Probate

Your Guide to Administration of a Probate Estate

If your loved one died with an estate, and you were designated as the administer of that estate while it goes through probate, it is important to understand your legal rights and responsibilities. Probate is the process of settling an estate by distributing the assets to the beneficiaries according to the will. Although both processes can be overwhelming at first, with a little assistance, it becomes manageable. To help you navigate the probate and trust administration process, we have provided an overview of some of the most common tasks involved as well as tips for getting through the process as smoothly as possible.

How to Probate an Estate

The first step in administering an estate is to file a petition for probate with the local probate court. The court will notify any creditors with an interest in the estate. Creditors have six months from the time of notification to file claims seeking payment from the decedent’s estate. During this time, you should ensure that any outstanding bills are paid and that the estate has adequate funds to pay the claims after the claim period expires. Once the probate petition has been filed, the court will appoint an administrator for the estate who will be responsible for managing and distributing the assets of the estate to the beneficiaries according to the terms of the will. The administrator will also have the responsibility of notifying the beneficiaries of the decedent’s death and preparing any necessary tax forms.

Managing the Estate After the Creditors’ Claim Period Expires

Once the creditors’ claim period has expired, the administrator will be responsible for closing out the decedent’s accounts and paying any remaining debts associated with the estate. If the estate has no outstanding debts at the time of the decedent’s death, nothing will need to be paid and those assets can be distributed to the beneficiaries according to the terms of the will. The administrator is also responsible for making arrangements for the transfer of assets. Typically, this will involve placing real estate in the name of the heirs and selling any other major assets if necessary. Some assets may need to be sold for the benefit of the estate in order to cover expenses such as taxes and debts. The administrator will need to notify all interested parties before a property is sold in order to ensure that their interests are protected. After the property is sold, the proceeds will be deposited into an estate account and all expenses incurred during the administration of the estate will be deducted from the account before they are distributed to the beneficiary(ies). When the assets are to be distributed, the administrator will prepare a final report listing all of the assets that were transferred and the costs associated with the administration of the estate. This report will be presented to the court for approval before it is presented to the beneficiaries for their review.

While this guide is a great start to the probate process, it doesn’t cover all of the ins and outs of the probate process. In order to ensure that you are fully prepared for your role as an executor or administrator, it is highly recommended that you consult with an experienced estate planning attorney prior to starting the process. Kentucky Estate Planning Law Center is here to help make probate simple – contact us today for assistance in your own probate process.

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Medicaid Planning & Protecting Your Assets

At this time, the average cost of a nursing home in Kentucky is between $70,000-$80,000 a year. The national average for a private room is over $100,000 a year. Typically, the people who require these types of facilities are retired, live on a fixed income, and are not in a position financially to cover the significant costs associated with long-term care. The unfortunate reality is that many families exhaust the entirety of their savings within two years of entering a nursing home. 

Medicaid may appear to be the solution and problem for anyone in this position. It provides the financial assistance you need to pay for the long-term care facility, but you may have too many assets to qualify. From the onset, these same people begin to view the assets that they spent a lifetime accumulating are what is preventing them from getting the assistance they need. Because of the stress and urgency of the situation, they may make very costly mistakes. 

This includes selling their home for less than market value to a friend or relative or simply giving away their assets. In extreme cases, some people may give away everything they own and realize it wasn’t what they needed to do to qualify. When you work with a qualified attorney who understands Medicaid planning, you will discover that you can be eligible and retain your assets. 

Exemptions, Spend Downs, & Transfers 

Before you apply for Medicaid, your attorney will ensure that your assets are either exempt, have been spent, or have been transferred appropriately. For example, Medicaid cannot take your family home if your spouse lives in it. Even if you pass away in the nursing home, your spouse can continue to live in it. The same extends to a car and an IRA. These are examples of exempt assets.

Although Medicaid allows you to “spend down” the money, it must be spent on either the person entering the nursing home or their spouse. Medicaid has a five-year lookback period and can actually penalize you for improperly giving away assets and money during it. An elder law attorney can advise you on how to “spend down” your money correctly and legally. 

