set a special needs trust for your disabled child, this child’s inheritance will not be available for judgment and creditors. However, if your child’s inheritance is not put in a special needs trust, the inheritance may be seized by creditors, or people can use it for legal judgments.

How to Set Up a Disability Trust and Why You Need a Probate Lawyer When Setting It Up

Setting up a special needs trust is not complex. To begin the process, you need to set money and assets aside that you will use to fund the trust. If possible, set aside around $100,000 since this trust’s maintenance and setup fees are usually high. The amount of money you will set aside for this trust will depend on how disabled your child is and the amount of care this adult needs. Consult your financial team if you experience any difficulties while deciding the amount of money to set aside for the trust.

After settling on your funding level, look for a probate lawyer. The chosen probate lawyer will help you set up a trust that favors the specific needs of your disabled child. After setting up the special needs trust, choose a trustee.

You should be careful when choosing the trustee since this person will be the trust administrator. They will be the one to authorize the dispersion of money and assets from the trust. That is why you need to ensure that you choose a person who will have the best interests of your disabled child at heart. Your lawyer can help you make the best choice. The trustee can decide to work with your financial advisor.

If you want to improve your disabled child’s quality of life, set up a disability trust for this child. Setting up this trust will help you offer financial support to your child while still preserving this child’s eligibility for special needs benefits. You should, however, ensure that the trust’s administrator is a person who will look out for the best interests of your child.

In community property states, the division of marital property is fairly cut and dried. If a couple divorces, all assets gained during the marriage are split 50/50 regardless of who purchased them or earned the lion’s share of the income. Anything you owned or owed before you were married belongs to you unless you stipulate otherwise, as a probate attorney can tell you.

One gray area that comes into play is the question of inheritance. If you receive a bequest during your marriage, is this considered a marital asset or does the windfall remain with the heir as separate, individual property?

What Is Community Property?

Community property is a defined as any assets obtained during a marriage. Property, income, and even debts incurred prior to marriage are considered individual assets and obligations that are separate from marital property and debts. That means anything you had before your marriage is still yours if the marriage dissolves. Your spouse is not legally responsible for debts incurred before the nuptials took place, and you are not responsible for theirs.

Any of this can be changed when you’re working with a probate attorney to write your will and through prenups or post-nuptial agreements. The only thing that matters in a legal setting is that:

• The decision is agreed upon by both parties,
• it’s entered into in good faith, and
• the choice was made of your own free will and not under duress.

Most courts will abide by the terms of the prenup/postnup even if the couple lives in a community property state.

Community Property States Versus Common Law

The majority of states are not community property states. Under common law, division of assets is performed through sometimes lengthy and fraught negotiations. Community property laws are determined at state level. They seek to simplify divorce by splitting all marital assets down the middle.

The one caveat regarding community property is that the law is not absolute. It only applies to income earned and assets obtained while the couple was living in a community property state.

This has led to quite a bit of legally maneuvering for couples with homes, businesses, and assets in multiple jurisdictions. However, the state of residence is generally determined by where you pay income tax, vote, and/or are licensed to drive, among other factors.

Do You Live in a Community Property State?

As of 2021, there are nine true community property states in the United States. Nevada is one of them. That means if your legal residence during your marriage is in one of these states, any assets are divided in half during a divorce.

These states differ from common law states, which define marital property as anything jointly owned. Any other assets go to the person whose name is on the title, deed, or account and anything purchased by the individual with their own money. This can only be challenged or changed during divorce negotiations or unless a judge determines otherwise.

Although not on the list of community property states, South Dakota, Alaska, and Tennessee have a conditional opt-in arrangement that allows a 50/50 split if both partners can agree to such a division. Nevada is one of three states where community property laws extend to registered domestic partners as well as those who are legally married. The others are California and Washington.

If you’re a legal resident of Nevada, it’s even more essential that you talk to an estate planning lawyer in Las Vegas about your options.

The Difference Between Marital Assets and an Inheritance

Inheritances are one asset that is excluded from community property laws. However, using any part of the inheritance to purchase, upgrade, or maintain a marital asset can put your bequest in jeopardy. The same applies if you use money from jointly held marital funds to maintain an inheritance.

For example, if your father leaves you his home and you use money from an account containing joint assets to make repairs or otherwise improve or maintain it, it can be argued that the home is now a martial asset in some cases. If you sell the property and put the money into a marital asset, such as buying a home with your spouse, purchasing a painting together, or event just putting it into your bank account, you’ll lose the right to claim it as separate property.

In legal parlance, this is known as “commingling.”

The account doesn’t need to be a joint account, either. If it holds funds or income acquired during your marriage, it’s used to pay bills, or your spouse benefits from the money in any way, it’s community property.

However, even in community property states, courts will subtract the portion of a jointly held marital asset that’s purchased with individual or pre-marital funds and divide only the portion that’s considered marital property. Assets purchased with income earned in a community property state are considered community property regardless of their location.

As you can see, it can become very confusing. The good news is that there are steps you can take to preserve your inheritance.

When You Need to Take Steps With a Probate Attorney to Protect Your Inheritance

Although inheritances are excluded by law from marital assets, it’s still important to take steps to protect your personal assets when it comes to property division.

1. Open a new bank account to deposit any cash you inherit, and only use funds from that account to maintain or improve property and other inherited assets
2. If you sell or earn income from an inheritance, place those funds into the separate, dedicated account
3. Don’t use funds from an inheritance to purchase, upgrade, maintain, or fund joint marital ventures or pay expenses
4. Establish a trust to protect your inheritance. There are various types of trust that will provide tax benefits in addition to protecting your personal property.

You should also detail in your will how you’d like inherited assets to be dispersed. A probate court will automatically assume that all property and assets are jointly owned community property. If you want to make sure a child from a previous marriage gets grandpa’s house or your favorite gallery gets the sculpture Aunt Bee left to you, spell it out in your will. To protect your assets, you may want to talk to an experienced probate attorney in Las Vegas about estate planning strategies according to your unique circumstances.

Deciding who gets what in the case of death or divorce is never easy. Although an inheritance is protected by community property laws, things can become messy and contentious when emotions run hot.