“Everybody wants to go to heaven, but nobody wants to die.”
At least twice here at my home away from home someone has raised the prospect of the imminent death of someone close to the them and their concerns about what would follow. Since this is what I do for a living, I’m an attorney with a practice limited to probate and trust litigation, I thought a primer on what occurs after death may be helpful.
I’m licensed in California and haven’t practiced in any other state. I have had plenty of contact with attorneys in other states. What I discuss will occasionally have a different name in other states, but the substantive law seems to be pretty similar from one state to the next. Needless to say, if you are actually dealing with a problem then speak with a local attorney.
When You Know Death Is Imminent
A terminal cancer diagnosis, hospice placement, or dementia diagnosis (barring divine intervention) is a signal the end is coming. Depending on the condition, it may come fast or slow. If your parent is still mentally competent and has the wherewithal, putting an estate plan in place or reviewing the existing plan is a good idea. If that’s not the case, then now is not the time to prod Mom or Dad to put an estate plan in place or change the plan they have. Every state has laws of intestate succession if there is no plan. That’s gibberish for “since you didn’t put a plan in place, the government has one for you.” I know I’m supposed to hate government, and generally I do, but having the government impose a plan when the soon to be departed didn’t is far better than letting the family club each other bloody over the estate.
What you should do right now is find the estate plan, if there is one, and pertinent financial records. All of this assumes Mom or Dad want some help and are willing to cooperate. If they don’t then leave it alone. Interposing yourself when it’s unwanted is an excellent way to cause a lot of stress during an already stressful time. Want to cause a permanent rift with your parent or siblings? Keep trying to “help” when your help has been declined. People aware of their impending end can be prickly. Unless you think someone is trying to financially benefit themselves at your loved one’s expense, leave it alone if you’ve been told to stay out of it.
If Mom or Dad will share the estate plan then read the trust, will, and durable powers of attorney to find out who is in charge in the event of mental incapacity and upon death. If it’s you, then congratulations! You have an absolutely thankless road ahead. A local probate judge has a sardonic joke. “You know what’s the second worst job in the world? Serving as trustee. You know what’s the worst? Serving as co-trustee.” She’s right. Having two people in charge usually makes things worse.
If you are in charge then you will be amazed how everyone else in the family is suddenly an expert in medicine and finance while you are a bumbling oaf who doesn’t devote enough time, effort, or energy to the task at hand. My jaundiced view is based on the cases that come into my office. They represent the minority of families. There are in fact families that help and support each other. Let’s hope that describes yours. And it’s worth noting, if you don’t want the job or can’t handle it then decline it. You aren’t doing anyone any favors by taking a job you can’t or won’t do. That’s another lesson from the rightfully aggrieved siblings I have represented over the years.
If you are in charge in the event of death or incapacity, then scan a copy of the estate plan. You will likely need more than one copy to provide to various entities as you go along. You can be sure the hospital will lose the durable power of attorney for health care you gave them three times before and the bank will have misplaced the trust or certification of trust just before they give you the new account agreement to sign. If you aren’t in charge, then while Mom or Dad are alive it’s very unlikely you have a right to see the documents. Curious to know what you will inherit? Wait. When death comes all will be revealed. Until then it’s Mom or Dad’s money and is going to be used for them. At least it’s supposed to be but that’s a separate discussion.
Whether you are serving as trustee or attorney in fact/agent under a durable power of attorney, keep track of every penny you spend. Yes, I am being literal. Keep every bill, receipt, invoice, bank statement, cancelled check, etc. Expect to have to account for it later.
When Death Comes
Stephen Franklin: It’s all so brief, isn’t it? Typical human lifespan is almost a hundred years, but it’s barely a second compared to what’s out there. It wouldn’t be so bad if life didn’t take so long to figure out. Seems you just start to get it right and then…it’s over.
Ivanova: Doesn’t matter. If we lived 200 years we’d still be human, we’d still make the same mistakes.
Franklin: You’re a pessimist.
Ivanova: I’m Russian, doctor. We understand these things.
“Soul Hunter” Babylon 5
Dr. Steven Franklin and Lt. Commander Susan Ivanova
Whether you are in charge (i.e. trustee, executor, or administrator) or not. Grieve. The day after your parent has died is not the time to call the attorney. Depending on your family dynamics, religious beliefs (or lack thereof), family geography, and financial ability you will have to put some time into the disposition of your loved one’s remains and gathering family to do so. You may have rituals around grieving. Observe them if this is important to you.
If you don’t, then take a tip from (((this))) lawyer. Take some time to grieve. I don’t care who you are or what your relationship was. You have feelings you need to address or process. Was it a warm, close, loving relationship? Then you probably have stories to tell and to hear. There are tears to be shed and people to embrace. Unless a foreclosure sale for the family home has been set, then the financial stuff will wait. Was the relationship distant and cold? Your grieving is going to be different. Grieving may not even be the right word. You still have some feelings to address. Do it.
Getting Down To Business
“Money, money changes everything
I said money, money changes everything
We think we know what we’re doing
We don’t know a thing”
“Money Changes Everything”
All that stuff you’ve seen in movies from the 1930s is garbage. (I’m looking at you Ted S.) The lawyer who drafted the will does not schedule a meeting with the entire family, there is no wood paneled room with a bunch of leather high back chairs, and there is no reading of the will. Depending on where you live, there is a good chance the will is irrelevant. Trusts have become the most common estate planning document in lots of places. The higher the cost of probate the more likely a trust was used to avoid the cost. A hat tip to Texas for making the costs and burdens of probate de minimus. If you are in Texas and there is a will your probate will move quickly. There are still good reasons to use a trust in there but I digress.
