Will my estate have to go to probate??

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Provlima
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Will my estate have to go to probate??

Post by Provlima »

I am living in Maryland am 76 and my wife recently passed away. I have two children.
I have a 600k condo a CD totaling 500k an IRA acct and an equities account totaling 500k
I have read that a will will have to go to probate.
My CD, bank accounts and equity account are all POD to my children in an equitable fair 50/50 manner
My IRA account beneficiary is my daughter.
The condo will be sold and proceeds shared by both 50/50.
My son and daughter have always been close to each other. I have discussed the above with them and they agree it is a fair distribution of my assets

My questions:

Will my estate avoid the need for probate?
Will the above assets pass to them without the need for a will?

Thanks much to the regulars here who have provided informal but wise advice over the years
Grt2bOutdoors
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Re: Will my estate have to go to probate??

Post by Grt2bOutdoors »

Provlima wrote: Sat Dec 04, 2021 7:53 am I am living in Maryland am 76 and my wife recently passed away. I have two children.
I have a 600k condo a CD totaling 500k an IRA acct and an equities account totaling 500k
I have read that a will will have to go to probate.
My CD, bank accounts and equity account are all POD to my children in an equitable fair 50/50 manner
My IRA account beneficiary is my daughter.
The condo will be sold and proceeds shared by both 50/50.
My son and daughter have always been close to each other. I have discussed the above with them and they agree it is a fair distribution of my assets

My questions:

Will my estate avoid the need for probate?
Will the above assets pass to them without the need for a will?

Thanks much to the regulars here who have provided informal but wise advice over the years
Accounts with payable on death or transfer on death designations will pass outside of the will - no probate. The real estate however will likely need to go through probate unless you structure the title likely through means of a trust so that it passes outside of it. I’m not familiar with the probate process in Maryland or if it something that is simple for your executor to do on their own. You may want to consult with legal counsel on the real estate issue.
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JoeRetire
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Re: Will my estate have to go to probate??

Post by JoeRetire »

Provlima wrote: Sat Dec 04, 2021 7:53 am Will my estate avoid the need for probate?
No. Probate will still occur.
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Lonestar007
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Re: Will my estate have to go to probate??

Post by Lonestar007 »

I have tried to structure my assets like the OP, avoiding as many as possible not having to go thorough probate. It does seem like the only way to avoid probate on the real estate is through a trust. I think the question regarding the real estate is "is it worth it"?

Also, if probate is needed, what would typical legal fees (attorney and court cost) be on an asset such as real estate assuming it's worth $600,000?
Mr. Rumples
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Re: Will my estate have to go to probate??

Post by Mr. Rumples »

First, very sorry for your recent loss. These sites might help:

https://mdcourts.gov/orphanscourt/faqs
https://probateadvance.com/maryland-probate-laws/
http://registers.maryland.gov/main/

One other consideration, again varying by state, is what the funeral home does if there is no will.

https://www.nolo.com/legal-encyclopedia ... -laws.html

Even when children agree in most things, when to discontinue life support can create angst. Thus, in addition to a will, other directives and documents might be helpful to your heirs.

Keep in mind that these laws vary widely from state to state and many times there are legislative changes that don't make the news; thus while a person might have everything in order on June 30, there may have been a change on July 1 of any given year.
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bsteiner
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Re: Will my estate have to go to probate??

Post by bsteiner »

Provlima wrote: Sat Dec 04, 2021 7:53 am I am living in Maryland am 76 and my wife recently passed away. I have two children.
I have a 600k condo a CD totaling 500k an IRA acct and an equities account totaling 500k
I have read that a will will have to go to probate.
My CD, bank accounts and equity account are all POD to my children in an equitable fair 50/50 manner
My IRA account beneficiary is my daughter.
The condo will be sold and proceeds shared by both 50/50.
My son and daughter have always been close to each other. I have discussed the above with them and they agree it is a fair distribution of my assets

My questions:

Will my estate avoid the need for probate?
Will the above assets pass to them without the need for a will?

Thanks much to the regulars here who have provided informal but wise advice over the years
We've had a few Maryland estates. Probating the Will wasn't difficult, expensive or burdensome. It was a small part of the work involved in the estate administration. There's no reason to be concerned about it.

Obviously if you don't have a Will, your Will can't be probated.

