Elder Law Report

The Importance of Probate and Trust Administration in Elder Law: Protecting Your Assets

February 24, 2023 Greg McIntyre, J.D., M.B.A.
Elder Law Report
The Importance of Probate and Trust Administration in Elder Law: Protecting Your Assets
Show Notes Transcript

Check out this informative video where estate planning and elder law attorneys Brenton Begley and Greg McIntyre discuss the importance of probate and explain the process in North Carolina! As they point out, understanding probate is crucial to ensure your loved ones are taken care of and your wishes are carried out after you pass away. Don't miss out on this valuable information!

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**Speaker 0** (00:00:00) - Please don't wait till it's too late. McIntyre Elder Law.

**Speaker 2** (00:00:15) - Hi, I'm Greg McIntyre here with my law partner Britain s Begley for the Elder Law Report. And we're going to talk about something that is complicated, often mismanaged, overlooked, but extremely important probate and misunderstood probate and, and trust administration. Britain. I hear all the time folks come to me and they say, you know what, Greg? Don't worry about it. I don't have to go through probate because I have a will to which I have, uh, a varied amount of responses to that. Uh, but

**Speaker 3** (00:00:56) - You will go through probate <laugh>,

**Speaker 2** (00:00:58) - You will, you will go through probate and <laugh>. So it takes me to get a while to get 'em there, but that probate is the process right by which your will passes assets. There is no other process. Your will isn't worth anything until it's actually submitted a probate and somebody qualifies as an executor.

**Speaker 3** (00:01:19) - Yeah. Yeah. I I like to think about it this way. So if you pass away, the things that you have are your estate. Now, some of those things can be prearranged to pass immediately to a beneficiary that's named to 'em, but otherwise somebody has to figure out what to do with those assets and that somebody is the court. And so when the court, when someone passes away, the court asserts jurisdiction over those assets that don't already have some prearranged beneficiary. Okay? And there's many ways to do that. But the court asserts jurisdiction and then they appoint somebody to act on the behalf of the court as an officer of the court. And that person is the executive. And just because you name somebody as executor in the will does not mean that they are the executor until they are appointed by the court until they swear.

**Speaker 3** (00:02:12) - They take that oath right hand on the Bible, hand the air, and you know, they gotta take that oath and be appointed. Okay? And then you begin the process of probate the process that is necessary for probate assets and the title for probate assets to be passed from the decedent to the next generation. Right? And here's another thing. You know, we talk about passing titled assets and that's a big deal. But there's also other things that need to happen through the probate process, depending on the manner in which the person passed away, if there was pending litigation before that person passed away, if they're owed contracts, right? You might have a business that needs to be ran, you might have money owed to you, you might have carried back a mortgage on a property that you sold. You might have been, you know, uh, someone might have caused that individual's death and, and are liable, um, for wrongful death or personal injury. The probate process is absolutely necessary and integral to making sure that that money contracts, whatever it is, lawsuit is continues on, you know, the money is obtained, or you can file on behalf of the estate some type of legal action to make the estate whole for personal injury or wrongful death.

**Speaker 2** (00:03:33) - Absolutely. And, you know, so, so the will worth really nothing while you're alive doesn't do anything. The executor can't do anything for you. Uh, the probate process serves to cha change title to assets that otherwise don't have a way to change title like a beneficiary or something like, or things in trust. Right? And we've already talked about in a previous E L R about the estate of confusion, the different types of estates, how you would divide up your estate into probate trust and maybe outside of both of those. Um, and we also talk about avoiding probate all the time, but that's not necessarily, that is the common thing is people want to avoid probate. But really, if your estate is large enough, probate might be the perfect place to handle the transition of assets. What do you think?

**Speaker 3** (00:04:29) - Yeah, I mean, at some point you might wanna start routing everything through the probate process for the benefit of that probate process because you have finality of the court order, you have the, uh, accountings that must be given to the court, and it's ensuring that everything is routed through that process. So it goes through the terms of that very important legal document that you've put in place your will. You know, and that's something that I like to point out to people, even without maybe a larger estate, you know, if you name beneficiaries on a life insurance policy, it's gonna go to them immediately upon your death and they're just gonna get the whole thing with no stipulations. If I leave, you know, a $500,000 life insurance policy behind, someone's gonna get $500,000 and I can't set any type of stipulations on that. I can't control what happens with that money. I can't ensure that money goes to a certain benefit. I can't ensure that money is used for education, maintenance support of

**Speaker 2** (00:05:28) - That. So you can put, you can put trust, like trust in wills, right?

**Speaker 3** (00:05:33) - Yeah,

**Speaker 2** (00:05:34) - Yeah. Testamentary trust.

**Speaker 3** (00:05:36) - Yeah. So, you know, I might have a life insurance policy that I won't leave to my oldest child, right? And if I pass away, I don't want that child, you know, to get that at 18 or even 21 and just blow that money. Maybe I want that money to be routed through that important legal document that I put in place that can set stipulations. Maybe it goes in trust for them upon my death and stays in trust for a certain amount of time. They only get it when they're 35 or get married or whatever, right?

