Estate Planning And Probate

IMG_80771Estate Planning and Probate Practice have been at the core of Powers & French’s law practice from its inception in 1932. Having served generations of Freeport families, we welcome the opportunity to meet yours.

In Estate Planning, a simple “sweetheart will” may be all that is needed to provide piece of mind and a plan of your family’s future. For those with assets close to or above Maine’s $2 million estate tax exemption amount or families seeking generation-spanning trusts or trusts for loved ones with special needs, Powers & French can provide you with a custom estate plan that addresses your unique financial situation, future needs, and hopes for your loved ones’ futures. Using trusts and other estate planning tools, our attorneys will recommend and provide for you legal instruments tailored to address your concerns and accomplish your goals. Other important estate planning documents include powers of attorney for health care and financial matters, which appoint trusted agents to make these decisions for you if you should become incapacitated, and living wills. Such documents provide loved ones with important guidance and clients with peace of mind. We also prepare Special Needs Trusts, Living Trusts, Life Insurance Trusts, Family Trusts, Personal Residence Trusts, Charitable Trusts, Minors’ Trusts, LLCs to own family and rental properties, and Pre and Post Nuptial Agreements to protect and manage your assets into the future. Such trusts are written specifically for your situation, and the terms of them can vary according to your goals and preferences.

When a loved one passes away, it can be overwhelming to know where to begin and which legal processes are necessary. The attorneys at Powers & French pride themselves in helping families during these difficult times. Whether you need to simply consult with an attorney to ensure that you are taking all appropriate actions, need help filling out probate or tax forms, or would prefer full probate representation, we are here to help. Powers & French also can help guide you through the conservatorship and guardianship processes. And we love to do adoptions.

Below are some frequently asked questions both for Estate Planning and for Estate Administration. Please understand that these answers do not constitute legal advice, which depends greatly on the specific circumstances of each individual situation.

 

ESTATE PLANNING FAQS:

WHAT ARE ESTATE PLANNING DOCUMENTS?

The most common documents are Wills, Powers of Attorney, Living Wills and Trusts.  Each of these documents is explained below, along with common questions regarding each.

WILLS

WHAT IS A WILL? A Will is a legal document containing your instructions and wishes as to how your assets (ie, your estate) are to be distributed after your death.  A person making a Will is called a testator.  A devisee is a person named to receive real of personal property.  A personal representative, also known as an executor, is a person named to administer the testator’s estate.

HOW CAN I MAKE A WILL? A Will requires that you be of sound mind and at least 18 years old.  A Will must be in writing and signed by you and two witnesses.  In Maine, witnesses can be relatives or other interested parties as long as they are competent witnesses.  Maine has a template simple Will in its Probate Code at 18-A MRSA § 2-514.  Please note that, when using a template, the template itself cannot be altered in any way.  We do not recommend these cookie cutter forms, which cannot be changed to reflect your particular wishes.

WHAT TYPE OF PROPERTY CAN BE DISPOSED OF BY A WILL? Only property owned by the testator alone can be disposed of by a Will:  solely owned property, a tenancy in common interest, and some allocated interests.  Property owned as joint tenants will transfer automatically to a surviving joint tenant and is not controlled by a Will (unless no other joint tenants are living).  (Tenants in common own their own shares to dispose of how they wish.)  Contractual agreements, such as IRAs/life insurance policies with named beneficiaries, are not governed by Wills.  Pay-on-death accounts are not governed by Wills.  Some testators have powers of appointment under trusts or other types of interests that allow for disposition under a Will.

HOW CAN I REVOKE MY WILL? You can revoke an existing Will either by making a new one that expressly revokes the old Will, making a new one that is inconsistent with the old Will, or destroying the old one.

WHAT EFFECT DOES DIVORCE HAVE ON A WILL? The law assumes that you would not wish provisions regarding your former spouse to take effect; the law will treat your former spouse as if he or she had predeceased you.  Please note that this treatment does not apply to trusts, property owned jointly with a former spouse, and contractual benefits such as life insurance and IRAs that name a former spouse as a beneficiary.  We recommend that newly divorced clients change all beneficiary forms and enact new Wills.

