(301) 606-5905 tbarkley@barkleylaw.com Home Areas of Emphasis Brochures Client Documents Knowledgebase About Us Contact Us PROBATE AVOIDED By Tim Barkley. October 2021. We all sat down, appropriately distanced at opposite ends of the conference table. They began: “Our folks both died earlier this year, and we’re trying to sort things out. We really don’t know where to start.” “Sorry to hear,” responded the attorney. “May they rest in peace. Losing your parents is a tragedy, especially losing both so closely together. I hadn’t seen them in years, but I do remember them.” “Thanks. It was time, but yeah, we miss them. They told us that if something happened to them, we should ‘talk to Tim,’ so here we are … so … where do we go from here? Do we have to do ‘probate’? What is ‘probate,’ anyway?” “Well … not to be blunt, but probate is the legal way to move deceased people’s stuff to their loved ones, and on the way pay the creditors and make sure everything settles orderly. If there was anything just in your parents’ names, with no living owner – no joint owner or beneficiary – after the second of them passed away, probate is the way we get that stuff to you.” “They had wills. Doesn’t that avoid probate?” “I see here in the file that we drew those up. No, wills don’t avoid probate; wills control probate. I hear that question all the time, but it’s a myth. People think that they can just take the will to the bank and the bank president will read the will and give them the money, but that’s just the stuff of old movies. Nowadays, the bank is worried about being sued – what if the will isn’t genuine, or isn’t the latest will? What if there are unpaid creditors? What if the brother you thought was dead – or you wanted the bank to think was dead – was really alive and well, and wanted his half of the bank account? “So banks, and brokers, and title companies, and everyone else with money just in your parents’ names without a living joint owner or beneficiary, send you to the Register of Wills for a ‘letter of administration’ to prove that the Register has examined the will and it’s genuine; and that you are the named ‘personal representative’ or ‘PR’ of the estate of the second of your parents to die. The PR is the person who represents the estate, and to whom creditors and beneficiaries look for their rights to be upheld.” “So … did your parents have anything that doesn’t have a living owner?” “I brought bank statements. They have our parents’ names, and one says ‘ATF’ and the other says ‘POD.’ What does that mean?” “That means that your parents named you as beneficiaries of the bank accounts. You can go to the bank, give them death certificates for your parents, and show them your ID, and they should pay you each your share of the account. They probably will want to send things to their legal department for review, but these aren’t part of probate. They pass directly to you.” They looked at each other and nodded. “Great. We’ll go to the bank. Now, they both had IRA’s, and they told us we were the beneficiaries after they both died. What do we do about that?” “Call the company that held the IRA, or the broker, and tell them your parents are deceased. They’ll send you each a ‘claim form’ to set up your own ‘inherited IRA’ and roll your share of your parents’ IRAs into those new IRA’s. You have to take out all of the money – and pay tax on it – within ten years of the death of the original IRA holder, but you can take it any way you want to – all at once, or over ten years, or whatever, as long as it’s out of the account by the tenth year. “Life insurance works kind of the same way. You call and get a claim form, and they send you a packet. They will usually want to keep your money in a special bank account at the insurance company that will earn much better interest than you’ll get at a bank, or you can ask for a check. It’s up to you. Either way, it’s usually not taxable as income.” “Actually, Mom and Dad just had what they always called ‘burial policies,’ and we signed papers to pay that to the funeral home. We got a little back from Mom’s funeral, but had to pay a little extra for Dad’s, so it just about equaled out.” “Right. That’s called ‘assignment,’ and it usually works really well. What about the cars?” “They weren’t driving anymore, but there was still a car in Dad’s name. We used it sometimes to drive him to appointments, but mostly he just liked to see it in the driveway. Here’s the title. It says ‘TOD.’ What does that mean?” “That means ‘transfer on death,’ he made one of you a beneficiary on the title. You’ll need to go to MVA with a death certificate and see who the beneficiary is. It avoids probate.” “Great. And they always said we were on the deed to their house. Here’s a copy.” The attorney nodded. “We drew that up. It says that they had ‘life estate,’ the right to live in the house until both of them were deceased; and the ‘power of sale,’ the right to sell the house or change the deed. Assuming they didn’t do any of that – and we can check online – then you are ‘remainder’ beneficiaries. The house is yours.” “Is there anything we have to do?” “Nothing is absolutely necessary, but I do suggest that you have me record a ‘confirmatory deed’ so we put on record that your folks are deceased and you own the house. That does three things: it updates the property tax record, so the tax bills show up in your names, not theirs; it lets people know that you are the owners when you go to sell or rent the house; and it takes your parents off the title for homeowner’s insurance purposes.” “We already changed the insurance into our names.” “That’s good, but if you have a loss – a flood or fire or something – some companies will pay insurance proceeds to whoever is on the deed. If your parents are still on the deed, the check would be payable to them, and that would be a hassle. Changing the insurance is good, but you still should record a new deed. You don’t have to, but I usually advise it.” “So … no probate?” “No probate. The law does say that you have to take the original will to the Register of Wills for filing within a ‘reasonable time’ after your parents’ death, but there’s no real definition of how long that is, and unless someone is complaining that they were supposed to get something, you can take the will when it’s convenient. There’s no fee, but you will have to fill out a couple of forms that they’ll prepare, and that’s just filing the will, not ‘probate.’” “So, your parents avoided probate. Let us know what you need us to do to help … new deed, help with paperwork, filing the wills, whatever. But no probate. “Thanks for coming by.” = Attorney Tim Barkley The Tim Barkley Law Offices One Park Avenue P.O. Box 1136 Mount Airy Maryland 21771 (301) 829-3778 Wills & Trusts | Estate Planning | Probates & Estates Elder Law | Real Estate | Business Planning Recently Added THE LAST WORD PROBATE AVOIDED POWERLESS PROBATE AVOIDANCE ON A BUDGET TO TRUST… OR NOT PROBATE: THE GOOD, THE BAD … (DON’T) DO IT YOURSELF! Call Today To Schedule Your Appointment 301-606-5905 Hours Mon – Thurs, 9am – 5pm Please call ahead to confirm availability, thank you! Home Areas of Emphasis Wills & Trusts Estate Planning Probate & Estates Elder Law Real Estate Business Brochures Client Documents Knowledgebase About Us Our Privacy Policy Terms & Conditions Contact Us Recently Added THE LAST WORD November 17, 2021 PROBATE AVOIDED October 20, 2021 POWERLESS September 15, 2021 PROBATE AVOIDANCE ON A BUDGET August 4, 2021 TO TRUST… OR NOT July 8, 2021 PROBATE: THE GOOD, THE BAD … June 2, 2021 (DON’T) DO IT YOURSELF! May 5, 2021 TOO LITTLE, TOO LATE April 7, 2021 UNHAPPY CAMPERS March 3, 2021 Ⓒ Barkley Law Offices 2003-2021. Web Design by Keir Knight