Sheri spoke about the drafting and administration
of Pet Trusts to the Silicon Valley Bar Association New Attorney Round Table.
Category Archives: Estate Administration
Estate Administration Video
Leslie Yarnes Sugai and Sheri Sudweeks were recently interviewed for a local real estate television program, Kapowich on Real Estate. In this episode, which is the second of a two part series, they discuss estate administration issues.
Topics covered include:
Discussion of what constitutes an estate administration, trust administration and probate. How long you should expect these processes to take and how they affect the sale of real estate.
The on-going administration of Special Needs trusts and how they are administered to bring additional benefits to persons with disabilities for their lifetimes. The ownership of real property by a special needs trust.
Discussion of Guardians of the person and estate of minor children and the limitations of the control of the assets when a trust is not utilized.
Understanding the term Private Professional Fiduciary and the role that they can play in the administration of an estate by court appointment in a contested matter or by the election of the person who creates the estate plan.
To view the program, click here.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Some Facts About Decedent Debts
As part of the probate or trust administration process, the decedent’s debts must be addressed. If there are debt collectors involved, this can be the worst part of the administration process. Although it would be nice, debts do not go away when the debtor passes away. Debts must be paid from the decedent’s estate, if there is enough money. The family members do not become personally responsible for the debt unless a family member co-signed for the debt or was the spouse of the decedent.
Creditors must comply with certain restrictions relating to the debt. Creditors can discuss the debt with the person who has authority for the deceased person, which is typically the executor or personal representative, the successor trustee, or perhaps a family member such as a spouse or parent. The debt collectors must comply with the Federal Fair Debt Collection Practices Act, and they are prohibited from using abusive or deceptive practices in their attempts to collect the debt. The collectors cannot pressure the family to use their own funds to pay the debt, and may not imply that the family must personally pay this liability.
It is always important to verify a debt of a decedent prior to payment. You may request proof of the debt and details regarding the debt owed. You should always ensure that the debt is actually owed prior to making any payments from the decedent’s estate. If a formal probate estate is open, you should always consult with your attorney prior to paying any debt, especially in the case of an insolvent estate to ensure that debts of a higher priority (like taxes) are paid first.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Federal Tax Updates
Qualified Charitable Distributions from an IRA:
The prior, expired tax law allowing for qualified charitable distributions from IRA’s has been revived. This law allows individuals over 70 ½ to exclude from gross income up to $100,000 in Qualified Charitable Distributions from an IRA. This requires a distribution from an IRA directly to a public charity. If done correctly, the individual can exclude the IRA withdrawal from gross income, although no further charitable deduction is allowed. This is a better tax result than claiming the withdrawal as ordinary income and then taking the charitable deduction, as given some other tax limitations the deduction never completely offsets the amount claimed in income even though the whole amount was donated to charity. This change is beneficial for those individuals who would like to donate their required minimum distributions for instance.
Portability Regulations:
We have been reporting in the past few years of changes in the estate tax law and the increase in the estate tax exemption amount to $5,000,000 as of 2011, which is indexed for inflation, and stands now at $5,430,000. For many clients, this larger exemption amount has lessened the concern for estate taxes and often can allow for a less complex trust. One tax planning option is the use of Portability, which is the ability of the surviving spouse to utilize the unused estate tax exclusion amount of the deceased spouse. The IRS has now issued final regulations which apply to decedents dying after June 12, 2015. The regulations confirm that to claim the deceased spouse’s unused exclusion amount (DSUE amount) an executor (not necessarily the surviving spouse) must timely file an estate tax return. As an estate tax return would typically not otherwise be required, this can place a burden on families and the executor to prepare and file a rather complex return. Unfortunately the IRS has not opted to issue a more simplified estate tax return form to claim the election. Whether to file the estate tax return and claim the DSUE amount is a complex discussion that should be part of the trust administration process at the death of the first spouse. Please feel free to contact Sugai & Sudweeks if you have questions about estate taxes or the impact of portability options on your estate planning.
