Wills, Elder Law, Estate Planning, Trusts & Probate

IMG_81061When 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.

PROBATE ADMINISTRATION IN MAINE: FREQUENTLY ASKED QUESTIONS

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 probate. 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.

WHAT IS PROBATE?

Probate is the legal process by which an estate is distributed. 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. There are separate probate courts in Maine, which handle only probate matters. The probate process differs from other legal proceedings, and sometimes can be accomplished without court hearings.

WHAT ARE THE TIME LIMITS FOR PROBATE?

There is a five day waiting period after a decedent’s death before any probate matter can be initiated. In most cases, probate must commence within three years of the date of death. Thereafter, a Will can be admitted as evidence of a devise, but it is 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 probate process.

DO I NEED TO FILE A WILL IN PROBATE?

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 instead of filing probate.

WHERE SHOULD I FILE?

Probate 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 THEIR ESTATE?

The first step in preparing for probate 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?

In probate, 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 are property issues, the estate must go through the formal probate process. The estate generally will be disbursed by intestate succession. Intestate succession is a legal formula by which an estate passes to 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. 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. Once a Will is found, you need to obtain a death certificate, begin to gather information about the decedent’s assets and debts, and then file an application for probate if probate 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 need to be probated. Instead, someone claiming to be a successor of the decedent prepares 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.

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

Probate 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. 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 (if all a decedent’s property is owned by the trust) and protecting financial information (some 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 with a petition for probate is free. Otherwise, the probate court filing feet 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 include $25 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.

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. 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, there is no original Will, or 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 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.

WHAT DO I DO TO INITIATE PROBATE PROCEEDINGS?

Probate filing begins with the filing of an original Will, if possible, 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 to assess the filing fee which is based on the value of the decedent’s estate. Probate only may be filed with specific forms generated by the probate court.

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.

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, though they can be helpful with capital gain calculations when the property is sold. 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 estates, 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 the law defines to include 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.

HOW ARE ASSETS DISBURSED?

Upon paying creditors and determining estate assets, PR may disburse the estate’s assets in accordance with the terms of the decedent’s Will. If assets are tangible property and not specifically bequested, a PR may sell them and add the proceeds to the estate account. Intangible assets such as stock may be transferred by PRs using certification letters and estate identification numbers provided by the court.

HOW ARE CLAIMS PAID?

A PR also must pay valid estate creditors. There are specific notice requirements for creditors; we also recommend that PRs contact known creditors directly when filing probate. Creditors then will submit claims to the PR or the court. The PR has the power to allow or disallow them. Creditors 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 2010, Maine estate tax begins at estates worth $1 million while there is no federal estate tax; estate taxes are due within nine months of the date of death. Estate values are determined by calculating the value of both probate and nonprobate assets.

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 2010, Maine estate tax begins at estates worth $1 million while there is no federal estate tax. 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.

WHO DO I NEED TO NOTIFY ABOUT THE WILL?

An important part of probate 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. For a fee of $5 each, the court will provide notice to all interested parties.

WHAT HAPPENS AFTER I FILE?

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 personal representative. 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. The estate also will be assigned an estate employer number (EIN). Most registers will return these documents within a couple of weeks of informal probate filing.

WHAT HAPPENS ONCE ALL 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 to close the estate, the PR must prepare a final accounting of the estate. 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 closing statements 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 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 in court filings, deciphering notice requirements, negotiations with creditors and devisees, complex probate matters, and tax strategies. We also are able to use our probate experience to draft estate planning documents to avoid many of the pitfalls of probate so as to affect exactly your wishes.
We hope this probate information has proved useful and stand ready to offer advice and assistance on future probate matters.