If you begin your Medicaid planning early, you and your attorney can discuss the possibility of placing your assets in an irrevocable trust. The downside of these trusts is that once your assets go into the trust, you will be unable to take them out. (Do not confuse these with irrevocable income-only trusts.) The tremendous advantage of an irrevocable trust is that once you fund the trust with a specific asset, that asset is no longer counted as yours. 

Contact the Kentucky Estate Planning Law Center 

Medicaid laws are constantly changing and are complex. The attorneys at the Kentucky Estate Planning Law Center study and follow them, so we will be in the best position to advise how to retain your assets legally and still qualify for Medicaid. Contact us today to schedule your consultation.

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Remarriage Protection in Estate Planning

For those who are divorcees and considering remarriage, estate planning can provide a safe and secure way to protect one another’s assets. By creating a prenuptial agreement alongside other estate planning documents, spouses can also decide how assets should be distributed among both sides of their new family. People who choose to remarry often have significantly more assets than in their first marriage, so the protection of these assets is crucial.

How Does a Prenuptial Agreement Work?

It’s a common misconception that a prenuptial agreement keeps all of the property separated between spouses. While this can be done, it’s not the only thing that an agreement can do for you. Spouses can decide on what should happen to each other’s property upon death, whether or not they have the right to specific pieces of property, and even establish alimony for one another. Postnuptial agreements are also available for couples who have already married and can provide all of the same benefits.

Your estate plan should also be updated to account for a new marriage and prenuptial agreement. While the prenuptial can manage how property is distributed between a married couple, a will or trust can determine how the property that is retained should be distributed to other loved ones. This can be in any manner that you like, including passing down assets to family members of your spouse’s side. 

A common issue in remarried couples without a comprehensive estate plan is that the assets of a deceased spouse are often transferred to their surviving spouse, instead of their children. Without a plan in place, assets will have to go through probate. By default, these assets will likely be transferred to the surviving spouse. By making use of a prenuptial agreement, spouses are able to ensure that some of their assets are set aside for their own children, while still providing their surviving spouse with financial security. An estate plan can also provide the benefit of avoiding probate, which can cause conflict in deciding how assets should be distributed, especially in the case of blended families.

If you’re considering remarriage, or want to start your own estate planning to protect your assets for the future, contact Kentucky Estate Planning Law Center today to get started on a plan that meets your needs.

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How You Can Effectively Protect Your House From Medicaid Estate Recovery

If you or a family member is making use of the Medicaid program, it’s important to keep in mind that states will attempt to recover the costs of that care from the estate of the Medicaid recipient. Unfortunately, in most cases, the only substantial asset remaining at death is the personal home – often leaving families and would-be beneficiaries without the largest item of intergenerational wealth. Those utilizing Medicaid aren’t necessarily stuck in this predicament, however. With some proactive estate planning, you can ensure that your house will remain safe from Medicaid estate recovery.

A Trust Can Provide Protection

The primary method by which we can protect your home is with an irrevocable trust. These trusts can protect your home from estate recovery, liens, and lawsuits by effectively separating it from your own property. After placing an asset, such as your home, into an irrevocable trust, it is essentially separated from your own property. It should be noted, however, that irrevocable trusts are just that – irrevocable.  Even though the trust is irrevocable you can still change your beneficiaries and the trust can also distribute assets out of the trust those persons named as lifetime beneficiaries. There are many different considerations that have to be accounted for in establishing an irrevocable trust, so working closely with an experienced estate planning attorney is always recommended to ensure the viability of your trust.

The Benefits of an Irrevocable Trust

The benefits of an irrevocable trust don’t stop at protection from recovery. Transferring the family home into a trust also protects from a higher tax burden on your beneficiary, as simply giving the house to a beneficiary during their lifetime could result in capital gains taxes if the beneficiary sells the house during their own lifetime.  The trust will also provide a much safer transfer of the home to your beneficiary, without the troubles of using a direct deed. 

The security of your family’s biggest asset shouldn’t be taken lightly. If you’re ready to take the next steps in protecting the family home from Medicaid recovery, contact the Kentucky Estate Planning Law Center today.

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What’s the Big Deal With Going Through Probate Court?

If you’ve taken a look around a few estate planning websites, you’ve likely heard claims of how detrimental or painstaking probate court is. In fact, one of the most common reasons for creating an estate plan is to avoid probate. Very few of those websites, however, take the time to explain exactly why probate should be avoided and how to ensure that your estate stays out of probate. That’s something we’re seeking to remedy today by clearing up some misconceptions about avoiding probate and detailing the benefits of doing so.