Same Sex Couples – Right to Marry and Tax Implications:
With the Supreme Court ruling that the Fourteenth Amendment requires a state to issue marriage licenses and recognize marriages performed in other states for same-sex individuals, these couples now have tax planning options to consider that were not previously available. All provisions in the code that previously only applied to husband, wife or heterosexual spouses, will now apply to all individuals lawfully married under state law to someone of the same sex. This may necessitate the filing of amended income tax, estate tax and gift tax returns depending on the year of marriage. Property taxes should also be examined to determine if refunds are applicable.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Your Rights When Purchasing Funeral Services and Goods
One of the most vulnerable times for a consumer is at the passing of a loved one. In the midst of shock and grief there are decisions that must be made for the funeral and most of these decisions must be made quickly. The Federal Trade Commission has published a pamphlet titled, “Paying Final Respect”, which is available at www.consumer.ftc.gov/articles/pdf-0072-funeral-goods-and-services.pdf.
The pamphlet contains a lot of information to help educate the consumer as to their rights and choices. For example, one of the most important pieces of information that you need to know is the Funeral Rule.
The Federal Trade Commission enforces the Funeral Rule, which makes it possible for you to choose only the goods and services you want or need and pay only for those you select, regardless of whether you are making arrangements when a death occurs or are purchasing in advance.
You have the right to:
1. Buy only the funeral goods and services you want. You have the right to buy separate goods, like caskets, and separate services, like embalming or a memorial service. You don’t have to accept a package with items you don’t want.
2. Get price information by telephone. Funeral directors must give you price information on the telephone if you ask for it. You don’t have to give them your name, address or telephone number first. Many funeral homes mail their price lists, although they aren’t required to; some post them online.
3. Get a written itemized price list when you visit a funeral home. The funeral home must give you a General Price List (GPL) to keep. There are 16 specific items and services that must be listed, but it may include others, as well.
4. See a written price list for caskets before you see the actual caskets.
Sometimes, detailed casket price information is included on the funeral home’s GPL. More often, though, it’s provided on a separate casket price list. Get the price information before you see the caskets, so you can ask about lower- priced products that may not be on display.
5. See a written price list for caskets before you see the actual caskets.
Sometimes, detailed casket price information is included on the funeral home’s GPL. More often, though, it’s provided on a separate casket price list. Get the price information before you see the caskets, so you can ask about lower- priced products that may not be on display.
6. See a written price list for outer burial containers. Outer burial containers surround a casket in a grave. They are not required by any state law, but many cemeteries require them to prevent a grave from caving in. If the funeral home sells containers, but doesn’t list the prices on the GPL, you have the right to look at a separate price list for containers before you see them. Look for a range of prices.
7. Receive a written statement after you decide what you want, and before you pay. It should show exactly what you are buying and the cost of each item. The funeral home must give you an itemized statement and the total cost immediately after you make the arrangements. The statement has to identify and describe any legal, cemetery or crematory requirements that require you to pay for any particular goods or services.
8. Use an “alternative container” instead of a casket for cremation. No state or local law requires the use of a casket for cremation. A funeral home that offers cremations must tell you that alternative containers are available, and must make them available. The containers might be made of unfinished wood, pressed wood, fiberboard or cardboard.
9. Provide the funeral home with a casket or urn you purchase elsewhere.
The funeral provider cannot refuse to use a casket or urn you bought online, at a local store or somewhere else, and it can’t charge you a fee to use it. The funeral home cannot require you to be on site when the casket or urn is delivered to them.
