Tuesday, May 02, 2006

Probate Myths Debunked

Category: Probate and Estate Administration

I am really not quite sure why "probate" has gained a reputation as a such a bad word in estate planning. This article from the Florida Bradenton Herald - There are two major advantages of living trusts - is a prime example of bad information about probate being promulgated as fact:

"Also, except for very small estates, probate court proceedings are usually required when a person dies without a will, thus delaying distribution six to 18 months, and often longer.

Another reason to avoid probate court proceedings is state law determines the attorney and administrator fees, ranging from 6 to 22 percent of estate assets. However, these fees are negotiable so don't hesitate to negotiate if you are an estate heir."
These statements are just plain not true, particularly in New Jersey, and I suspect in other states.

First - Probate is the start of the estate administration process. In New Jersey, it generally involves (1) offering the Will to the Surrogate, (2) offering identification to the Surrogate that (a) you are the person named executor, or (b) that if there was no Will, you are the person who has the right to administer the estate under state law (first the surviving spouse, and then the adult children). That's it. The Surrogate then issues you Letters Testamentary (in the case of a Will ) or Letters of Administration (if there is no Will) and off you go empowered to administer the estate. This can all be accomplished in a 1-2 hour meeting at the Surrogates office - it does not take months, or even days.

What does take many months (or even years) is the Estate Administration Process. This is separate from Probate, and needs to be gone through whether you die with a Will, with no Will, or with a Revocable or Living Trust. The Estate Administration Process involves (1) gathering all the assets of the estate, (2) paying any liabilities of the estate, (3) calculating and paying taxes, (4) waiting for the tax calculations to be accepted by the authorities, and (5) finally making a distribution of the assets of the estate.

Second - In New Jersey, it is ILLEGAL for an attorney to charge a legal fee on the basis of a percentage of the estate. The legal fee must be reasonable to the work involved. Even in states where there is a statutory percentage fee, it is true that the executor or administration (not the heirs) can enter into a different percentage with your attorney. However, I don't know of any statutory fee of 22% of the estate, since this is higher than most states estate tax rate.

Monday, May 01, 2006

Supreme Court Says...Anna Nicole Smith gets another Shot at Hubby's Estate

Category: Probate and Estate Administration

I have previously written about the probate issues being raised by the unlikely source of the notorious Anna Nicole Smith, which the White House backed at the Supreme Court level (see Marshall v. Marshall - Or, Anna Nicole Smith Goes to Washington for the legal issues at bar) Today, a unanimous Court finds in favor of the blonde.

From Yahoo News: Supreme Court Backs Ex-Playmate's Effort:

"The Supreme Court ruled Monday that one-time stripper and Playboy Playmate Anna Nicole Smith could pursue part of her late husband's oil fortune.

Justices gave new legal impetus to Smith's bid to collect millions of dollars from the estate of J. Howard Marshall II. Her late husband's estate has been estimated at as much as $1.6 billion.

Smith has been embroiled in a long running cross-country court fight with Marshall's youngest son, E. Pierce Marshall. The court's decision, which was unanimous, means that it will not end anytime soon.

Justice Ruth Bader Ginsburg, writing for the court, said Smith should have a fresh chance to pursue claims in federal court. "

"At issue in the legal battle was competing court jurisdiction. A Texas court held a five-month trial before deciding that Smith was entitled to nothing from Marshall's estate. Smith brought a separate claim in federal court in California."

Justices said Monday that the 9th U.S. Circuit Court of Appeals was wrong in ruling that federal courts could not handle Smith's case. "