Anyone going through the probate process for a loved one has likely come up against this question. How do you manage debt that belonged to someone who has died? Although the exact answer will depend on the details of the situation, the following provides a general guide and starts with the first step — figuring out the estate.

Step 1: What is the estate?

The estate is the assets left behind by the Decedent. If the Decedent had an estate plan, such as a Will or Trust, either document will provide guidance as to what the estate is comprised of and who will benefit from the Decedent’s Estate. For example, a trust document may have a Schedule A attached showing the trust assets, and a Schedule B, showing the non-trust assets.

Other assets (including bank accounts, IRA accounts or life insurance policies) may be distributed to the designated beneficiaries directly, and may easily be collected by the named individual by providing a certified death certificate of the Decedent and by providing the beneficiaries Social Security number and/or showing his or her legal identification. More often, personal property items such as vehicles, jewelry, paintings and antiques are beneficiary-designated in the Trust document or in a Will.

Even if an asset is designated in the Trust, it may still require the use of a probate proceeding. And, regardless of whether there is a Will, if the gross value of assets in the name of the Decedent without beneficiary designations is over $184,500, pursuant to California law a probate more likely will have to be opened by the Fiduciary.

A trust is a legal document created by the individual (Settlor or Grantor) prior to death. The creator of the Trust, the Settlor, most likely designates himself/herself as Trustee and manages the assets that have been transferred to the Trustee. Once the Trustee is incapacitated and/or dies or resigns, the Successor Trustee takes over. At the death of the Trustee, the Successor Trustee handles the trust assets and distributes the trust assets as provided in the trust document. Retirement accounts, life insurance policies and bank accounts can be collected by the individual beneficiary. When opening a new account, the individual usually designates a beneficiary and alternate beneficiary when filling out the paperwork. Once the owner of the account dies, the transfer is essentially automatic to the listed beneficiary.

Step 2: What about debt?

Unfortunately, it does not just disappear. The estate itself is likely responsible for debt. The person managing the estate may need to use the estate’s assets to pay off creditors. There are specific state rules to help guide this process.

There are also instances when a creditor may expect another individual to take on this debt, such as if someone co-signed the debt. Also, in California, the Surviving Spouse may be liable for certain debts. But, even if expected to manage these debts, there are federal laws that protect against abusive debt collection efforts. The process can be difficult without the appropriate legal help.

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A power of attorney (POA) is a legal document that allows the creator (known as the Principal) to give another trusted individual (known as the “Agent” or “Attorney-in-fact) the power to make decisions about their finances. This is a powerful legal tool that is an important part of an estate plan — but how do we help our parents get their affairs in order? By first having our own POA prepared by our lawyer, so we can explain the benefit to our aging parent.

The following tips can help.

#1: Know what you need

California state law requires the creator of the POA be at least 18 and have the mental capacity to understand the consequences of creating the document. The creator (Principal/Parent) must sign the document and his/her signature must be notarized or signed by two adult witnesses who are not healthcare providers. (The notarization and witnessing is to make sure that the documents will be accepted in all States.) There are some nuances that can apply in certain situations, such as if the POA involves real estate (Specific Power of Attorney), or the creator is in a nursing home at the time of its creation.

The language used to create the POA guides its reach. It is a good idea to have legal counsel prepare the Power of Attorney. Most attorneys do not review a draft e-mailed in for review, whether using a fill-in-the-blank document or one written specifically to your Parent(s) situation. It is more cost-effective if the attorney prepares the document and is familiar with his or her documents.

