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Mary Owens: The functionality of wills

Mary Owens

Proper estate planning is one of the best things you can do to protect your loved ones.

Having the right type of legal documents in order reduces stress, frustration and avoids unexpected delays in administering financial and legal affairs once disability or death takes place within a family.

Having a proper estate plan is critically important; understanding how the documents work and the processes that are tied to each one is equally important.

For the next several months I will be explaining the functionality of wills, revocable living trusts, and other related documents. I will start with wills since most people are generally familiar with the term and the purpose of the document.

What is a will?

A will can be a completely hand-written document prepared by the testator (holographic will), drafted by an attorney representing the testator, or be typed by the testator. It is critically important that the testator signs and dates the document.

A will is, essentially, a letter written to a probate judge informing the court of your desires for your estate administration. It should tell the judge who your immediate family members are, if you are married or single, give instructions on paying your final debts, and instruct the probate judge who is to receive your net assets, and in some cases, who is not to receive them.

The will also needs to indicate who will be the executor of the estate. It should name at least two people that the testator prefers to serve in this capacity in case the first person chosen is unable or unwilling to serve.

A will is a private document until the testator passes away. After the death of the testator, the original signed will is lodged (presented and filed) with the probate court system in the county in which the decedent resided.

A copy of the will cannot be accepted. Once the will is lodged at the courthouse, all privacy goes away and it, along with all subsequent filings, becomes a public document that anyone may read.

Outlining the process

There are many steps to “probating” a will. In very simple estates, the process can take four to six months. The average is about two years, and may vary by county, depending on how impacted the local court system is with other legal affairs that may take priority over court room availability.

In very complicated estates probate can take many years to successfully conclude. The first step in the probate process is the appointment by the court of an executor or other personal representative. This person will be responsible for taking possession of the estate property and administering the estate.

The court will issue a “letter of testamentary” which is a written court order allowing the executor to legally take control of the assets and administer them in accordance with the probate laws and the instructions laid out in the will.

It is the executor’s responsibility to protect the estate assets and deliver the net assets to the proper beneficiaries. The executor is answerable to the probate court for their actions in the administration of the estate.

The next step involves legal notifications. Known creditors must be notified of the death of the decedent. Unknown creditors are given notice to present their final debts of the estate via publications in local newspapers regarding the death of the decedent and the opening of the public probate process.

Heirs and potential heirs of the estate are also notified so they have the opportunity to read the will and file protests if they have reason to believe the will is not valid or they have been “unintentionally” forgotten.

Next the executor files an inventory of assets with the probate court. This inventory must be very detailed, listing bank accounts, brokerage accounts, real estate and all other probate assets, along with the value of each asset as of the date of death of the decedent. Known debts of the estate must be listed as well.

The filing of the inventory is a public document. We will discuss in later articles how this can be completely avoided with sufficient estate planning.

The final step

After the inventory is accepted as filed, the executor petitions the court for permission to deal with the assets and pay creditors claims.

After the statute of limitations has passed for additional creditors’ claims to be filed with the court, the publication for final settlement has been completed, all bills of the estate have been paid, and proper tax filings have been completed, the executor then petitions the court for final settlement. This petition includes a complete accounting of all financial activity of the executor.

The opening inventory value is presented again, with a full accounting of the funds received or disbursed since the opening inventory of assets. This report presents the final assets available to be distributed to the heirs of the estate.

The funds that each heir is to receive are detailed in the public court report. Once the report has been accepted by the court, the executor may proceed with distribution of the assets to the heirs of the decedent.

Next month we will discuss which assets are includable in the probate process and which assets are excluded.

There is a common misconception that all assets of the decedent must go through probate.

Many assets are excluded and are not subject to the court supervision process.

Mary Owens, Managing Principal/Branch Manager, RJFS, 426 Sutton Way, Suite 110, Grass Valley, CA 95945, 530-272-7500. Securities offered through Raymond James Financial Services, Inc., Member FINRA/SIPC. Owens Estate and Wealth Strategies Group is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment advisory services offered through Raymond James Financial Services Advisors, Inc. The case study discussed is hypothetical and has been provided for illustrative purposes only. Individual cases will vary. Neither Raymond James Financial Services nor any Raymond James Financial Advisor renders advice on tax, legal or mortgage issues, these matters should be discussed with the appropriate professional. The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Any opinions are those of Mary Owens and not necessarily those of Raymond James.

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