Category Archives: Wills

Removal of a Personal Representative

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WHEN IS IT APPROPRIATE TO REMOVE THE PERSONAL REPRESENTATIVE?

The most basic duty of a personal representative to act in “the best interests of the estate.” This means that the personal representative must be loyal to the to the estate, as well as to the heirs and devisees, and not co-mingle his or her assets with the assets of the estate.  A failure to act in a manner that is within the best interests of the estate may result in removal of the personal representative, or even separate legal action against the personal representative.

WHAT TYPE OF ACTION RESULTS IN REMOVAL OF A PERSONAL REPRESENTATIVE?

Montana Code Annotated (MCA) section 72-3-526 sets out the grounds for removal of a personal representative. According to Montana law, the breach of a single duty is sufficient to remove a personal representative. A simple failure to provide a timely inventory, or failure to give notice to all heirs can result in removal.

Recent Montana Case Law on the Removal of a Personal Representative

Recent case law in Montana in the case of the Estate of Hannum, illustrates a failure by a personal representative to properly administer an estate (see , DA 12-3, 8/10/12). In Estate of Hannum, the personal representative provided an accounting of the estate that was “highly speculative,” and included undocumented and unverified loans and gifts. The unverified gifts and loans increased the value of the estate by more than $1.3 million, resulting in increased personal representative fees to himself in an amount over $32,000, as well as over $49,000 in attorney fees to his daughter. The personal representative also claimed that other heirs owed the estate over $300,000, while he and his brother were to be awarded $600,000 from the estate, leaving a relatively minimal amount for distribution among the other heirs.

Additionally, the court determined that the personal representative in Estate of Hannum breached his duties by: failing to follow the plan of disposition set out in the Last Will & Testament; failing to file an estate inventory within 9-months of appointment; and failing to send notice of his appointment to all heirs as required.

Although this case illustrates an instance in which the personal representative breached multiple duties charged to him, a simple failure to follow any of the basic duties of a personal representative can result in removal. It is important for every personal representative to understand all of the duties and obligations of a personal representative and precisely follow Montana law. An attorney experienced in Montana probate law can guide a personal representative through the probate process to avoid removal, or even separate legal action.

With questions about the duties and responsibilities of a personal representative, or the probate process in general, contact Kalispell, Montana probate attorney, Kelly R. O’Brien, Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373 to schedule an appointment.

What Does a Personal Representative Do?

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The Duties and Obligations of the Personal Representative in the Probate Process

In general the personal representative of an estate, also known as an executor or administrator, is the individual responsible for gathering up the assets of the decedent; paying off debts and expenses of the estate; and distributing assets either to the individuals named in the will, or in the event the decedent did not leave a will, according to state law. How the distribution of an estate is accomplished depends on the specific nature of the estate and assets, and whether or not there was a will. However, there are a few key tasks and duties that are essential to every probate process.

Tasks of a Personal Representative

First and foremost the personal representative should attempt to locate the Last Will & Testament, and all other financial information of the decedent. Ideally, the decedent would have provided the location of this information to the personal representative. If not,  his or her attorney may have this information. It is important to locate the original Will and not a copy, as  the personal representative must file the original Will with the probate court.

To actually carry out the role of personal representative, the individual appointed must file an application for appointment with the probate court. Often this is accomplished with the assistance of a probate attorney that will draft the application and appropriate documents to file with the court.

Upon approval of appointment by the probate judge, the court clerk will issue testamentary letters or letters of administration (depending on whether or not there is a will), certifying the appointment of the personal representative. The Letters verify that the personal representative is authorized to deal on behalf of estate for actions such as opening a bank account, selling property, and collecting and paying debts.

Once the personal representative has been appointed by the probate court, it is important that the personal representative take immediate action to further the probate process. One of the first actions after appointment as personal representative is to notify the interested parties and potential creditors of the estate. No later than 30 days after appointment, the personal representative must provide notice to heirs and interested parties of his or her appointment as personal representative; information regarding the court where the personal representative filed the probate documents of the estate; and whether or not a bond was filed.

