Episode 4: In today’s episode, Louisville probate attorney David Holton explains the 5 steps to take when your parent dies. This can be a very emotional time, but as a retired probate judge and now a probate and estate planning attorney, he guides clients through a seemingly complicated process. He’ll do his best to make it as easy as possible, especially now.
As an attorney, David maintains 2 Louisville-area law offices. He has one in Fern Creek, near the intersection of Bardstown Road and Hurstbourne Parkway. His other office is located near where he grew up in Valley Station. It’s located on old 3rd Street Rd near the corner of Stone Street Road, near Prairie Village.
Step 1: Determine if the Parent (or loved one) Had a Will
This is an important first step and it will help to avoid some delays and potential disagreements. It’s important to find the Will, if possible. If the person had a Will, they are considered to be “testate.” As long as the Will was properly executed, it will determine how the specific assets are to be distributed. If they didn’t have a Will, they are “intestate.” In this case, the Kentucky laws will determine how the assets will be distributed.
Ideally, you’ll need to have the original copy of the Will. However, there ways to have a copy approved by the court. Each “heir at law” will have to sign a document agreeing to petition the court to probate this copy of the Will.
What Is an Heir at Law?
In Kentucky, an heir at law are those who stand to inherit from the estate, if there is no Will.
If it’s not possible to get all of the heirs at law to agree to use a copy of the Will, there are still steps available to probate a lost Will. David will cover those options in a future podcast episode.
Do I Have to Use the Attorney Who Wrote the Will?
No. In fact, if it’s been a number of years since with Will was created, that attorney may have retired, moved or passed away. It’s perfectly okay to use a new attorney to handle the probate process.
David tells a funny story about how as a judge, he was involved in the probate process involving Wills he had originally drafted. At least he was confident they’d been done correctly!
The executor or administrator of the estate will usually decide which attorney will be hired for the probate process.
Step 2: Schedule a Court Hearing to Open the Probate
An attorney is usually the person who will petition the court, on behalf of the decedent’s estate, to probate the Will. The Will usually designates the executor or executrix. If there is no Will, an administrator will be designated. He or she acts as a fiduciary to ensure the estate is handled properly.
David explains he met with a spouse and son of a man who recently passed. They live in Valley Station, near Arnoldtown Road. David was able to prepare the petition while the mother and son were in the office. David will file the paperwork to get a hearing date set. The man died intestate, so they will have the son appointed as the administrator of the estate.
Step 3: Contact Financial Institutions and other Accounts
In this step, the objective is to provide the required paperwork (including a death certificate and a new federal tax ID number for the estate) to have available funds moved into a new checking account specifically set up for the estate. Often there are bank accounts or other accounts that exist in the name of the deceased. Those funds need to be legally transferred into the estate’s account.
It’s important to understand that bills still need to be paid, while the estate is in probate. For instance, an insurance premium on the house (in case something were to happen to it during the probate process).
David explains there’s a 6-month (180 days) period from the date the executor or administrator was appointed. During this period, creditors can file claims with the court for payment from the decedent’s estate. If the creditor misses this period, they typically cannot sue for payment. However, if a creditor makes a claim in time, the executor or administrator can still reject the claim. At that point, the creditor will have 60 days to take legal action to protect their right to payment.
The estate can still contest the claim. There’s a process to handle all of this with the court.
Step 4: Marshal the Assets
In this step, the executor or administrator will document all of the assets of the estate. David explains that IRAs, annuities and life insurance policies have a beneficiary already designated. These will pass outside of the probate process, to the listed beneficiary. The remaining assets, including bank accounts, real estate, vehicles and other personal property will be documented.
The house and vehicles may need to be sold, assuming they are not specifically directed to an heir in the Will. The remaining personal property may also be sold.
Is the Executor or Administrator Personally Responsible for the Debts of the Estate?
No. The assets of the estate are to be used to pay the debts of the decedent.
Doesn’t the House Always Go to the Surviving Spouse?
Actually, no. It depends on how the couple was listed on the deed. In many cases, the deed should be signed using the term, “as joint tenants with right of survivorship.” This phrase allows the house to automatically become the sole property of the surviving spouse. If the deceased spouse is the only one listed on the deed, the house will need to be probated. It may or may not end up being the property of the surviving spouse.
The same phrase can be used with a bank account.
Does Credit Card Debt Become the Responsibility of the Surviving Spouse?
It depends. If the credit card is in both names (deceased and surviving spouse), the debt becomes the responsibility of the surviving spouse. If the credit card is only in the name of the deceased, it does not become the responsibility of the surviving spouse. It’s a debt of the estate. Remember, the credit card company only has 180 days from the appointment of the executor or administrator to prove the debt and make a legal claim for payment from the estate.
Does the Surviving Spouse Automatically Get the Deceased Spouse’s Personal Property?
In Kentucky, the surviving spouse is entitled to the first $30,000 of the estate and 50% of everything else. The remaining 50% of personal property will go to the surviving child or children. Remember, the Will may specifically designate certain items to be given to a particular heir. Also, please review the information, above, regarding the right of survivorship.
It’s possible for the executor/administrator to hire an estate auctioneer to get rid of real estate, personal property and furnishings. The auctioneer will charge of fee for this service. Instead of going to auction, having an estate sale is another option. If there’s no Will, the house could also be sold by the estate, but the agreed upon price would have to be approved by the court.
David briefly discusses how he’s been asked to be an executor for a lady in the Valley Station, PRP area of Louisville. She currently owns several houses. She has designated a couple of charities as beneficiaries. David comments that she knows things will be handled properly and according to her wishes, once she passes away.
Step 5: Distributing the Assets
Even though there is a 6-month window for creditors to make claims for payment from the estate, it’s not uncommon for partial distributions to be made from the estate, prior to the end of the 6-month period.
As long as there are enough assets to pay the debts and other bills related to the handling of the estate, the heirs can agree to take partial distributions.
David will create a Settlement Sheet listing all of the assets of the estate that existed at the beginning, the items sold and how much money the estate received from the sales. It’ll include information from the closing statement on the house(s) and other property. Then, it’ll show how the assets are to be divided among the heirs.
If all of the heirs sign a specific document specifying they are satisfied with how the estate was settled, a formal accounting of the estate can be avoided. This will speed up the process of distributing the remaining assets and ultimately closing the probate process.
However, there can be disputes among the heirs. These can be extremely emotional and unpleasant. It’s always best to document your wishes in a properly executed Will to avoid as many disputes as possible, after you pass.
As we conclude Episode 4, we encourage you subscribe to this podcast on Spotify, Google Podcasts, iHeartRadio, Apple Podcasts, Amazon Music, Audible and many other podcast platforms.
For more information about probate and estate planning issues, or to listen to The Blind Judge Podcast, visit http://www.davidholtonlawky.com/.
Check out The Blind Judge Podcast!
Retired Probate Judge David Holton actually has 2 podcasts. In addition to this one focusing on legal matters, his other podcast will focus on community issues, sports, cooking, outdoor activities, politics, history and a variety of other topics, including information about David’s guide dog Coach.
Thanks for listening! Please share this episode with your friends and family.
Disclaimer: This podcast is for informational purposes only. This does not establish an attorney-client relationship. Your situation is unique. Please consult an experienced attorney to discuss your situation. This is an advertisement. Principal Office located at 5226 Bardstown Rd., Louisville, KY 40291. Office phone number: (502) 933-8600.