The Principal, should chose carefully how little or how much power he/she wants to give to the Agent over his/her assets. For example, the Principal whether to allow gifting of monies to the Agent or to others. The three questions that the Principal will need to answer when going over his Power of Attorney include:

• Who is the agent? (adult child, family member or friend)
• How much power will they have over my assets? (Specific or General)
• When will the POA be effective? (Now or when the Principal becomes incapacitated)

#2: Know how to have the conversation

This is not an easy conversation, but the following tips can help:

• Start early. It is important to begin the process when the parent(s) still has or have the mental capacity to make these decisions.
• Prepare to go slowly. Some may be ready to dive into the conversation while others may be caught off guard. It can help to ask a few questions at a time instead of bombarding the parent with everything at once.
• Share a story. Ideally one of someone you both know. The failure to plan for these things can lead to catastrophic consequences including significant financial loses. The story could be a positive or negative. Either way it serves as way to transition into a conversation about your parent’s wishes.

It is best to have an Attorney experienced in the field of estate planning prepare the Power of Attorney along with other estate planning needs and help ease this transition to the next chapter of life. If you, the adult child, prepare the documents for the parents and name yourself as the Agent, that situation most likely may raise issues of undue influence and conflict of interest. It is best to make the appointment with the lawyer to help your parents out but do not attend the meeting for those reasons.

#3: Follow through

Once you have had these conversations, have your parents reach out to that professional and let the professional help your parents get the documents put together. Once they are ready, your parents will most likely let you know the location of the documents and let you know their wishes.

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Alzheimer’s disease and other forms of dementia are a serious health crisis in the United States. As seniors live longer and our country’s average age continues to rise, more and more Americans will be diagnosed with dementia in their later years. According to the Alzheimer’s Association, one in three seniors have some form of dementia at the end of their lives, and an estimated 13 million Americans are expected to be living with dementia by the year 2050.

One of the things that a well-craft estate plan can do for you is ensure that your finances and medical care proceed according to your wishes, even if dementia takes away your ability to handle these matters yourself someday. But a dementia diagnosis, or just signs of possible dementia, can lead to a will challenge in probate court after the testator passes away.

Alzheimer’s and testamentary capacity

One of the most common reasons for someone to challenge a will’s validity is a lack of testamentary capacity. In order to create or amend a valid will, the testator must be able to understand what is going on and the consequences of signing the will. This means the person should have been able to understand things like:

• The size and value of their estate.
• Who their heirs and beneficiaries are.
• What they are giving through their will.

A diagnosis of Alzheimer’s or similar condition does not automatically mean the testator lacked capacity. They could be in the disease’s early stages and still be able to understand the details and implications of their estate plan. Whether the testator had capacity at the time their will was executed could become the subject of a will challenge later on. Often, the person who files the challenge is not included as an heir or beneficiary or is unsatisfied with the size of their inheritance.

Will challenges are serious

Probate litigation can be expensive and time-consuming for everyone involved. It must be handled properly to try to honor the deceased’s final wishes as much as possible.

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Having an estate plan is a crucial way to preserve your legacy. However, to ensure it continues to provide the protection you want and need, you should consider reviewing and revising your plan after certain life events.

Relationship changes

When people leave or come into your life, it can be wise to update your plan. Doing so can minimize confusion and the risk that someone will contest your wishes or be in a position of control you would not want.

Thus, you can revise your plan before or after the following:

• Getting married
• Getting divorced
• Having a new child or grandchild
• Death of a loved one
• Estrangement
• Reconciliation
• Anytime

These events can affect appointments and the transfer or inheritance of your property.

Shifts in assets

Revising your plan after minor financial changes may not be necessary, but updating your estate plan can be smart when there are meaningful shifts in your assets.

To ensure your plan remains accurate and comprehensive, you can update it after events like:

• Retirement
• Buying or selling property
• Bankruptcy filing
• Receiving an inheritance
• Opening new accounts

After these events, the gifts and property you pass down changes dramatically, so revising your estate plan is a good idea.

Medical diagnoses

After being diagnosed with a serious health condition, updating your plan canbe crucial. Revisions can ensure someone you trust will be in a position to make medical or financial conditions on your behalf. You can also make certain that your planning reflects the provisions during any incapacity.