WHAT IS A PERSONAL PROPERTY MEMORANDUM? A personal property memorandum is a written statement, separate from a Will, that provides for the disposition of tangible, personal property.  It must either be signed by the testator or in his or her writing.  It can be prepared before a Will or after and changed at any time by the testator.  Personal property memorandum, also called side lists, cannot provide for the disposition of vehicles, money, debt, securities or property used in a trade or business.

WHAT IS A CODICIL? A codicil is a legal document separate from a Will that references a previous made Will and adds new terms or provisions to the Will, deletes terms or provisions from the Will, and/or changes the Will in some way while keeping it in effect in others.  While some clients prefer codicils, we will revise an existing Will for the same fee and prefer a new Will rather than a codicil, which can be confusing and adds another document to be properly stored and kept track of.

WHAT IF SOMEONE DIES WITHOUT A WILL? If a Maine resident dies without a Will, Maine’s law of intestate succession applies and determines the disposition of the decedent’s estate.

If the decedent was married and the spouse is still living, the spouse gets up to a $29,000 allowance plus

  1. entire estate if no children, grandchildren [issue]
  2. if no issue but the decedent’s parent(s) is/are alive – $50,000 and half of estate
  3. if issue of surviving spouse only (ie, stepchildren) – $50,000 and half of estate
  4. if issue but not of surviving spouse (ie, children from other marriage) – half of estate

If the decedent was not married, the decedent’s estate goes to:

  1. their issue, with grandchildren (if any) dividing the share of any deceased child’s share
  2. if no issue – to the decedent’s parent(s)
  3. if no issue or parents – to parents’ children (ie, siblings)
  4. if none of above – to grandparents or issue of grandparents, half to paternal relatives and half to maternal relatives (ie, aunts, uncles, cousins)
  5. if none of above – to issue of great grandparents, half to paternal and half to maternal
  6. (ie, great aunts and uncles, second cousins and cousins once removed)
  7. if none of above – to the State of Maine

POWERS of ATTORNEY

WHAT IS A POWER OF ATTORNEY? A power of attorney [POA] is a legal document appointing someone else to act for you if you are unable to do so.  For estate planning purposes, the most common are financial POAs and medical POAs.  POAs usually are intended to be used if and when you become incapacitated.  The person executing the POA is the principal, the appointed person is the agent.

WHAT IS A FINANCIAL POA? A financial POA is a legal document appointing an agent to act for you in regards to your property.  POAs can grant an agent power to sell your property, pay your bills, make investment decisions, file tax returns, etc.  An agent has a fiduciary duty to act in your best interests and should understand your values as well as be financially competent. If an incapacitated person does not have a financial POA, probate court will hold a hearing to appoint a conservator or guardian to make decisions on their behalf.

WHAT IS A HEALTH CARE POA? A health care POA is a legal document appointing an agent to make medical decisions on your behalf if you’re incapacitated.  Health care POAs also provide agents (and other named persons) access to HIPAA info, and can include your preferences regarding burial, organ donation, etc. If there is no health care POA in place for an incapacitated person, one possibility is using the probate process to appoint guardian, which can be a lengthy and expensive process. Ideally, these POAs also prevent family members disagreements about your emergency and end-of-life care.

LIVING WILL

WHAT IS A LIVING WILL? A Living Will is a legal document used to establish a person’s wishes regarding life-prolonging medical treatments. It also is referred to as an advance health care directive, health care directive, or a physician’s directive. It informs health care providers and family about your desires for certain medical treatment in the event you are not able to speak for yourself.  As a result, loved ones don’t have to make these difficult decisions themselves.

(A living will should not be confused with a living trust, which is a mechanism for holding and distributing a person’s assets to avoid probate.)

TRUSTS

WHAT IS A LIVING TRUST? A Living Trust, also called an Inter Vivos Trust, is formed and funded while the creator of the trust [grantor] is alive.  Living trusts usually are formed for ease of accounting, privacy or to avoid probate upon the grantor’s death.  Living trusts usually can be changed or revoked while a grantor is alive.  A grantor can serve as the trustee and be the sole beneficiary; living trusts are very flexible.

WHAT IS A TESTAMENTARY TRUST? A Testamentary Trust is a trust made by a Will and funded after death.  These trusts usually are formed for tax reasons, to provide continuing oversight of inherited assets, or to provide for secondary beneficiaries (such as a trust that provides income for a surviving spouse but then thereafter goes to the testator’s children).  The terms of the trust can be changed while the grantor is alive, but not after the death of the grantor.