10. Make funeral arrangements without embalming. No state law requires routine embalming for every death. Some states require embalming or refrigeration if the body is not buried or cremated within a certain time; some states don’t require those services at all. In most cases, refrigeration is an acceptable alternative. Services like direct cremation and immediate burial don’t require any form of preservation. Many funeral homes have a policy requiring embalming if the body is to be publicly viewed, but this is not required by law in most states. Ask if the funeral home offers private family viewing without embalming. If some form of preservation is a practical necessity, ask the funeral home whether refrigeration is available.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
The Funeral Rule
The Funeral Rule, enforced by the Federal Trade Commission (FTC), makes it possible for you to choose only those goods and services you want or need and to pay only for those you select, whether you are making arrangements when a death occurs or in advance. The Rule allows you to compare prices among funeral homes, and makes it possible for you to select the funeral arrangements you want at the home you use. (The Rule does not apply to third-party sellers, such as casket and monument dealers, or to cemeteries that lack an on-site funeral home.)
Your Rights Under the Funeral Rule
The Funeral Rule gives you the right to:
- Buy only the funeral arrangements you want. You have the right to buy separate goods (such as caskets) and services (such as embalming or a memorial service). You do not have to accept a package that may include items you do not want.
- Get price information on the telephone. Funeral directors must give you price information on the telephone if you ask for it. You don’t have to give them your name, address, or telephone number first. Although they are not required to do so, many funeral homes mail their price lists, and some post them online.
- Get a written, itemized price list when you visit a funeral home. The funeral home must give you a General Price List (GPL) that is yours to keep. It lists all the items and services the home offers, and the cost of each one.
- See a written casket price list before you see the actual caskets. Sometimes, detailed casket price information is included on the funeral home’s GPL. More often, though, it’s provided on a separate casket price list. Get the price information before you see the caskets, so that you can ask about lower-priced products that may not be on display.
- See a written outer burial container price list. Outer burial containers are not required by state law anywhere in the U.S., but many cemeteries require them to prevent the grave from caving in. If the funeral home sells containers, but doesn’t list their prices on the GPL, you have the right to look at a separate container price list before you see the containers. If you don’t see the lower-priced containers listed, ask about them.
- Receive a written statement after you decide what you want, and before you pay. It should show exactly what you are buying and the cost of each item. The funeral home must give you a statement listing every good and service you have selected, the price of each, and the total cost immediately after you make the arrangements.
- Get an explanation in the written statement from the funeral home that describes any legal cemetery or crematory requirement that requires you to buy any funeral goods or services.
- Use an “alternative container” instead of a casket for cremation. No state or local law requires the use of a casket for cremation. A funeral home that offers cremations must tell you that alternative containers are available, and must make them available. They might be made of unfinished wood, pressed wood, fiberboard, or cardboard.
- Provide the funeral home with a casket or urn you buy elsewhere. The funeral provider cannot refuse to handle a casket or urn you bought online, at a local casket store, or somewhere else — or charge you a fee to do it. The funeral home cannot require you to be there when the casket or urn is delivered to them.
- Make funeral arrangements without embalming. No state law requires routine embalming for every death. Some states require embalming or refrigeration if the body is not buried or cremated within a certain time; some states don’t require it at all. In most cases, refrigeration is an acceptable alternative. In addition, you may choose services like direct cremation and immediate burial, which don’t require any form of preservation. Many funeral homes have a policy requiring embalming if the body is to be publicly viewed, but this is not required by law in most states. Ask if the funeral home offers private family viewing without embalming. If some form of preservation is a practical necessity, ask the funeral home if refrigeration is available.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Increase in Small Estates Limits
As part of an estate administration, it is typical to use a small estate affidavit to claim assets that may have not been titled in the name of a trust, or assets which were “lost or forgotten” by the family. Previously we were limited in the usefulness of this process, as the asset limit for a small estate process was $100,000. Often, when a number of accounts were located which needed to use this process, the total would exceed $100,000 which would then require a full probate proceeding to be opened.
As of January 1, 2012, California Probate Code section 13100 has been updated to allow for small estate transactions where the estate does not exceed $150,000. This increase in dollar amount should help us avoid the need to open a probate for small estates and to claim assets in a much easier manner.