You may want to consider having your Will provide for your children in trust rather than outright, to keep their inheritances out of their estates for estate tax purposes, and to protect their inheritances from their creditors and spouses, and Medicaid.
Lonestar007 wrote: Sat Dec 04, 2021 8:16 am I have tried to structure my assets like the OP, avoiding as many as possible not having to go thorough probate. It does seem like the only way to avoid probate on the real estate is through a trust. I think the question regarding the real estate is "is it worth it"?

Also, if probate is needed, what would typical legal fees (attorney and court cost) be on an asset such as real estate assuming it's worth $600,000?
The work to probate the Will is the same for a $600,000 estate as for a $600 million estate. The lawyer (or, more likely, a paralegal in the law firm) fills out some forms which get signed and filed with the court. Since probating the Will is usually a small part of the work in an estate administration, we don't pay much attention to how much of our fees for the estate administration are attributable to probating the Will.
rivercrosser
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Re: Will my estate have to go to probate??

Post by rivercrosser »

Check your state rules. Here in Missouri, you can have a transfer on death deed. We have a son and daughter, and everything will get spilt 50/50. All accounts are TOD or POD. Vehicles same way. Our estate won't have to go through probate, but it's pretty simple. A good lawyer should be able to answer all your questions.
Hebell
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Re: Will my estate have to go to probate??

Post by Hebell »

Put the real estate in a Life estate deed with your two children as remainderman. That's how we solve the problems with my parents estate. We did not have to probate anything
prd1982
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Re: Will my estate have to go to probate??

Post by prd1982 »

From your original post, you seem to think that you don’t have to do probate if you don’t have a will. That is not true. In addition, it will be more work if you don’t have a will. My great niece just did her mother’s estate in MD, and there wasn’t a will. A lot of her effort was getting assigned as an executor, making sure she understood the default rules, etc, The pandemic rules added to the work. So please get a will. I assume you will make one of your children the executor, and the other the backup. I’ll not make an comments about whether to put the assents in trust. As to settling the estate when the time comes, the executor might settle the estate without a lawyer, assuming no disagreements between the heirs. The MD probate folks helped my great niece to understand what was required.
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Peter Foley
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Re: Will my estate have to go to probate??

Post by Peter Foley »

Your situation is fairly straightforward. There is no reason not to have a will if for no other reason than to address your wishes for a motor vehicle and other personal property. Perhaps there are family heirlooms, not necessarily valuable, that are of interest to multiple family members.

As mentioned I would look into a transfer on death deed option for the condo if that option is available in Maryland.

You have done a good job in terms of setting things up with POD and beneficiary designations.

I would also advise having a checking account with a reasonable balance that is a joint account with one of your children. There will be some expenses at death and having an account set up to settle those expenses is advisable. In Minnesota one can have a joint account for convenience. This is useful for elderly parents where dementia might be an issue and was also used by my wife to pay for her mother's funeral expenses and end of life health care costs.
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quantAndHold
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Re: Will my estate have to go to probate??

Post by quantAndHold »

Probate is just a framework to make sure your bills get paid and your estate gets distributed legally. It’s a way to make sure your heirs do the stuff that they need to do anyway. Probate appears to be pretty straightforward in Maryland, so there doesn’t appear to be any meaningful reason to try to avoid it just to avoid it.

My advice would be to spend a few hundred dollars with an estate attorney discussing your situation and getting a will or trust written that’s legal in your state and appropriate for your needs.

One thing I would say is when you’re doing all the POD/TOD stuff, leave a checking account in the estate. Whoever is administering your estate will need money to pay bills.
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arcticpineapplecorp.
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Re: Will my estate have to go to probate??

Post by arcticpineapplecorp. »

Hebell wrote: Sat Dec 04, 2021 8:52 am Put the real estate in a Life estate deed with your two children as remainderman. That's how we solve the problems with my parents estate. We did not have to probate anything
while this strategy might get around probate, it may create issues with regards to medicaid during the lookback period, if that is a concern.
Can Medicaid take a life estate?