WHAT IS A SPECIAL NEEDS TRUST? A Special Needs Trust is a trust created for the benefit of a third party, usually to limit their access to funds in order to protect their eligibility for government assistance.  A trustee, who cannot be the donor or the beneficiary, usually has wide discretion on how funds are distributed but must act in the best interests of the beneficiary.  Grantor can form their own special needs trusts too.

WHAT IS A MINOR TRUST? Wills may provide for assets going to minors to be held in trust.  A grantor also may form a minor trust while the grantor is alive to hold gifts of assets to minors.  Grantors giving gifts to minors in order  to remove assets from the grantor’s estate often use minor trusts such as 529 college plans or so-called Crummey Trusts, which limit the minor’s access to trust assets. Minor trusts are very flexible and can be written to last past the time that the minor reaches adulthood.

WHAT IS A CHARITABLE TRUST? A Charitable Trust is a trust by which the grantor receives income from trust assets for a certain period or for life, whereafter the trust principal goes to charity.  These trusts have income tax and estate tax benefits.

WHAT IS A MARITAL TRUST? A Marital Trusts is a testamentary trust that provides income to a surviving spouse for life, with the principal then going to other beneficiaries (usually children).  These trusts avoid estate taxation by removing trust assets from the surviving spouse’s taxable estate and are a common estate planning tool.   If a couple owns assets worth more than $1 million in Maine, we recommend that they consider using a marital trust.

WHAT IS A FAMILY TRUST? A Family Trust, which can be either inter vivos or testamentary, is a trust which provides income to some family members for a lifetime and terminates after one or more generations with a payout to the next generation.  Family trusts can provide for continued family ownership of a special summer home, or provide interest income for several generations.  Generational trusts provide income to children for their lifetime, then principal to grandchildren, for example.

WHAT ARE OTHER ESTATE PLANNING TRUST OPTIONS: Grantors can give gifts to form trusts for a wide variety of purposes with an infinite variety of provisions; trusts are very flexible documents.  Many grantor trusts seek to take advantage of the $14,000 per person annual gift tax exemption, which allows grantors with significant assets to remove some assets from their estate to avoid their eventual taxation.  Grantor Retained Annuity or Unitrust Trusts allow grantors to gift investment assets that they expect to appreciate in value, while passing on much of the appreciation without tax.   Life Insurance Trusts allow grantors to give gifts that are used by the trust to purchase life insurance on the grantor’s life, thus providing beneficiaries with an eventual life insurance payout exempt from taxation by the grantor’s estate.  Some estate planning trusts provide a grantor with income while alive, others provide income to beneficiaries, and others retain assets until the grantor’s death.  Powers & French welcomes the opportunity to work with you to create a trust that addresses your individual concerns and values.

 

ESTATE ADMINISTRATION FAQS:

PROBATE ADMINISTRATION IN MAINE

At the difficult time of a loved one’s death, legal requirements may be the last thing on your mind or may be one of the worries keeping you awake at night. Either way, a basic understanding of the process by which a deceased loved one’s estate is handled can be very helpful. The following FAQs are meant to offer general information and basic procedural details of Estate Administration. They are not intended to offer legal advice or address specific circumstances that make each probate matter unique. If you are concerned or are facing complex estate issues, we strongly suggest that you contact an attorney before commencing probate proceedings. Powers & French welcomes the opportunity to shepherd clients through the probate process, as well as to help clients prepare estate planning documents to avoid or facilitate probate.

Please note that Probate Practice also includes Guardianships, Conservatorships, and Adoptions, which are not addressed in these FAQs.

WHAT IS ESTATE ADMINISTRATION?

Estate Administration is the legal process by which an estate is distributed and settled, which is overseen by county probate courts. The probate process includes identifying a legal Will, appointing someone to handle the deceased person’s affairs, identifying the deceased person’s property, identifying heirs, paying debts and taxes, and distributing the deceased person’s property in accordance with a Will or Maine law.  The probate process differs from other legal proceedings, and sometimes can be accomplished without court hearings.

WHAT ARE THE TIME LIMITS FOR PROBATING AN ESTATE?

