If you belong to a book club, whether Oprah’s or one in the neighborhood, chances are “Bleak House,” by Charles Dickens, will never be on your reading list. Ever. As in never!
For one thing, “Bleak House” is really old. Written in the 1850s. For another there is lots of legal stuff. It takes readers through a horrified version of settling an estate through probate. Some experts (people who have actually read Dickens rather than just seen him on PBS) believe it was inspired by a contested will case of that time period. The case, Thellusson v. Woodford, lasted from 1797 to 1859. That’s longer than most people lasted in those days. To be fair, most probate actions don’t take 50-plus years. But if one is triggered by your death, your family might have to wait six months to two years before your estate is settled. Unless you leave an estate plan which clearly spells out your wishes. It’s a grim subject, but one most of us should deal with because the day will come whether you are prepared or not. In addition to settling your estate — and you probably have one — it can reduce the likelihood that disposition of your estate — home, 401k plan, insurance, etc. — won’t break up your family. So while probate can be a mystifying and grim subject, it is one you should be up on. Starting right now.
Today’s guest on your turn is Tom O’Rourke. He’s an estate and tax attorney in the DC area. He’s also a former IRS attorney and most of his clients are either current, retired or former feds. Some of them are TSP millionaires with estates, based on time and hard work, that are significant. Tom is going to talk about how to avoid probate, or navigate through it if that is the only option. Today’s show will be archived on our home page. That way you can listen later, listen again or refer it to a friend or coworker. While it’s a grim subject, in many respects learning how to do it correctly can make things so much easier for your loved ones. Meantime, here’s a brief (remember this is Charles Dickens) introduction to Probate 101 Tom has prepared to help keep you and yours out of “Bleak House:”
Probate is frequently misunderstood. While many people do not know what it is, they know they want to avoid it. For some people probate is the procedure described in the Dickens classic, “Bleak House:” an expensive, time consuming matter. While in some cases this can be true, this is certainly not typical.
Probate is the court-supervised procedure for winding up the affairs of a deceased individual (the decedent). It is designed to ensure that a decedent’s assets are used to pay any debts or other obligations of the deceased, and that any remaining assets are distributed in accordance with the decedent’s will, if he/she had one, or in accordance with state law. It is usually an administrative proceeding conducted before the Register of Wills in the county of the decedent’s domicile. In most cases, it does not require a court appearance and can be completed within a reasonable period of time.
The only assets of a decedent that are subject to probate are those held solely in the name of a decedent for which no beneficiary has been named. It is not uncommon that the estate of a wealthy individual with many assets is able to avoid probate because his/her assets were held in joint names or a beneficiary had been designated. In addition, any assets owned by a trust also avoid probate.
If probate is required, it is initiated by filing a Petition for Probate with the Register of Wills. The Register will then issue Letters of Administration that authorize the Personal Representative (Executor/Executrix) to liquidate all of the decedent’s assets and use these assets to pay any obligations of the deceased. The Personal Representative is not legally obligated to pay any debts of the deceased by using the Personal Representatives assets. If the decedent does not have sufficient assets to pay all claims, the estate is insolvent and a creditor’s claim may be worthless.
An inventory listing all assets owned by the deceased is typically required and is filed with the Register of Wills. Once all required obligations have been paid, and all assets liquidated, the Personal Representative may file a Final Account. After the Account is approved, the Personal Representative distributes any assets in accordance with the terms of the will (or in accordance with state law if there is no will).
Typically, the probate procedure takes from six months to one year to complete, but all states have a small estates procedure for estates with probate assets worth less than a certain amount (often $50,000). This procedure is much quicker and easier and is generally completely in a matter of weeks.
While probate may be required in many estates, it is not generally the long, convoluted, expensive process described in “Bleak House.”
In his book “Charles Dickens as a Legal Historian,” Oxford Law Professor William S. Holdsworth argues that Dickens’ portrayals of British law in both “Bleak House” and “Pickwick Papers” are realistic enough to be considered primary source material.