After A Loss: Your Guide To Legal Matters And How To Prepare

Losing a loved one is incredibly difficult. You are grieving, planning for family members and friends to come into town, making decisions regarding funeral services and memorials, and maybe facing financial hardships. It’s a time of stress, overwhelm, and great sadness.

The last thing on your mind is legalities, but unfortunately, these things come up faster than anyone wants to think about, and being prepared is your best defense. Here is a short guide on what to do next.?Note: laws vary by state, this article discusses New York law. ?

The first term to familiarize yourself with is?“Probate.”?Probate is the process that will unfold if the deceased has left a?Last Will and Testament. The named?executor?in the will should take steps to review the will and begin the process of submitting a petition to the Surrogate’s Court to be formally appointed by the Court as the?fiduciary?of the decedent’s estate.

The will is “proved” by the court, basically stating that it is valid and was executed properly. Also in probate, anyone contesting the validity of the will can come forward and file a petition. A judge will determine how the assets are divided, if and when this occurs. An example of why a will could be contested would be undue influence or lack of legal capacity to make the will (did not understand the legalities.)

If the deceased left no will, the process is similar. A petition to be appointed an?administrator?is submitted to the Surrogate’s Court instead. New York law provides a list of people who take priority over others as to who may be appointed. Generally, it is the spouse, then a child, sibling or parent who takes precedence over anyone else, but a creditor can make an application to have the Public Administrator appointed if the creditor wishes to sue the estate (i.e., in a foreclosure action.) We will call the person appointed here the fiduciary, as once they are appointed, the duties of an executor or an administrator are substantially the same going forward.??

One of the first things to occur will be the?“marshaling” of assets. The fiduciary must locate and take over any asset of the deceased that is part of the estate and file a formal inventory with the Court or they can face personal liabilities.??

Note that some assets are not part of probate, including those in a?trust?and those already belonging to a specified beneficiary, like a life insurance policy or joint assets that have a right of survivorship (like a joint bank account or real property.)??

Another duty of the fiduciary is to collect the deceased’s debts and determine if they are valid and then pay the debts from the estate assets.??

Finally, once the assets have been “marshaled” and the debts have been paid, the fiduciary will distribute the assets according to the will or the?laws of intestacy.?While intestacy laws may vary from state to state, in New York, generally, the heirs are as follows:

If spouse and no kids – all to spouse.

If spouse and kids – the first $50,000 to the spouse and then the spouse and kids split equally.

If kids and no spouse – all to the kids equally (if a child has predeceased the parent and has children of their own, their share would be split among the predeceased child’s children.)

If no kids and no spouse – then to parents if living; if not then to siblings, then cousins, etc.?

Although some people worry that their assets will “go to the state” if they don’t have a will, you can see that a person would have to have no surviving heirs at law for the assets to?“escheat”?to the State.

The final aspect of probate is the?filing of an accounting.?This can be done either through the courts if there are any issues (i.e., minors involved, someone disputes the distributions, etc.) or can be done extra-judicially, meaning that everyone involved is satisfied with the result and they agree to the distributions, providing releases and waivers to the fiduciary.?

When a trust is recommended to people, it is often for either Medicaid asset protection or for?“ease of probate.”?Ease of probate refers to this process of probate.?Currently, depending on the County, there is still a backlog in the courts in New York and the probate process can get expensive. A trust is also more private, in that the trust does not need to be filed with the Court, for public viewing. ?

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