New perspectives

As we get older and go through new experiences, our perspectives can change. For instance, you may think differently about things like charitable giving, leaving your kids a certain amount of money or what you want your final arrangements to involve.

Therefore, periodically revising your plan can ensure your estate plan reflects your wishes, values and beliefs.

In light of these events, changing your estate plan may not be at the top of your priority list. However, doing so can make a tremendous difference in your future and the legacy you leave behind.

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Many people think probate is a nightmare. It can certainly be a stressful experience. While families process their grief and try to deal with their shock and emotions, family members and often friends want to know who is going to be the Executor (if there is a Will) or Administrator (if there is no Will) and what property and assets did their loved one leave behind.

Who are the beneficiaries or heirs and what needs to be done in probate court? (What needs to be done realizing that the Decedent may have failed to transfer assets to himself as Trustee of a Trust, designate beneficiaries in the trust, and/or failed to provide for a beneficiary in a Will document.)

It doesn’t have to be a nightmare for your family

One helpful step to avoid such a scenario is to prevent any surprise revelations within your estate plan. We briefly discussed this step in a previous blog post, but we will take a closer look to help avoid surprises – and potential disputes.

Issues to make clear

Your will or other estate planning documents are not the proper or best places to inform your family of major decisions.

Best practice: Do it before you have the lawyer draw up an estate plan for you. While creating such a plan, avoid secrets or surprises involving:

1. Who inherits your estate
2. Whether you are disinheriting a child
3. Your desire to provide small funds over time for one of your adult children rather than allowing them immediate access to the funds set aside for them
4. Limiting immediate access to the funds
5. Providing provisions that punish a beneficiary if he/she struggles with budgeting money or if they have had bad spending habits

Planning for inheritances

It might be tough to have that conversation about financial matters and your estate planning goals. But, it is important, to avoid springing your thoughts and decisions you made on your beneficiaries (as well as your non-beneficiaries) as a surprise during the probate process. Let’s say a parent wishes to disinherit a child, or perhaps establish a spendthrift clause for a beneficiary if they struggle with budgeting (and of course, he or she disagrees). This information is not something that a trustee or a beneficiary should learn during probate (and/or during a Trust Administration).

Intentions

You may convey and say one thing to a potential beneficiary but actually do something else. For example, you may, as a parent, inform your children that they would each have a share in your vacation home – but as it turns out your children discover that you did not plan on this and it is not the case. This would turn out to be a problem, such as causing a risk of conflict between the children and the remaining family members.  Make your intentions clear, both in words and in writing.

Avoiding surprises in situations like this can help prevent emotional strife for family members as well as complex legal challenges within probate, such as will contests. It can also help you protect your wishes.

Your plan does not have to be private

Estate planning documents do not have to be top secret. As much as your estate plan helps you protect your legacy and everything you worked for, it actually may be a good idea to be open about it and discuss the plan with your first with your lawyer and then with your family. Communication is the best way – and often the only way – to prevent misunderstanding.

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If you and your siblings do not get along, a parent’s passing can be not only sorrowful but stressful. Even the mere thought of facing probate and administering your parent’s estate can be overwhelming.

It is important to carefully evaluate your situation, and prepare yourself and your family as you move forward to reduce the stress you face.

If possible, have a conversation together

Every family is different. Therefore, every sibling relationship is different. Perhaps you and your sibling just do not click, or you constantly compete with each other in a rivalry. Both situations might make you worry about how the probate process will play out.

If at all possible, it is helpful to sit down with your siblings before probate begins to discuss your situation. It might be a difficult conversation. However, talking it out before probate can enable you to move forward as a united front in some cases.

For example, many cases of sibling rivalry stem from the parent’s behavior. Some parents might fuel the rivalry, show favoritism or encourage an unhealthy level of competition between siblings. Sitting down with your siblings, despite your differences, and discussing the situation might help you reach an agreement to work together.