It is likely however that banks and financial institutions will be resistant and unaware of this change. Most financial institutions have pre-printed forms which list the old $100,000 limit on them. Unless the financial institution has updated their forms, the clerks processing the paperwork will be unaware of the change and refuse to process transactions in excess of $100,000 but less than $150,000. In addition, for financial institutions out of state, it is likely that they will also be resistant to processing a transfer in excess of $100,000 and will need to be educated as to the recent change in California law. While we may have to educate the financial institutions regarding the law change, overall this new law will greatly ease some of the estate administration issues and avoid the need for probate proceedings for estate less than $150,000.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Dividing Up The Stuff
People sometimes ask me: What is the most difficult part of my job when advising clients on post death administration matters? Surprisingly, that often is the division of tangible personal property, or the “stuff” in the home.
Unlike cash or other financial assets which can typically be easily divided between the children, tangible items are much more difficult to divide. With only one piano or grandfather clock, who will receive those items when there are four children? Trustees and estate administrators struggle with how to divide up the items, especially if the decedent left no specific instructions regarding their distribution. In addition, the trustee is often struggling with their own grief and personal memories which are attached to some of the personal property items, and may find themselves having difficulties achieving an equitable division.
Jennifer Modenessi’s article Dividing Up a Life’s Worth of Memories (11 September 2011, Living Section) in the San Jose Mercury News discussed dividing up personal property following a parent’s passing and how difficult that process can be. I find that in my practice, older estate planning documents tend not to mention the division of the personal property while current estate plans will often contain some sort of direction particularly regarding certain items. When drafting estate plans, I do encourage clients to consider keeping a list which will indicate to whom certain items should be distributed.
However, for my administration clients, as there is typically little or no direction coming from the documents, I have to advise my clients to find a method which may work for them and their families to equitably divide up the personal items. There is no one solution that will work for everyone, however it remains in everyone’s best interest to work through the difficult task of dividing up the personal items, as the probate judge would prefer to keep these issues out of the courtroom!
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
Your loved one just died–what should you do now?
We recognize that this is a very difficult time for you and your family having just lost a loved one. The process to administer an estate after a loved one dies can seem overwhelming. For some clients, the stress of meeting with the attorney shortly after the passing is too much. For others, they feel reassured to start the legal process, often while other family members are in the area. We are available to meet with you to discuss the basic steps of the estate administration either immediately after the passing or within the first month. We recommend that the first meeting be within the first month of the passing.
Although you do not need to meet with us immediately, there are some decisions which have to be made immediately. The questions most often asked are: “How do I get death certificates? and How many death certificates do I need?” Typically the funeral home will assist you with obtaining death certificates. It is important to review the form with the submitted death certificate information. Of particular importance are the spellings of names, and the decedent’s social security number. For most estates, at least five (5) certified death certificates are needed, and often we recommend that ten (10) be requested. The exact number will depend on the types of assets the decedent owned and the process which will be used to administer the estate. Should you find you need more death certificates later, we can assist you with ordering more from the county.
The process to administer a deceased person’s estate will depend on the type of Estate Planning documents the decedent had. If the decedent had no documents or just a will, the estate will most likely need to pass through Probate. If the decedent had a living or revocable trust, then a Trust Administration will need to be commenced. The estate administration process depends not only on the type of documents, but also the type of assets the decedent owned.
At the first meeting, we will request that you bring the originals of all estate planning documents, as well as a certified death certificate. The type of estate planning documents will dictate the process required to administer the estate, as well as the type of assets and the title of those assets. In order to review the type of estate administration work which will be necessary, we will need copies of all asset statements which cover or are as close to the date of death as possible. Information relating to life insurance, retirement accounts, annuities and other assets which may have named beneficiaries should also be provided. Upon review of all of the information, we can then provide you with the guidance necessary to administer the estate efficiently with the least amount of stress for you.
* The information contained in this Blog is intended for general information and educational purposes only and does not constitute legal advice or an opinion of counsel.