In addition, the personal representative must publish a notice to creditors in a local newspaper. As soon as possible after appointment, the personal representative should publish the notice to creditors. The notice puts creditors on notice that they have four months within which to file claims against the estate for payment of their accounts.

Depending on the nature of assets and type of probate proceeding, an inventory of the estate assets may be required. An inventory must be filed within 9 months of appointment of the personal representative. The the inventory accounts for the estate assets, which consists of all property owned, individually, by the decedent.

Upon the expiration of the four month creditor claim period, the personal representative can pay the creditors. In the instance of a formal probate the personal representative must file a final accounting with the court which accounts for all receipts and disbursements during the probate process. Once judge approves the accounting, the personal representative pays the creditors and taxes of the estate. Then, the remaining assets of the estate can be distributed to the heirs and devisees.

Duties of A Personal Representative

The personal representative has a duty to act in the best interests of the estate. The personal representative also has a duty of loyalty to the estate, as well as to the heirs and devisees. These duties are of the utmost importance as failure to act in a manner that is within the best interests of the estate may result in removal of the personal representative, or separate legal action against the personal representative.

This means that the personal representative must: avoid conflicts of interest; use reasonable care, ordinary skill and prudence in carrying out the duties of the personal representative; direct any benefit derived from the appointment to the decedent’s estate to the beneficiaries; and  not use any of the assets of the estate for his or her own, personal benefit.

Montana law requires that a personal representative specifically acknowledge these duties. The personal representative must sign and verify, before a notary public or under penalty of perjury, an acknowledgment of fiduciary relationship in the application for appointment.

Perhaps one of the best ways for a personal representative to avoid breaching his or her duties is to maintain detailed records of the estate assets and accounts. The assistance of a probate attorney can be beneficial in maintaining records of the estate, and keeping up with the probate timelines and requirements.

If you have questions about the role of a personal representative, or probate in general contact Kelly O’Brien, Measure, Sampsel, Sullivan & O’Brien, P.C. (406) 752-6373.

 

 

Estate Planning for Blended Families

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Tips & Techniques for the Modern Family

The idea of the “typical” American family has changed significantly over the last several decades from the traditional nuclear family to blended families of countless variations. Now-a-days, a blended family, or a family where one or more spouse has children from a prior marriage is commonplace.

Blended families face unique challenges when it comes to estate planning. Parents of blended families should take extra precautions to adequately consider what would happen to the family upon the death of one spouse and take steps to avoid disinheriting a spouse or children.

Perhaps one of the more famous estate disputes in recent history surrounded the estate of J. Howard Marshall who was married to the much younger Vickie Lynn Marshall, more widely known as Anna Nicole Smith.  Upon Mr. Marshall’s death, his will left almost all of his estate to his son from a previous marriage. However, Ms. Marshall sued, claiming her elderly husband promised to give her more than $300 million and the court battle went on for several years.

This case illustrates one of the more common scenarios in blended families, where one spouse leaves everything to their children from a prior marriage and completely leaves out his or her spouse. This leaves the estate subject to claims from the surviving spouse, as well as other disputes between family members that can have lasting impacts.

Another common problem occurs when the children are disinherited by virtue of joint ownership of property.  This commonly occurs because married couples often decide to hold property such as houses, bank accounts, or cars jointly. However, in a family of a second marriage joint ownership with a spouse can result in unintended consequences. In the case of joint ownership, the surviving spouse obtains sole ownership of the property by operation of law, thereby excluding the predeceasing spouse’s children from ownership of the property.

If you have remarried and have children from a prior marriage, what can you to reduce the chance for disputes between your spouse and children after you are gone?

First, it is essential that you talk to your spouse and children about your wishes, as well as discuss potential issues that may arise with the distribution of your estate. In addition to communication with family members, a blended family should consider the following techniques for reducing conflicts:

Update your Estate Plan & Beneficiary Designations

At a minimum each spouse should have an estate plan containing a will with Powers of Attorney for finances and health care. However, a will only goes so far with a blended family. It is also critical that each spouse updates their estate plan and beneficiary designations to ensure that ex-spouses are disinherited or no longer listed as beneficiaries of assets such as retirement accounts or life insurance policies. Then review your beneficiary designations to make sure that the proper beneficiaries are named, and the beneficiary designations fit within your overall estate plan. Remember, a beneficiary designation trumps a will, so keeping your beneficiary designations updated to reflect your current life situation is essential.