There is a five day waiting period after a decedent’s death before any probate matter can be initiated. In most cases, probate process must commence within three years of the date of death. Thereafter, a Will can be admitted as evidence to the probate court, but it requires a formal process and the Will is not given the immediate effect that it would have been given if probated within the three year period. Formal probate can be a long process; Powers & French recommends clients begin sooner rather than later. Upon the death of a loved one, however, there usually is no immediate urgency to begin probate. Most people need some time to make burial and funeral arrangements, be with family, and deal with their grief before worrying about estate administration.

DO I NEED TO FILE A WILL WITH THE PROBATE COURT?

When someone dies, a family member, personal representative or attorney must notify the probate court. In come cases, simply filing the Will and a copy of the death certificate is sufficient. If you need to transfer property ownership, a personal representative of the estate first to be appointed by the probate court and so authorized to access estate asset information and transfer ownership. If there is a dispute about some aspect of the estate, a formal probate hearing is required to solve the controversy. If, as personal representative, you are concerned about your liability for your actions or need the court’s guidance, you should file probate. If estate assets are worth less than $20,000, a Small Estate Affidavit may be used to authorize the transfer or this small amount of assets.

WHERE SHOULD I FILE A WILL?

Wills, death certificate and probate forms must be filed with the probate court in the county where your loved one lived at the time of death. There are probate courts in fourteen Maine counties. For a list of probate courts, visit www.maineprobate.net.

AFTER A LOVED ONE DIES, WHAT SHOULD I DO FIRST REGARDING THE ADMINISTRATION OF THEIR ESTATE?

The first step is to locate your loved one’s Will. Powers & French reviews local obituaries daily and will contact a decedent’s family if we are holding their Will. Wills also may be stored in safe deposit boxes, home safes, or in files or desks with other important papers. Some copies of Wills indicate on the cover who is holding the original. Wills stored in safe deposit boxes are accessible to anyone listed at the bank as an authorized person so it is best to plan ahead and authorize several people to access boxes; banks also will open safe deposit boxes to check for a Will and give the Will to named personal representatives.

DO I NEED AN ORIGINAL WILL?

It is important to have the original Will, if possible. If you are unable to find the original, you may need to go through the formal probate process. Any Will copies or other documents executed by the decedent can be filed with the court for legal determination as to their validity and effect.

WHAT IF THERE IS NO WILL?

If no valid Will is found and there is estate property to distribute, the estate must go through the formal probate process. The estate generally will be allocated by the law of intestate succession. Intestate succession laws determine the heirs by looking to who survived the decedent, such as a spouse or registered domestic partner, the children of a decedent, the parents of a decedent or others entitled by familial relations.

WHAT IS A PERSONAL REPRESENTATIVE?

Personal representatives (PRs) carry out a Will’s instructions. PRs usually are named in the Will; sometimes a Will appoints co-PRs or names alternates. PRs have specific legal obligations and responsibilities that they must follow and are liable for mismanagement or malfeasance. Along with a fiduciary duty to the heirs and devisees, the PR also must keep them informed about the probate process. A PR is entitled to reasonable compensation for his or her time, travel and expenses. Powers & French frequently represents PRs and aids them in the filing of documents, managing deadlines, and otherwise meeting their fiduciary duties. The duties of personal representatives are found in 18-A MRSA §§ 701-721.

WHAT IS AN EXECUTOR?

Older Wills often use the term “executor” while newer Wills use the term “personal representative.” They are the same thing.

I WAS NAMED A PERSONAL REPRESENTATIVE. WHAT SHOULD I DO?

First, you need to locate the decedent’s Will and determine their assets so as to know whether probate is necessary or not. Powers & French often meets with PRs at this initial stage to help them navigate the probate process. If probate is required, the named PR or his/her attorney should file the necessary forms and documents with the appropriate probate court. After the initial filing, the court will appoint the PR and provide him or her with signed forms allowing the PR to act on behalf of the estate. The PR then will have access to the decedent’s financial information and can begin to ascertain all estate assets, pay estate creditors, sell assets if necessary, and ultimately allocate assets to heirs and devisees. We recommend that PRs create new estate bank accounts, keep careful records, and retain all receipts.

HOW DO I DETERMINE ESTATE ASSETS?

Assets vary widely and can be difficult to find and confusing to understand. Financial information usually can be found in the decedent’s files, paperwork or safe deposit box. Previous tax returns are a good source of information. Look for deeds, bank statements, certificates of title, bonds, and life insurance policies. Powers & French recommends that PRs send letters to any financial institutions where the decedent had accounts and request the balance or amount due on the decedent’s date of death. For real estate, it may be necessary to search the registry of deeds. Powers & French’s title company, Royal Title, conducts title searches.

