Probate
Saturday, April 25th, 2009The way things are set up now, Sherry’s family will encounter another problem when either Pop or Mom dies: probate. Remember, as it stands now, the business is in Pop’s name alone, and he is passing it on with a will to Mom, who will then (with her will) pass it to her sons.
To transfer the title to the assets when Pop dies, or to have Mom’s name put on the papers, there are procedures in most states that allow you to sign an affidavit with a certified death certificate so you don’t need to go to probate court to transfer assets from spouse to spouse. But look out if your state doesn’t allow this and you haven’t checked the form of ownership on the deeds to real property like your home. If there are names on the titles other than Mom’s or Pop’s, you may be in for a rude surprise. If this is the case, or you don’t know how you hold title to real estate, or what the words by your name on the deed mean, seek legal counsel. Ask your attorney to put what you want to know in writing so you understand the consequences of the many types of ownership forms out there. The words “joint tenant” and “tenants in common” (or the absence of any such words) have different meanings and can make the difference between a $150 fee to transfer ownership and thousands of dollars in fees or even more, depending on the value of the real estate.
But the simple procedures available to most surviving spouses to change title to a home, business, bank, or brokerage account cannot help Daniel or Tim when Mom dies. If everything is left to them via her will, they’ll have to go through the probate procedure and be hit with unnecessary probate fees. The probate fees that Daniel and Tim will have to pay in California are $42,300 plus about $1,700 in court costs for a total of $44,000.
If you add together the probate fees and the estate taxes, Tim and Daniel will owe about $204,000 when Mom dies— and no, they can’t send the IRS or pay the lawyers’ fees with some rusty old machines. Where would they get that kind of money? They don’t have it, and it would be owed within nine months of Mom’s death unless they qualified for certain limited extensions.