Why Should I Avoid Probate?

To start, the probate process usually consists of verifying the decedent’s will, appointing an executor to the will, and then following the process of determining which assets should be distributed to the beneficiaries after paying the decedent’s debts. Depending on the size of the estate, this process could take a lengthy period of time. With more time and complexity comes more expenses in handling the probate of the estate, and this reason alone is enough to convince most to do their best to avoid probate. 

Keeping an estate out of probate also means that your assets will not become part of the public record. This may or may not be a significant selling point for you, but to some with large estates, keeping the details of their assets away from the public eye is essential – leading them to undergo the effort of ensuring that their estate will not need to go through probate.

Avoiding Probate Can Be Difficult

How difficult it is for you to avoid probate depends heavily on the size and complexity of your estate, but for some, will be automatic. If the total value of an estate in Kentucky is less than $30,000, it will not enter into probate and instead will enter into an expedited process. For those who want to avoid probate entirely, a trust is often used to transfer assets out of the control of the owner, and into the control of the trust. Legally, the individual no longer owns those items, and so they won’t be included in the value of their estate.

Some items are considered non-probate property, and also won’t be included in the valuation of the estate. This mainly includes jointly-owned property which is passed onto a partner automatically upon the death of the other, such as shared houses or bank accounts. In order to avoid probate, every asset which is considered probate property is transferred into a trust, effectively leaving no items (or less than the minimum required for probate) to be distributed in your will. 

With this process, avoiding probate is possible; however, it can become difficult for some to stay on top of transferring every necessary asset into the trust. This method poses a significant risk, as the costs of upkeeping a trust could be for naught if not kept up to date. If enough property is left out of the trust, the estate will be forced into probate regardless, which means that we’ve effectively cost ourselves more money by paying both to upkeep the trust and for the probate process. 

If you’re seeking to avoid probate, you’ll need the most experienced estate planning attorneys around. Look no further than Kentucky Estate Planning Law Center. Our team approach means that we’re able to create a comprehensive plan that will work for you, and we offer ongoing updates to your estate documents, ensuring that your plan is never out of date. To get started with your own estate plan, contact us today

 

Power of attorney

Creating Effective Power of Attorney Documents

It’s an unfortunate reality that injuries and illnesses often come unexpectedly. When they do, power of attorney documents are useful tools to ensure that your wishes are followed, even if you’re unable to make those decisions yourself – but these documents can only be as effective as they’re written. As such, it’s important to work with an experienced attorney who knows these common pitfalls, and how to avoid them.

Planning is Primary

Your primary power of attorney, also known as your agent, will be the first to act on your behalf in the case that it is needed, and a successor agent may also be named to ensure that you always have an agent available. If the person elected in your primary (the “agent”) becomes sick, unable, or unwilling to fulfill their duties, your primary power of attorney will not be able to act on your behalf. Only the person named has the authority to act on it, and if they’re unable to do so, the privileges provided by the power of attorney document cannot be transferred to anyone else unless that person is named as a successor agent in the Power of Attorney

The person nominated should also sign the document. This way, we have a written acknowledgment of their duties and what your power of attorney entails, which holds them to the execution as it’s defined in the document. This is just another step in ensuring that your wishes are followed, and one which is often missed by estate planning attorneys, sometimes resulting in issues known as “trustee malfeasance”. 

Planning for Contingencies

Often, the deciding factor between an effective power of attorney document and one which is useless to your situation comes down to proper planning. For instance, Kentucky recently implemented new laws restricting how an agent may make gifts on behalf of the principal (the original owner of the estate). These restrictions prevent an agent from making any gifts from the assets of the principal without explicit permission to do so, and with the specificity of which assets they’re allowed to gift. This may cause problems in cases where distributions from the estate are necessary to pay for bills or to support the principal’s family while they’re incapacitated. Without an experienced estate planning attorney, these details could easily be missed.

We frequently see cases with issues stemming from a lack of proper power of attorney documents. These are just some of the many problems that stem from poor estate planning, all of which are avoidable with the expertise of the Kentucky Estate Planning Law Center. Contact us today to see what we can do for you.