**Speaker 2** (00:06:04) - But those things are written in the will and happened coming outta that courtroom, that court process, the probate process, right?

**Speaker 3** (00:06:11) - Exactly. The probate process gives it, you know, the slim of having that court order to make sure that those assets are passed correctly to the correct people through that will, you know, that will, you've set down and, and you know, uh, spend a lot of time making sure is, um, very detailed as to what your wishes are gonna be. And that can, the same thing can happen through a trust too, during your life. So, you know, will, can create a trust at your death. It's called a testamentary trust because it's created under the last one testament. Um, you know, by virtue of your death. Okay? And then you have a trust that is a living trust that means it's, you know, created during your life. And that trust can do the same thing. Um, however, you know, how about this, the trust can be a really good thing for people, for certain, you know, certain factors, okay?

**Speaker 3** (00:07:11) - But at a certain point you may, there may be a benefit to route assets through the probate process. That's not the case with some of our clients who may face, you know, large long-term care bills or large, uh, Medicaid recovery. We want to avoid probate. However, for certain ones of our clients who don't have that issue, routing things through probate can be a good, uh, thing because it forces, you know, the parties meaning the executor, the beneficiaries to go through this process where the court can hold everybody accountable and make a final decision as to how things are, are split up

**Speaker 2** (00:07:52) - And keep talking about a court order. Like, you know, I can rely on the finality of that court order, the official, and this the officiality. I dunno, you know, but, but really we have the officiality in this. We really have court oversight from beginning to end.

**Speaker 3** (00:08:09) - That's right. And

**Speaker 2** (00:08:09) - That's why you can take comfort in and probate is you have court oversight starting from the very beginning and different checkpoints with accountings, you know, your executor has no choice really, but to abide by the exact rules of your will, right. And from the beginning to end until the court closes it out.

**Speaker 3** (00:08:30) - Yeah. And, you know, there's, there's benefits to that. Certainly some people want to avoid that. And sometimes it's in the best interest of the parties to avoid court oversight, to have, you know, to avoid unnecessary delay for assets to pass. Especially if it's somebody who's really depending on that inheritance to make sure that they can maintain the same quality of life. Things like that you might want to pass to them immediately. However, if really not a concern, especially if it's a large enough estate where you wanna make sure that, you know, if, especially if like estate taxes are, are a factor or something like that, and you wanna make sure that your estate is handled correctly by a professional where there's not going to be any infighting, any prolonged litigation afterwards. And that, you know,

**Speaker 2** (00:09:17) - And that things are done correctly from the begin. I mean, you know,

**Speaker 3** (00:09:20) - And, and the larger estate people, more likely of of things going wrong too. So that court oversight's gonna give, you know, the, the ability for everybody to check off at every step, right? The court to check off at every step that you're doing things right. So you don't get, you know, three months into the process and realize, oh, you know, we messed up at day, um, you know, 20 and now we have to rectify it somehow. Right? And,

**Speaker 2** (00:09:46) - And a lot of times people are coming to us to try to clean up those messes and fix it and get in in the middle much easier if we can sit down, determine all the assets, and develop a plan to probate the estate and handle it from the beginning to end as efficiently as possible. Right? Right. So, so, so that's probate. I'll tell you what, I think the next week we should separate out and trust administration, um, into its own show, and that's what we'll do. Yeah. Uh, pro probate in itself can be a beast. It can, uh, you know, it, it's very meticulous as far as things that have to be done in a certain order. The timing of things is very important. Um, and it's also somewhere where if you don't know what you're doing, you can get in a lot of trouble. Um, and what I mean is if you're not filing certain things in the right order at the right time, you'll get a visit from a sheriff serving you with a show cause motion to do whatever the court needed you to do.

**Speaker 3** (00:11:03) - Yeah,

**Speaker 2** (00:11:04) - Yeah. And, and that's, and that's not a fun situation to

**Speaker 3** (00:11:07) - Be in. Yeah. And you know, we, we, um, we talk a lot about, you know, avoiding court oversight and things like that. And then it's funny cuz you see some people trying to recreate the desire to have an oversight, to have a very solemn process that must be gone through whenever they pass away to make sure that things are split correctly. And they, and they try to kind of go, you know, through all these steps to make sure there's, you know, uh, multiple, uh, trustees or beneficiaries can have this right to, you know, see an accounting or something like that. And at the end of the day it's like, well, you might as well just have it all routed through probate anyway, you know, and really at a certain point there, it could be in the best interest of the estate and the heirs to go ahead and have it routed through probate and rely on the will rather than trying to have as an overall goal avoidance of probate. You know, that doesn't apply to everybody. I think you have to be at a certain asset level for that to really be the case. But it can certainly be helpful at that high asset threshold.

**Speaker 2** (00:12:15) - I do, I do not disagree. And, uh, you know, let's talk a little bit more about trust planning and trust administration specifically next week on the Elder Law Report. Brett and I, I appreciate you being with me today on this great episode of the Elder Law Report. And, uh, I look forward to having a good Friday. C g, IM okay. See you next week.

**Speaker 0** (00:12:41) - Please don't wait Late entire elder

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