Prenuptial or Other Marital Agreements

Perhaps one of the best methods of preventative maintenance for a blended family is to execute a prenuptial or other marital agreement with your spouse that addresses estate planning issues. By clearly defining which assets you want to remain separate after the marriage and which assets you agree will pass to each of your children you can reduce disputes later, Moreover, marital agreements allow you to maintain more control over the how and when your assets are distributed.

Life Insurance Policies

Life insurance can be a great tool for providing for your children, while also providing for your spouse. By specifically naming children as beneficiaries of a life insurance policy it creates immediate benefit to children upon death, rather than having to potentially wait many years for inheritance. With the life insurance proceeds going to children, the remainder of the estate may pass to the surviving spouse, thereby eliminating or reducing potential inequities.

Create a Trust

Consider a joint revocable living trust or Qualified Terminable Interest Property Trust “QTIP” Trust. A QTIP or other trust can provide income and principal for a surviving spouse’s care during his or her lifetime. However, upon the death of your spouse, the remaining assets in the trust can be distributed to your children according to your wishes.

Life Estates

Another option to consider is to provide your spouse with a life estate in your home.  A life estate allows a surviving spouse to live in the house for his or her lifetime, but allows the remainder interest in the home to pass to your children.

Talk with your Family & Seek Professional Advice if Necessary

These are just some of the techniques to consider when planning an estate with a blended family. It is critical that you and your family discuss these issues together and have an overall plan to addresses any potential disputes or inequity problems. Your particular estate may also have estate tax or other considerations, so I always recommend seeking the professional advice of your attorney, CPA or financial planner.

These types of estate planning issues may not always be easy issues to talk about, especially with a blended family. However, communication and planning now can provide peace of mind that you are sparing your family from conflicts or hurt feelings down the road.

Contact Kelly O’Brien for more information or questions about estate planning at  Measure, Sampsel, Sullivan & O’Brien, P.C. at (406) 752-6373/ www.measurelaw.com

 

 

When should you update your will or trust?

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Reviewing & Updating Your Will or Trust

Advice from a Montana Estate Planning Attorney

Wills and Trusts are highly effective tools in distributing assets upon your death and reducing family stress and conflicts. However, Wills and Trust are only effective estate planning tools if they are kept up to date. An outdated Will or Trust and be just as ineffective as nothing at all, or worse.

Instead of thinking of your Will, Trust or other estate planning documents of something you do once, then lock away, I always recommend you keep copies of these documents in a safe, but in a handy place. It is important to review and update these documents on a regular basis. In addition, there are some specific instances where it is especially important to take some time to review, and if necessary, update your estate plan. Some examples of these situations include:

 

  • After the death or incapacity of an individual nominated in your will or trust as a personal representative, trustee or beneficiary
  • After you are married or divorced
  • After birth or adoption of a child
  • After purchasing or selling real estate or other large asset
  • Prior to a major operation or other medical procedure
  • After receiving a large inheritance
  • After moving to another state or purchase assets in another state
  • After any major change in your income or income earning capacity
  • After a minor child reaches the age of majority or completes college
  • Upon the marriage of a child or other beneficiary
  • Anytime you change you change or mind about how your want to distribute your assets and to whom you want to distribute those assets 

There are many other situations where you might need to update your estate plan, but the important thing is to get in the habit of reviewing your estate planning documents when your life changes. If you have questions about how or when to update an estate plan, speak with a local estate planning attorney. Making a change to your estate plan is usually quite simple and reduces complications for your family later. 

 

How to Choose the Right Guardian for Your Minor Children

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Choosing a Guardian for Minor Children- Advice from a Montana Estate Planning Attorney

For many people their largest concern in estate planning is providing for their children. Everyone who has a child under the age of eighteen should consider who would raise their children if there were unable to do so. However, determining who would act as a guardian for minor children is perhaps the most difficult decision in estate planning, and the one with the most potential impact. That is why it is critical to take some extra time to make this decision.

