Sorry to be a bit late to this discussion -- haven't checked email for
over a week (what a glorious holiday!).
You SHOULD have a will. In many states, if you do not have a will, you
are declared "intestate" and the state takes a huge cut off the top of
the estate.
Don't be afraid of probate. "Probate" is simply the process of the
court approving the distribution of an estate. If the estate is small,
the will is straightforward, and there is no dispute, the only thing
an executor needs to do is file the will with the probate court. No
lengthy court proceedings (which is what many people mean when they
talk about "probate") are necessary. The executor is legally the one
who has to assess the estate, determine the heirs, figure out whether
probate court proceedings are necessary, file the probate papers, pay
any outstanding debts, collect any money owed, and file a final IRS
tax return. You don't *need* a lawyer to do this, though most people
hire one to guide them through the process.
Nolo press (www.nolo.com) is the oldest (and best, IMO) source of DIY
legal information.
A trust is much more involved, and there are several types of trusts
(lawyer time, folks). If you are creating a trust for animal care that
only goes into effect when you die, then it may still be part of your
estate, and you may or may not have avoided probate. To avoid probate
with a trust, you have to create a trust while you are still living. In
this way, you create a legal entity to which you transfer assets while
you are alive, so it is not part of your estate, and is not probated.
On the other hand, you no longer own that money free and clear.
Insurance policies are not probated, and they should pay right away
(since one of the advertised reasons for life insurance is to tide you
over while the estate is being settled). As suggested, life insurance
policies can be used as sort of a poor man's trust. Just remember that
legally there are no strings attached. You may intend the money to be
used for care of ferrets left behind, but there is no way to enforce
that (but presumably whoever you are trusting with your babies is
trustworthy). By the way, if the "owner" of a policy is the one who
holds on to the paperwork, it simplifies matters. The executor doesn't
have to find the policy, determine who is the beneficiary, and notify
the insurance company. The owner simply sends the insurance company a
copy of the death certificate, and gets paid.
Jointly owned assets (bank accounts, real estate) usually revert to
the other owner without probate. This is different from specifying a
beneficiary for an account. You have to trust the other person. The
person who you designate as joint owner has full property rights; they
could clean out a joint bank account.
Willing an IRA to someone is only tax-free if that someone is your
spouse; if you will it to a child or unrelated person, they will have
to dissolve the IRA and pay the accrued taxes. They will have to file
extra paperwork to avoid paying an early withdrawal penalty. But they
won't be able to just roll it over into their own IRA, as a spouse
could.
You cannot legally leave an estate to an animal. However, you can leave
money for the care of an animal. You can do this informally (I leave
this money to XX, with the understanding that she will care for my
pets), but there is no legal enforcement of the "understanding".
Chances are you trust this person, or you wouldn't be making them
caretaker, so this should be sufficient. If you do it formally by
creating a trust, a court is now involved in enforcement. This does
NOT necessarily make things more straightforward.
The original poster wanted to give her estate to ferret organizations
instead of to her natural heirs. In this case, where you can anticipate
that the will might be contested, it's important to have a lawyer draw
up the papers. The lawyer will do things like make sure that all the
natural heirs are mentioned in the will (this is where you get things
like "and to my son George, I give $5 and my favorite pen, in the hope
that he will finally learn to write thank-you notes"). Failure to
mention a natural heir can be grounds for challenging a will. The
lawyer will also check the various state laws that might apply. As
someone mentioned, the rules are completely different in Louisiana,
since there the legal underpinning of "Common Law" refers to French
law and not English Common Law.
Make sure that your will is findable. If the will is drawn up by a
lawyer, they will usually have a copy in their vault. But your executor
will need to know who your lawyer is, so they can get the will. If you
make your own will, you might keep it in a safety deposit box or in
your desk drawer. Those are all normal places to look for wills. Make
sure your executor knows where you keep yours. Note that to get into a
safety deposit box after someone has died, you need permission from a
probate judge. For this reason, it may be a good idea to have a safety
deposit box that is also owned by the executor of the estate, so they
can retrieve the document without going to the judge.
It is perfectly legal to have a holographic will -- that is, an
informal will that simply tells your wishes. It should be signed,
dated, and witnessed. It's better than nothing, and may keep an estate
out of the "intestate" classification, but it is open to challenge by
just about anyone (including the state if they decide they want their
"intestate" cut).
I think the most important thing with our pets is to have someone
lined up ahead of time who is willing to take them immediately. If you
collapse and go into the hospital, is there someone who will know and
will take care of your animals? Neighbors or distant family members may
not even know the pets exist, and even if you don't die, they might
suffer.
Bill, sorry this is so long. Edit as you see fit.
-Claire
(disclaimer as per Sukie -- I am not a lawyer. But I am executor of my
Dad's estate, and took paralegal courses in Wills and Trusts.)
[Moderator's note: No need to cut but I hope people keep any comments
related to ferrets :-) BIG]
[Posted in FML 7116]
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