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.These statements are just plain not true, particularly in New Jersey, and I suspect in other states.
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."
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.
posted by Deirdre R. Wheatley-Liss, Esq. @ 8:48 AM
1 comments
1 Comments:
I agree 100% - I also don't quite understand why probate has gained such a negative reputation... I also agree that trusts do have certain advantages, for minimizing or deferring taxes - or, if you live in California, for saving a small fortune on property taxes. Of course probate has some advantages, nationwide, if you're am heir to an estate in probate and need a probate loan or cash advance assignment.
But this is why I just love California - if you're inheriting property in California from your parents, for example, and urgently need cash... yet can't get approved for a probate advance assignment - an irrevocable trust can come in very handy. California is the only state where you can avoid current property tax reassessment, capped at 2% with Prop 13... Plus keep parents property taxes and transfer parents property taxes, inheriting property taxes at super low base rates... have the ability to use Prop 58 property tax transfer, with parent to child transfer or as real estate lawyers usually call it, "parent to child exclusion".
The great thing about inheriting property in California is that you can buy out a sibling's share of an inherited house and at the same time keep contested property from parents, with a trust loan – as covered on Websites like https://cloanc.com/category/prop-58 with articles and interviews that go in-depth into trust loans with Proposition 58 in tow make it possible for beneficiaries to sell shares of inherited property to another sibling - a beneficiary buyout of sibling property shares - or buying out a sibling’s share of an inherited house – or, as realtors refer to it, “the transfer of property between siblings” or “sibling to sibling property transfer” – by lending money to an irrevocable trust – typically from an irrevocable trust loan lender, commonly called trust lenders, specializing in trust loans.
Beneficiaries in every state in America should have the right to buy out siblings share of a house through a trust loan, and should be able to use irrevocable trusts to be able to help co-beneficiaries get cash while avoiding selling their share of inherited property. Allowing heirs who keep an inherited home huge tax breaks on the transfer of property, with the ability to transfer parents property taxes, at the low base rate parents paid, thanks to CA Proposition 13 of course. And my favorite part - so beneficiaries can keep parents property taxes - thereby avoiding property tax reassessment forever. This obviously adds up to tens of thousands of dollars in savings over the years, or far more. No other state allows this, as we all know. I suggest every home owner in every state should be familiar with CA State Board of Equalization, at https://www.boe.ca.gov/ or any objective, informative property tax relief Website or blog, like https://propertytaxtransfertrusts.com or any other site focused on property tax breaks for Californians. Every state should have these property tax benefits! Having these tax breaks is a life saver for many middle class families. It proves that great tax breaks and useful trusts are not just for rich people and upscale CEOs.
Post a Comment
<< Home