Under certain circumstances if you get long-term care through Medicaid, the state can collect on the cost of care in what's known as Medicaid estate recovery. What assets they can take from the Medicaid recipient depends on the state. Some won’t take assets that pass onto other people outside of probate, which includes property that you had a life estate interest in. However, there are some state Medicaid programs that will collect your assets, even if they weren’t part of your probate estate. If you live in one of these states, then a house that you pass on to someone through a life estate deed (and even a transfer-on-death deed) could be potentially taken as part of the Medicaid estate recovery program.

source: https://www.policygenius.com/estate-pla ... fe-estate/
A life estate may enhance Medicaid eligibility, but you’ll need to avoid remainderman issues
The “look back” period

There are some limitations on using a life estate to reduce property ownership to qualify for Medicaid. The primary limitation is based on when you created the life estate. The government does not want to allow a person to give away all their property one day and apply for Medicaid the next day because that would amount to an abuse of the Medicaid system. To avoid that abuse, Medicaid imposes a five-year “look back” period between the time that you apply for Medicaid and the date you disposed of your property. Transfers of property within that five-year period are subject to penalties.

https://legacyassuranceplan.com/article ... igibility/
also there are different types of life estates, each with their own consequences:
For MA purposes, there are four types of life estates:

A revocable life estate (also known as life estate with full or partial powers) in which the applicant, the recipient, the applicant’s spouse or the recipient’s spouse is the grantor of the property and is deeding or granting ownership to a remainderman.

An irrevocable life estate (also known as life estate without powers) in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the grantor of the property and is deeding or granting ownership to a remainderman.

A revocable life estate in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the purchaser (remainderman) of a life interest in another person’s home.

An irrevocable life estate in which the applicant or recipient or applicant’s spouse or recipient’s spouse is the remainderman of a life estate in another person’s home.

Best to see an elder law attorney to discuss what you want to do and the best way to do that.
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delamer
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Re: Will my estate have to go to probate??

Post by delamer »

I’m sorry about your wife.

My guess is that part of your motivation is that you are hoping to avoid the costs of having a lawyer draw up end-of-life documents, such as a will.

It is a lot less expensive (both in money and time) to pay for those documents now then it will be for your children to straighten out any messes that you inadvertently leave behind by not having proper documents in place.

Don’t be penny wise and pound foolish, just because you won’t be around to see/deal with any future mess. It’s easy to underestimate the potential hassle you could be leaving for your loved ones while they are grieving your loss.
Last edited by delamer on Sat Dec 04, 2021 10:47 am, edited 1 time in total.
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HomeStretch
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Re: Will my estate have to go to probate??

Post by HomeStretch »

Consider having a bank account without a POD designation to cover any outstanding bills (utilities, medical), taxes and burial expenses.
bsteiner
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Re: Will my estate have to go to probate??

Post by bsteiner »

quantAndHold wrote: Sat Dec 04, 2021 9:55 am ...
My advice would be to spend a few hundred dollars with an estate attorney discussing your situation and getting a will or trust written that’s legal in your state and appropriate for your needs.
...
More like a few thousand dollars than a few hundred dollars.
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Lee_WSP
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Re: Will my estate have to go to probate??

Post by Lee_WSP »

Sorry to hear that.

As far as probate or intestacy goes, IMO a section of the estate planning bar has done a very good job of using California’s inane and reportedly awful probate process to scare everyone in the rest of the country into thinking that they need a living revocavble trust or else your heirs will suffer in probate court purgatory. Whereas in fact, it’s just a bunch of papers and a few appearances (if any). The rest of the estate administration needs to be done regardless of testamentary vehicle.

What you need is a comprehensive plan for all of your asset distribution devices. You need to understand the double edged nature of beneficiary designations, the retirement account tax bomb implications, etc etc.

So, yes, I’m going to say that you should seek a lawyer well versed in estate tax law and trusts and estates.
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Steelersfan
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Re: Will my estate have to go to probate??

Post by Steelersfan »

Lee_WSP wrote: Sat Dec 04, 2021 11:11 am Sorry to hear that.

As far as probate or intestacy goes, IMO a section of the estate planning bar has done a very good job of using California’s inane and reportedly awful probate process to scare everyone in the rest of the country into thinking that they need a living revocable trust or else your heirs will suffer in probate court purgatory. Whereas in fact, it’s just a bunch of papers and a few appearances (if any). The rest of the estate administration needs to be done regardless of testamentary vehicle.

What you need is a comprehensive plan for all of your asset distribution devices. You need to understand the double edged nature of beneficiary designations, the retirement account tax bomb implications, etc etc.

So, yes, I’m going to say that you should seek a lawyer well versed in estate tax law and trusts and estates.
+1, many times over.
curmudgeon
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Re: Will my estate have to go to probate??

Post by curmudgeon »

Provlima wrote: Sat Dec 04, 2021 7:53 am
Will my estate avoid the need for probate?
Will the above assets pass to them without the need for a will?
When you lose a spouse, a number of life and estate planning issues become more important now that you don't have an automatic backup. There doesn't need to be a rush, but it would be good to address them sometime in the next year. With a fairly simple scenario, you might start with the fairly simple default docs you might find (Nolo press has some good books, or there may be some online forms). Even if you then choose to use a local lawyer, working through things beforehand may give you a better background.

