Beneficiaries refer to people who are entitled to assets owned by a person who has died. Beneficiaries typically include spouses, children, and direct lineage heirs such as sisters and brothers. Organizations such as charities or educational institutions can also be designated beneficiaries.
Anyone can be named as beneficiaries on property titles to real estate, automobiles, recreational vehicles, motor crafts and financial holdings such as bank accounts, retirement accounts and life insurance policies.
Beneficiaries can be designated in a Last Will and Testament, Living Trust or through Payable-on-Death (POD), Transfer-on-Death (TOD) and Joint Tenants of Survivorship documents. Official documentation of named beneficiaries must be prepared prior to the decedent's death.
Executing a Will does not keep the decedent's estate out of probate. Unless the decedent places their Last Will and Testament in a Revocable or Irrevocable Living Trust, their estate must pass through probate before distributions are made to heirs.
When POD, TOD and Joint Tenants of Survivorship documents have been prepared, beneficiaries are required to sign documents and wait 45 days before assets can be distributed. All remaining assets must undergo the probate process, which can last several months or even years.
If a person dies without a Will (intestate), a probate judge will determine the rightful beneficiaries according to their states' probate laws. Generally, a probate executor is designated to administer the estate. Designated Administrators are usually a family member or personal representative. However, if no relatives or associates accept the position of probate executor, the judge will assign an outsider to oversee the estate.
During probate, the Administrator will handle multiple duties. In some instances, the estate executor will follow directives for planning the decedent's funeral. Most funeral homes will advise the Social Security Administration of the decedent's death. However, this is not always the case and the estate executor should follow-up to ensure SSA is notified. Doing so will prevent potential identity theft.
The probate executor is required to contact any government agencies which provided benefits or assistance to the decedent. These might include Medicare, Medicaid and the Veteran's Administration.
A creditor notice should be published in the local newspaper. The Administrator is required to engage in due diligence to contact all creditors whom the decedent owed money. All outstanding debts must be paid from the decedent's estate. In cases where the decedent does not have enough money to repay outstanding debts, assets must be sold to cover the debts. The Administrator and beneficiaries of the estate are never held responsible for the decedent's personal debts.
Last, but not least, a final tax return must be filed within nine months of the decedent's death. If taxes are owed, they must be paid in full at the time of filing.
Most people prefer to work with a probate lawyer to ensure the estate is handled appropriately. Retaining the services of a probate attorney is particularly helpful when the estate is complex or if family discord exists. A probate lawyer is of particular importance in cases where beneficiaries contest the Will.
Unfortunately, many people procrastinate about estate planning. However, dying without executing a Will creates a heavy burden for your family and opens the door for beneficiaries to fight over your belongings. If you do not have a Will, the probate judge will decide who receives your property. Chances are the judge will not distribute your assets in the manner you prefer.
Estate planning does not have to be a difficult process. Preformatted Wills can be purchased at office supply stores or downloaded via the Internet. All that is required is to fill in the blanks, obtain two witness signatures and have the document notarized.
Published on October 23, 2008 at 08:52 AM | Comments: 1