If the trustee, executor, or administrator, does his/her/xer job correctly then you will get a copy of the operative document in the mail. In the Golden State (*cough* bullshit *cough*) a trustee is required to mail out notice to the beneficiaries within sixty days of being informed of the settlor’s death. That notice identifies the trustee, provides their contact information, and tells the beneficiaries they have a right to request a copy of the trust. Most of the time a copy of the trust is mailed out with the notice making life easier for everyone involved. If it’s not, then make a written request to the trustee and/or the trustee’s attorney. This doesn’t mean sending a text or an email. Send a letter and keep a copy. It’s exhibit one to your petition to the probate court if the trustee doesn’t send you a copy of the trust.
If a will is the operative document, then the will must be deposited with the probate court for the county in which the decedent resided before their death and a petition for probate should be filed within 30 days if there is a need to open probate. Attached to the probate petition is a copy of the will (if there is one) and it gets served by mail on all the beneficiaries. Why do I keep saying executor or administrator? Are the overlords paying me by the word? By ZARDOZ, no. The person in charge of the estate when there is a will is the executor. The person in charge when there is no will is the administrator. Same position, same duties, same process, different name. I blame the British.
Whether you are dealing with a trust or a will, if it was written in the last few decades,then you shouldn’t find a lot of legalese in it unless it involves some significant tax planning or it was written by a kook (i.e. shitty attorney, paralegal with an inflated ego, or *shudder* a legal document preparer). If the document seems disjointed, contradictory, or otherwise incomprehensible for no good reason then I would check to see if Legal Zoom or Suze Orman’s horrible estate planning software is involved.
It’s usually easy enough to read the document to see who is nominated to serve as trustee or executor and how the estate will be distributed. If you really can’t tell, then get to an attorney. There may be a genuine problem that needs to be addressed sooner rather than later.
The large majority of the time the document itself is fine and anyone who can fog a mirror understands how this comes out in the end. What isn’t so obvious to anyone who isn’t in charge is what has to be done in order to get to distributing the estate.
Regardless of the document, creditors must be addressed. But you know Mom and Dad paid all their bills when they came in and had very simple finances. Great. Then things will go quicker if there is a trust. Oh, by the way, Mom and Dad may not have been entirely forthcoming with you. Credit cards are a form of debt even if they didn’t want to acknowledge it. They paid their bill every month… or so you thought. They paid the minimum and kept enjoying life as long as they were able. That final hospital stay that Medicare pays for… it didn’t pay the whole thing. Expect bills from the ambulance, hospital, and a slew of doctors to come in over the next few months. Surprisingly, mortgage holders don’t really care about the death. They expect to be paid. If they aren’t then they will go through the state specific foreclosure process.
What can the creditors get? It depends on whether the debt is secured or unsecured. If it is secured then the house, car, or boat is going back to the lender if the debt is unpaid. Assuming there is equity to be preserved but a cash shortage, then if anyone can pay until the asset is sold they should. The estate will repay them after it sells the asset and has cash on hand.
If the debt is unsecured then it depends on how title to the estate property was held at the time of death and what notice was given to creditors. If title was held by the trustee to the trust or solely in your parent’s name, then the trust or probate estate can be liable for the debts. If an account at a financial institution was held in joint tenancy, pay on death, or has a designated beneficiary, then it is going to that person. It doesn’t belong to the trust and it isn’t going through probate. A creditor can try to chase it but unless there is a lot of money at stake they won’t.
California has a very severe creditors claim process. In probate, the executor or administrator is responsible for sending a creditor claims notice to all known or suspected creditors. The creditor has sixty days in which to file their claim. Miss it by a day and they are out. No exceptions. The creditor gets nothing. There is an optional procedure trustees can use for the same purpose with the same effect.
If the creditor does file a claim then the trustee, executor, or administrator has to accept it, reject it, or partly accept it and partly reject it. If the claim is rejected in whole or in part then the creditor can file a civil lawsuit against the estate for the amount they claim is owed. If they don’t file within 90 days of getting the rejection of their claim, then they are barred from collecting.
At this point, all the property has been gathered and creditors have been paid. There is some net amount left in the estate. Presumably, there are still attorney’s fees to be paid (thank you state government) and the trustee, executor, or administrator also needs to be paid from the remaining estate. There are two ways to get to distribution. First, everyone who inherits can waive an account. Second, an account can be provided and is usually subject to court approval.
Whether to waive an account entirely depends on your level of trust and the transparency that’s been shown during the process. I commonly advise clients who have at least a half way decent relationship to send out copies of all the underlying financial records to the beneficiaries and ask them to waive an account. If they do waive then it speeds things up and saves everyone some money. If they won’t waive then the expense and delay is on them.
If there is going to be an account, then it only makes sense to petition the court for approval. It’s the only guaranteed way to cut off liability once it is approved.
With that done, the check is in the mail. When you get it, you may also be asked to sign a receipt. Attorneys who play it straight send out receipts that say exactly what you would expect. Please sign here to acknowledge receiving these items of tangible property and a check for $X. If that’s what you got, then sign the receipt.
That’s it. You’re done. Hopefully, everyone got along and the family relationships are no worse for wear.
I really appreciate Sloopy’s music links that somehow relate to the daily links. I’ll do my part to follow suit. This is more or less how I think about death.