You definitely want a will. It may not prove necessary if all your assets are passed directly, but it's a backstop that will make life much simpler for your heirs if something unexpected happens.

You probably want an advanced health care directive - something that will designate who should make health care decisions for you if you are unable to. Ideally this will also provide some direction if there are situations where you would NOT want life sustaining care (long term tube feeding or other "pull the plug" type scenarios).

You need to consider a potential future point when mental or physical deterioration may have set in. It may not be something you want to do now, but think about when you might want to have one of your kids able to pay your bills or make other arrangements.
privateer79
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Re: Will my estate have to go to probate??

Post by privateer79 »

my father passed intestate in baltimore county, and becoming the PR and executing the estate (i.e. doing all the legal legwork) was maybe only 10% of the actual work. (the bulk being going to the banks and getting accounts transfered, shutting down utilties/accounts and selling real property/cars.)

(i.e. don't sweat intestate probate unless you have really complicated finances or potentially contentious family issues)

having letters of administration can come in handy in ways you might not anticipate (like closing accounts, selling property etc...) so it might be worth going through probate regardless.

finally, another branch of my family (that tended to have larger families) has a tradition of doing "estate sales" and selling everything rather than individually assigning assets to individuals. initially I thought this was kind of cold/callus, but in retrospect realize it's a way that insures fairness at time of distribution, rather than fairness at time of will-writing. (i.e. by the time you pass the house might go way up in value, and the accounts might be drained by end of life care (or vice-versa)..... what you think is fair now, may very likely not be later..... but "sell and divide by 2" (with a possible small discount for family members) is an algorithm that is both fair today, and at any point in the future.... it will also keep you off a treadmill of rewriting your will as circumstances change.
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quantAndHold
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Re: Will my estate have to go to probate??

Post by quantAndHold »

bsteiner wrote: Sat Dec 04, 2021 10:45 am
quantAndHold wrote: Sat Dec 04, 2021 9:55 am ...
My advice would be to spend a few hundred dollars with an estate attorney discussing your situation and getting a will or trust written that’s legal in your state and appropriate for your needs.
...
More like a few thousand dollars than a few hundred dollars.
LOL. I guess I’m out of touch. So I take it your office isn’t above the nail salon down the street like our attorney’s is?
chemocean
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Re: Will my estate have to go to probate??

Post by chemocean »

rivercrosser wrote: Sat Dec 04, 2021 8:43 am Check your state rules. Here in Missouri, you can have a transfer on death deed. We have a son and daughter, and everything will get spilt 50/50. All accounts are TOD or POD. Vehicles same way. Our estate won't have to go through probate, but it's pretty simple. A good lawyer should be able to answer all your questions.
I see the downside of transfer on death deed is that the heirs will own the house in common. They need to manage it or sell it together. This might lead to disagreements within the family or coming up with an arrangement for one heir to buy out all the other heirs Since probate in not onerous in my state, I prefer to have the house be part of the probate estate and sold by the executor. My state does not charge a % of assets.
chemocean
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Re: Will my estate have to go to probate??

Post by chemocean »

Provlima wrote: Sat Dec 04, 2021 7:53 am I am living in Maryland am 76 and my wife recently passed away. I have two children.
I have a 600k condo
I have read that a will will have to go to probate.

The condo will be sold and proceeds shared by both 50/50.
My son and daughter have always been close to each other. I have discussed the above with them and they agree it is a fair distribution of my assets

My questions:

Will my estate avoid the need for probate?
Will the above assets pass to them without the need for a will?

Thanks much to the regulars here who have provided informal but wise advice over the years
Maryland does not recognize Transfer on Death Deeds. Therefore, it seems that the condo needs to go through probate. I remember, like Delaware with its 1.75% fee on total assets, that Maryland also as a fee based on total assets of the probate estate.

If the $600,000 condo is the only probate asset, the following url suggests that the probate fee for the value of the condo would be $750. Even with the other fees, it does not seem putting the condo in a trust to avoid the probate fees for the condo are worth the expense of establishing a trust.

Who knows, you may decide to move into independent living with home care support as an end-of-life decision that would mean the cost of establishing the trust would be wasted.

https://registers.maryland.gov/main/fees.html
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