Perhaps the best place to start by making a list of good potential candidates for the role of guardian. Initially this list may include brothers, sisters, aunts, uncles, grandparents or even family friends, basically anyone you can think of that may act as a guardian.

Then consider the factors that are most important to you in deciding on a guardian. Some considerations may include:

-Do they have similar philosophies about child rearing?

-What are their religious beliefs or do they possess the ability to follow your desires for your children’s religious upbringing?

-Do they possess the ability to follow your instructions about education, activities and child rearing, in general?

-What is their age, stamina, and maturity level?

-What is their relationship with your children and do they have a genuine interest in your children’s well being?

-What is their level of stability and integrity?

-Are they physically capable of caring for your children?

-What is their current job situation and do they have time available to care for your children?

-Are they willing and interested in acting as a guardian for your children?

-Do they have children of their own and are their children compatible with your children?

-Do they live in the same geographic area as you?

-What are their social, political and moral values?

-Are they financially responsible?

-Do you children enjoy their company?

-Is their overall lifestyle compatible with yours?

Once you have considered these factors, I recommend prioritizing the factors that are the most important to you and your spouse (or other co-parent as the case may be). Understand that you and your spouse may have conflicting ideas about the most important attributes, however the discussion is important to have within this process. Once you have decided on a few key factors you can compare these to your list of candidates and determine who would best fit based on your priorities.

Open discussion with your family members, including your spouse, children and potential guardians is a key component in this process. While the discussion may be difficult at times, keep in mind that this is one of the most important life decisions you will have to make, so discussion is important.

If you have additional questions about choosing a guardian for your minor children, or if you would like additional assistance from a Montana estate planning attorney in nominating a guardian for your minor children or other estate planning techniques to provide for your children, call me at (406) 752-6373.

 

What is Estate Planning & What Happens Without it?

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What is Estate Planning & Who Needs it?

Advise from a Montana Estate Planning Attorney

Estate Planning is the process of setting out your wishes for the distribution of your assets upon your death, and implementing strategies to ensure that your wishes are carried out to the fullest extent possible. Anyone who wants to control the distribution of their assets, the guardianship of their minor children, provide for charitable causes, or reduce estate taxes needs estate planning can benefit from estate planning.

Estate planning can be utilized to accomplish goals ranging from complex tax planning to simple distributions to children. However, it is best accomplished as a team, where you, your attorney, financial advisors, and your family can work together to create a complete picture of your goals and implement the best strategies to meet those goals.

What happens without a Will or Trust Montana?

Without estate planning, or a Will or Trust, Montana state law controls the distribution of assets upon your death. These laws are known as the laws of intestate succession. Without a valid Will or Trust you do not have control of who receives which assets, nor do you have control over the selection of guardians for minor children, or how those children will receive their inheritance.

For example, if you are married without children, or all of your children are from you and your spouse together, then upon your death your spouse will receive your entire estate. However, if you die leaving a spouse and children who do not belong to your surviving spouse, then surviving spouse is entitled to receive a $100,000 plus ½ of the remaining estate and the child is entitled to receive ½ the remaining estate. It is important to note that intestacy laws change, and unless you want to constantly keep up with current laws, it is a good idea to have a valid Montana Will or Trust.

However, if you have a valid Montana Will or Trust in place, you can decide who receives your assets, how much, and when they receive those assets. This means that you can provide for different distribution amounts to different children. With a valid Will or Trust, you can distribute specific assets to other friends, family members or charities. You may also decide to disinherit a child, limit the amount a child receives from your estate, or place their inheritance in a separate trust to be managed by someone else. Basically, a Will or Trust lets you determine who receives your property and does not leave it up to state law.

Proper estate planning is one of the most valuable gifts you can give your loved ones. It is important to work with an attorney that can take the time to understand your long-term goals and draft a Will or Trust that will address your family’s unique needs. If you have questions about estate planning or would like assistance with a Will or Trust, please call my office to schedule a consultation at 406-752-6373.