Tips as you move forward with probate

Even if you have a conversation with your siblings, the risk of conflict remains. It is important to:

• Know what to expect: Get a basic understanding of the probate process, regardless of whether or not you are the appointed executor, trustee or personal representative. Knowing what the process generally entails in California can help you prepare.
• Understand the duties in probate: On that note, it is important to understand the roles and duties of an executor, trustee and personal representative, whether or not you take on any of these roles. This can help you protect yourself and your parent’s wishes, no matter the situation.
• Strategize conflict-resolution: Research and consider ways you can manage conflict effectively. Perhaps you might enlist a third-party, such as a mediator or family counselor to help you work through conflict in a productive manner. It may also help to speak with an attorney beforehand, to understand your rights and options moving forward.
• Mentally prepare yourself: If there is a risk of conflict, you should have a plan for how you will care for your well-being during this time. Make sure you have a support system, whether that is your own family or friends. Prioritize self-care during this stressful and emotional time.

It will not be easy to overcome years of rivalry or disconnect with siblings. However, it is important to know how you can move forward and handle any conflict in probate effectively.

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A loved one named you as the executor of their will and personal representative of their estate. It is important to understand the roles and duties that lay ahead of you.

There are many responsibilities that make up this role. So, it may be helpful to speak with an experienced estate planning and probate attorney to fully understand this role. However, here is a brief overview of the fundamental categories of duties.

Your duties under the law

The California Probate Code highlights the legal duties executors must adhere to, including fiduciary duties to the beneficiaries of the estate. It is critical to take great care when managing the affairs of your loved one who passed and make sure you work in the best interests of those who will inherit assets.

Your role as manager of the estate

A previous blog post outlined some of the things to consider when choosing an executor. As we discussed in this blog, the executor must manage and administer the estate. This includes, but is not limited to:

• Locating all of your loved one’s assets
• Taking inventory of these assets
• Valuing or getting appraisals for these assets
• Sending notices to creditors about your loved one’s passing
• Handling any claims from these creditors or others
• Distributing assets according to the will

This is not an exhaustive list of all of the steps required to manage your loved one’s estate during the probate process. Additionally, there are many subtasks included within each of the steps listed above. Those named as executors must take time to fully understand all of the duties they must complete concerning the estate.

Your responsibility to manage finances

Managing your loved one’s financial affairs falls under the same category as managing your loved one’s estate during probate. However, it is important to highlight this role separately because of the wide range of duties that fall under the umbrella of finances in relation to the estate.

For example, executors must:

• Set up an account for the estate, if any money is owed to it
• Pay remaining bills, such as utilities or other debts to creditors
• File taxes on your loved one’s estate
• Handle funeral costs from the estate
• Keep receipts of any transactions organized

Handling finances is a key part of an executor’s role. You must make sure you are prepared for this role to reduce your own stress, as well as protect your loved one’s legacy.

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Probate can proceed in a smooth manner, but sometimes that is simply wishful thinking.

Complications may arise during the settling of an estate. Disputes may surface, for example, regarding the validity of a will, accusations that the legal representative (executor/administrator) engaged in wrongdoing, or issues with payment to creditors . The chance for litigation is possible in any of these scenarios and others, as well. Any of these reasons can lead to a long, drawn-out probate process that may evolve into litigation.

Here are some specific reasons why litigation may occur during probate:

• Contesting of the will: Wills are disputed by heirs, such as spouses or children, or by people who were mentioned in a previous will,, on the grounds that a person had undue influence over the testator; that the testator lacked mental capacity ; or that the will was the product of fraud or forgery.
• Wrongdoing of the executor/administrator: The legal representative (executor/administrator) is accused of wrongdoing, which could include negligence, misconduct, failing to fulfill the duties, conflict of interest, or misappropriation of funds.
• The presence of creditors: All valid debts should be paid before the distribution of any estate assets. If they do not get paid, creditors may take legal action to seek payment of those debts In other cases, heirs or beneficiaries may take issue as to whether the debt is valid and, thus, whether the debt should be paid by the estate.