WE’VE LOCATED THE WILL. WHAT DO WE DO NEXT?

Upon finding a Will, the second step is to identify your loved one’s assets and how they’re held. If they owned property, you should locate the deed(s) to see whether it was held jointly with someone else, as a life tenancy, or solely owned. Determine whether any assets were in trusts as well as the type of trust. For financial assets, you may need to contact brokers or financial institutions for account values at the time of death. Powers & French prepares introductory letters for clients to use in seeking this information; such letters should include your authority as the personal representative named in the Will or as close relative of the deceased. Tax returns are a helpful source of information about accounts and investments. You will need to obtain a death certificate, probably at least several copies. Once you have asset information and the death certificate, you can file an application for probate if probate process is required. If taxes are an issue, Powers & French recommends that you contact an attorney early in the process to ensure proper legal actions are taken to protect the estate’s assets.

WHAT IF THE VALUE OF THE ESTATE IS SMALL?

If estate assets are worth less than $20,000, the estate does not require probate process to be administered. Instead, someone claiming to be a successor of the decedent can prepare a legal affidavit stating specific facts that then will allow them to collect debts or assets belonging to the decedent. Powers & French can provide these affidavits, as well as guidance as to whether probate is necessary. Affidavits cannot be prepared until at least thirty days after the date of death.

WHAT IF ALL MY LOVED ONE’S ASSETS WERE JOINTLY?

Probate process is not necessary because ownership of the decedent’s assets vests automatically in the survivor upon the decedent’s death. Even in cases where probate is not necessary, however, an original Will, along with a copy of the death certificate, must be filed with the appropriate probate court. There is no fee for this filing.

WHAT IS AN INTER VIVOS TRUST?

Inter vivos trusts are common estate planning tools; they are created to hold some or all of a person’s assets during their lifetime so that, upon their death, there is no estate to probate with the court; instead, the estate is administered by the trustee in accordance with the terms of the trust. Ownership of the assets is dictated by the terms of the trust document. Some of the benefits of inter vivos trusts are the avoidance of probate process (if all a decedent’s property is owned by the trust) and protecting financial information (most probate documents are available to the public).

WHAT IS AN ELECTIVE SHARE?

An elective share is a legislative provision by which a surviving spouse can enter a claim against the Will. It basically is a method for the surviving spouse to circumvent a Will that provides for others, or to receive an inheritance outright rather than by trust. The share is a somewhat complex formulation that basically awards a surviving spouse one third of a deceased spouse’s assets. An elective share must be claimed within 9 months of the decedent’s death or 6 months after a PR is appointed.

HOW MUCH DOES FILING WITH THE PROBATE COURT COST?

If you use the services of an attorney, that fee will depend upon the attorney’s own fee schedule. Filing a Will and death certificate is free. Otherwise, the probate court filing fee depends on the value of the estate. Fees range from $40 for a $20,000 estate to $950 for a $2.5 million estate; the fee for a $150,000 estate is $250. Other fees generally include $30 for the court to publish notices to creditors in the newspaper, $5 per notice prepared and issued to heirs and devisees, and $35 for real estate abstracts required if the decedent owned real estate, although these fees vary from county to county.

WHAT IS THE DIFFERENCE BETWEEN ESTATE ASSETS AND PROBATE ASSETS?

Estate, but nonprobate, assets include jointly held property and assets that pass by contract such as property held by some trusts, retirement benefits, life insurance, and annuities. These assets are subject to estate taxation, but do not need to be probated because they are transferred by the entity holding these assets to the named beneficiary or joint owner. Probate assets are those assets that require the probate court’s authorization in order to transfer, such as stocks held in the decedent’s name or the decedent’s personal property.

SHOULD I FILE INFORMAL PROBATE OR FORMAL PROBATE?

If the Will is original and valid, probate is uncontested, and no other probate procedures have been undertaken, probate will generally be an informal process accomplished mostly by forms filed with the court. Court deadlines and requirements must be observed strictly, but no hearing will be necessary in most cases. If the probate matter is contested, if there is no original Will, or if there are other complications, formal probate is required. Formal probate involves different court forms than informal probate, and a hearing is scheduled upon filing. A hearing will provide interested parties with a forum to oppose provisions of the will or present additional evidence regarding the estate. We recommend that all clients facing formal probate be represented by an attorney.