Be prepared

Without the emergence of complications, such as an heir contesting a will, or a legal representative who commits a wrongdoing, the likelihood of probate litigation is scant. But things could turn for the worse, so prepare yourself if such developments come to fruition.

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All parents worry about their children’s futures. If you are a parent of a child with disabilities, those worries can multiply. What can you do to support them – especially as they approach the age of 18 and become a legal adult?

One option you may hear of is a limited conservatorship. However, it is important to understand the details of establishing this kind of conservatorship before considering this option.

Details about the limited conservatorship

A limited conservatorship is specifically meant to aid adults with developmental disabilities. They give a conservator – most often a parent – certain decision-making rights to help the conservatee manage financial or personal matters.

They provide seven particular rights to limited conservators in these cases, which include the ability to make decisions regarding:

1. Where the conservatee lives
2. The conservatee’s education
3. What medical treatment the conservatee receives
4. Access to personal records
5. The conservatee’s social or sexual relationships
6. Whether the conservatee can get married
7. If the conservatee can enter into a contract

A limited conservatorship is not designed to control your child’s life. It actually aims to support your child’s independence as much as possible once they become a legal adult. As a limited conservator, you would simply retain the legal ability to assist them and make certain decisions on their behalf.

What to know about the process

The process of establishing a limited conservatorship is involved, and you can discuss the particulars with an attorney to learn more. However, here are some of the most critical things to understand about this process:

• The court hearing: A hearing is necessary to determine if a conservatorship is appropriate. You must petition the court to begin the process. Your child will also require legal representation to ensure they have a voice in the process.
• Granting the conservatorship: It is essential to understand that the judge will only grant a limited conservatorship if the less restrictive options do not work. Therefore, you must make sure you consider all of the options available to support your child with disabilities as they turn 18.
• Specific conservator rights: We listed the seven rights a limited conservator has in these cases above. However, the judge will consider each one carefully to determine which ones are necessary. This ensures that a limited conservatorship promotes independence while meeting the child’s needs.

California law differs from many other states by allowing such arrangements. The goal is to protect your child’s needs and interests, even when they become adults. So, you must consider all of your options to do this. The best time to consider whether a limited conservatorship is appropriate is when your child with intellectual disabilities reaches age 17 1/2.

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California is a popular location for out-of-state residents to purchase vacation homes and seek shelter from the cold seasons. This second home can be a nice escape for the family – but what happens to the loved one’s special home in California if he or she passed?

The answer may be in your loved one’s will. Probate may be necessary to handle your loved one’s property after death in your home state.

If there is property in California as well, it may have to be probated there.

Two states means two probates

One probate will not cover all of your loved one’s property if their property spans states.

If your loved one owned property in two different states, and died outside of California, then it may require two separate probate cases. The case involving property in California – or outside of your home state, if over $184,500 in California – is called ancillary probate.

This is simply an additional probate specifically for non-residents who owned property in California that deals with said property.

What should you know about ancillary probate?

The basic details of what you should know about ancillary probate fall under the categories of the most common questions in “The 5 Ws,” such as:

• Why is this necessary? If there is a will, probate proves a will is valid. Ancillary probate does the same, and proves that your loved one owned this property. However, it is also necessary to allow the personal representative to obtain the property in California and the court could order it to be distributed according to the deceased person’s wishes.
• Who governs this process? The ancillary probate in California is subject to California’s probate code – not your home state’s
• When should you start this probate case? The ancillary probate can occur at the same time as your home state’s probate. In fact, the two probate courts will often cooperate throughout the process.
• Where should you start this probate case? Generally, every county has a probate court. Therefore, you should hire an attorney who helps you decide the appropriate place to file.

Ancillary probate is necessary in these cases, but it does not have to be a point of stress for your family. Understanding the basics of this process and seeking guidance from a knowledgeable probate attorney can be critical to manage a probate and its ancillary probate efficiently.

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