WHAT IS FORMAL PROBATE LIKE?

Formal probate process involves hearings before a probate judge to determine issues such as the validity of a Will, whom should be appointed PR, or how assets should be distributed in the absence of a valid Will. Interested parties are given notice of hearings and can participate and present evidence. There are no jury trials in probate court.

HOW I DO TO INITIATE PROBATE PROCEEDINGS?

Probate proceedings begin with the filing of an original Will, if possible, a death certificate, specific probate forms obtained from the probate court or an attorney, and a filing fee. The forms notify the court of the decedent’s death, whether they had a Will, their heirs and devisees, the approximate value of their estate, and other pertinent information.

WHAT INFORMATION DOES PROBATE FILING REQUIRE?

The application itself requires personal information about the decedent and contact information for heirs and devisees. A separate form called a Certificate of Value requires a list of the decedent’s assets and estimate of their value; this information is used only to assess the filing fee which is based on the value of the decedent’s estate. Specific, original court forms are required.

WHAT DO I DO ONCE PROBATE HAS BEEN FILED AND I’M APPOINTED PERSONAL REPRESENTATIVE OF THE ESTATE?

One of the most important roles of the PR is as an accountant for the estate. We recommend that PRs open an estate checking account and keep careful records of all estate bills, expenses and disbursements. As PR, you should then check for SS, VA, pension, annuity, life insurance, partnerships and corporation interests held by the decedent. For tangible assets, a PR must arrange appraisals. Once this financial information is compiled, a PR must prepare an inventory of the estate. We also recommend that you obtain a federal tax identification number for the estate, called an EIN, which can be done at www.irs.gov.

WHAT IS AN ESTATE INVENTORY?

An inventory lists all of the decedent’s property and assets with their actual or estimated value at the date of death. A PR or their attorney must prepare an estate inventory within three months from the date of the PR’s appointment. A specific probate form is available for the inventory, which can be obtained from the probate court or an attorney, but is not required. Usually inventories do not need to be filed with the probate court; however, they must be provided to “interested persons” as defined by the probate code. Inventory values should be as of the date of the decedent’s death. PRs need to contact financial institutions and brokers to get date of death values, interest and dividends accrued but not paid at the date of death, and how assets are held (solely or jointly? is a beneficiary named?) Some institutions will request letters of authority before releasing information; these letters can be obtained from the probate court upon request. Completed inventories must be provided to any heirs or devisees that request it. It is illegal for anyone to remove a decedent’s property before an inventory is filed. In inventories, it is best to include all of the decedent’s assets, probate and non-probate. Appraisals are only necessary when a federal estate tax return is being filed, although they can be helpful with capital gain calculations when the property is sold or disputes among heirs. Otherwise, municipal valuations can be used for real estate; blue book values are useful for vehicles.

HOW CAN I KEEP ESTATE INFORMATION PRIVATE?

Filing documents with the probate court causes them to become public information. You can request that the court return the certificate of value, the preliminary list of estate assets values, after reviewing the probate application. The estate inventory does not need to be filed with the court, but it must be provided to “interested persons,” which includes heirs, devisees, spouses, children, creditors ,and any others with property rights or claims to the estate. Avoiding probate entirely by transferring all assets to an inter vivos trust is the best way to keep estate information private. In some instances, you can seek protection of certain information by court order.

HOW ARE ESTATE ASSETS DISBURSED?

Upon paying creditors and determining estate assets, a PR may disburse the estate’s assets in accordance with the terms of the decedent’s Will. A PR may sell certain assets and add the proceeds to the estate account. Intangible assets such as stocks and bank accounts may be transferred by PRs using certification letters provided by the court.

HOW ARE CLAIMS PAID?

A PR also must pay valid estate creditors. There are specific notice requirements for creditors. Creditors will submit claims to the PR or the court. The PR has the power to allow or disallow claims. Creditors generally have 4 months from the date of notice to present claims to the estate. PRs and heirs are not personally responsible for estate debts.

HOW ARE FUNERAL EXPENSES PAID?

Many Wills specify that funeral expenses be paid by the estate. Once probate has been filed, a PR has been appointed, and the PR has established an estate checking account, the PR can pay or reimburse funeral expenses from the estate account.

WHAT IS THE PRIORITY ORDER FOR ESTATE EXPENSES?

  1. Estate administration costs and expenses
  2. Funeral expenses
  3. Federal debts and taxes
  4. MaineCare benefits, hospital and medical expenses
  5. Maine state debts and taxes
  6. All other claims

PRs may be held personally liable for failure to follow this priority.

DO I HAVE TO PAY ESTATE TAXES?

In 2013, the Maine estate tax exemption amount increased to $2 million. The federal exemption amount is $5 million. Estate values are determined by calculating the value of both probate and nonprobate assets, so includes life insurance, retirement benefits, interest in jointly owned property, etc. Estate taxes are due within nine months of the date of death. Estate taxes are a liability of the estate. Heirs are not taxed on inheritances.

WHAT TAX FORMS ARE REQUIRED FOR ESTATES?

Taxes can be a large issue for estates. Tax laws change frequently and differ between state and federal. In 2013, Maine estate tax begins at estates worth $2 million while federal estate tax is not assessed for estate worth less than $5 million. Federal and state income tax also applies to the period between January 1st and the date of death and to the estate for any income earned. State tax liens are attached to Maine real estate to secure estate taxes. If no estate taxes are due, a PR needs to request a discharge of this lien and record it in the registry of deeds. All estates owning real estate should file a Maine Estate Tax Return, even if no tax is due. A Discharge of Estate Tax Lien can be included with the tax return, and will be signed and returned to the PR is accepted. A PR also needs to look at the decedent’s tax information, revising estimated tax payments, reviewing capital gains and losses, and ultimately filing a final income tax return if needed.

WHO DO I NEED TO NOTIFY ABOUT THE WILL?

An important part of probate process is notice requirements; notice and copies of most forms must be provided to heirs, devisees, creditors, parties who have filed requests for notice with the probate court, and sometimes others. Contact information for these interested parties must be provided to the probate court with any probate application. Most courts will provide notice to all interested parties for a small fee.

WHAT HAPPENS AFTER I FILE WITH PROBATE COURT?

For informal probate, once it is in receipt of the required forms, the probate court will determine whether the Will is valid and appoint a PR. The court will provide the PR or their attorney with a letter of authority authorizing the PR to act on behalf of the estate and a signed form determining the specific findings required in order for a Will to be admitted to probate. Most registers will return these documents within a couple of weeks of informal probate filing.

WHAT HAPPENS ONCE ALL ESTATE EXPENSES AND DISBURSEMENTS ARE PAID?

Once all assets are inventoried, debts are collected, creditors are paid and any property sold, the estate can be closed, In preparation for closing the estate, the PR must prepare a final accounting. This accounting begins with the initial estate balance, lists all income and expenses, details estate disbursements, and finishes with an end balance of current estate assets. Final disbursements should be made at this time, and the accounting should be provided to any interested parties. We suggest that PRs send a final accounting of the estate to all interested parties to protect themselves from future liability and for purposes of clarity. In informal proceedings, once a final accounting is prepared and distributed, Powers & French recommends that the PR file a closing statement with the probate court using a specific form and providing copies to interested parties. This form is not required, but a closing statement terminates the right to bring actions against the PR for breach of duty after one year, and so limits PR’s future liability.

I’M AN ESTATE BENEFICIARY. WHAT DO I NEED TO DO?

You should be receiving information from the estate PR about the probate process. If you have any concerns about the PR’s actions or are not being kept informed, we recommend that you contact an attorney. They are several legal tools available to help beneficiaries.

WHERE CAN I FIND PROBATE LAW?

Probate law is located in title 18-A of Maine Revised Statutes Annotated. It can be found online at: http://janus.state.me.us/legis/statutes/18-A/title18-Ach2sec0.html

The attorneys at Powers & French often serve as personal representatives or legal counsel to personal representatives. We can assist you with court filings, help you understand notice requirements, guide you in negotiations with creditors and devisees, represent you in complex probate matters, and explain tax strategies. We also are able to use our estate administration experience to draft estate planning documents to avoid many of the pitfalls of probate process and so ensure that your wishes will prevail.
We hope this probate information has proved useful and stand ready to offer advice and assistance on future probate matters.