- Estate Taxes?
- Bank Accounts?
- Attorney’s Fees?
- Income Taxes?
- Retirement Accounts?
What do I do first after the death of my spouse or family member?
The first steps that are taken after the death of a loved one are as follows:
- Notify family members, friends, church, and next of kin.
- Meet with the funeral home to make the necessary funeral arrangements.
- Locate the Will to determine who is listed as the executor of the estate and whether any funeral instructions have been included in the Will or attached to the Will.
What do I do now?
Coping with the loss of a loved one is always difficult. Your fear and anxiety can stem from many unanswered questions about your future and finances. Going through probate, dealing with a lawyer, and making financial decisions may be overwhelming. This pamphlet is designed to answer some of the questions that you may have about the estate administration process, taxes, and probate.
Can I still use a power of attorney after the death of my spouse or family member?
No, when a person dies, the power of attorney immediately terminates. The attorney-in-fact named in the power of attorney document has no legal authority to transact business on behalf of the decedent. After someone passes away, the authority to act on behalf of the decedent shifts to the court appointed executor or administrator of the estate or the successor trustee of a trust.
Will bank accounts be frozen?
Banks and other financial institutions will freeze accounts that are titled in the decedent’s name alone. You will need a tax release, death certificate, and Letters of Authority from probate court to have access to the account. A joint account with a surviving spouse will not be frozen and will remain fully and immediately available to the surviving spouse. A joint account, with someone other than a spouse, will be frozen if the account is greater than $25,000. The joint owner will need a death certificate and a tax release to gain access to any account larger than $25,000.
Can I access a safety deposit box?
If the decedent is the only registered owner of the safety deposit box, then you will need to obtain a court order from the probate court to prove you are the executor or administrator of the estate in order to gain access to the box. If the safety deposit box is in two names, the surviving owner will have access to the box.
How do I find an attorney?
Usually the attorney who prepared the Will is the person who would administer the estate. However, some attorneys who prepare Wills do not do probate or estate administration. Furthermore, attorneys retire, move, or die.
You should look for an attorney who practices in the area of estate planning and probate to help you with the estate administration. If you can not get a referral from someone trusted, the local bar association can refer you to an attorney. Our firm is available to help.
What happens if there is no Will?
Ohio law determines where the assets are distributed if a person dies without a Will. The probate court will appoint a person (usually a family member) to be the administrator of the estate. The court will also appoint guardians for any minor children of the person who died.
The administrator will be in charge of distributing the assets according to Ohio law.
In the absence of a Will or other applicable beneficiary designations, Ohio law causes the estate to be divided between the surviving spouse and children of the decedent. Who gets what and how much they will get depends upon whether or not the children are minors or adults, how many children there are, and how large the estate is.
For example, if the surviving spouse is also the natural parent of the children, the spouse receives the entire estate. If however, the surviving spouse is not the natural parent the estate is split between the surviving spouse and the children. If there is no surviving spouse and no children, then the estate is distributed to the heirs as determined by Ohio law.
Will the estate go through probate?
Whether an estate goes through probate or not, depends on how the decedent held assets and what types of assets were owned at the time of death. Certain assets have to go through probate, other assets do not.
The following is a list of assets that typically avoid probate:
- Jointly held property with right of survivorship;
- Life insurance and annuities;
- Retirement plans, IRAs, and pensions;
- Assets held in a Living Trust at the time of a decedent’s death;
- Payable on Death accounts;
- Transfer on Death deeds for real estate;
- Transfer on Death automobile titles.
All other assets that are titled in the decedent’s individual name alone and do not also have a surviving joint account holder or designated beneficiary must go through probate.
What is Probate?
Probate is a legal proceeding supervised by the probate court in which the decedent’s probate assets are administrated and distributed to the decedent’s heirs. The probate court makes sure that the terms of the Will and state law are properly carried out. The court supervises the process of gathering assets, selling assets, paying debts, determining the rightful heirs, and accounting for the distributions.
Will I have access to assets during the probate administration?
After the executor or administrator of the estate has been appointed by the probate court, estate assets are available to pay all bills, debts, claims, and expenses of the decedent. Assets like real estate and investments may be sold. Partial distributions can be made to beneficiaries after the Will contest period expires (three months). Final distributions can be made after the period for creditors to make claims against the estate expires (six months) and estate taxes are paid (nine months).
What are the steps of Probate?
- File the Will with the probate court
- Send notice of the filing of the Will to all persons listed in the Will and those who would inherit if there was no Will or the Will was invalid
- Have the executor (or administrator where there no Will) appointed. Once appointed, the probate court issues a court order called “Letters of Authority”
- Appraise and value the assets
- File an inventory listing the assets in the probate estate
- Send notice of the filing of the inventory to the heirs
- Have a hearing if any beneficiaries object to the inventory
- Resolve Will contests, if any
- Resolve creditor claims, if any
- File estate tax returns
- Transfer assets to the heirs
- File a final account showing all distributions from the estate
What is the timetable for an administration?
Typically, the estate administration process takes approximately six months to one year. More complicated estates may take longer. The typical timetable for various tasks is as follows:
- One month – file the Will and have the fiduciary appointed (i.e., the fiduciary is called “executor” if there is a Will, or the “administrator” if there is no Will)
- Three months – Will contest period ends and the “inventory and appraisal” is filed
- Six months – creditors must make claims or else their claims are barred
- Nine months – estate tax returns are due
- Six months to one year (or more) make final distributions to the heirs and file the “final account”
What happens if the decedent owned real estate in another state?
In addition to a probate administration in the state in which the decedent resided, an ancillary probate administration will also need to occur in any other state in which the decedent owned real estate or time shares.
What are the costs and fees associated with a probate administration?
The actual costs and fees will depend upon the size of the estate, the nature of your assets, and the attorney that you retain to represent the estate. Additional issues may arise that could increase the cost of administration, including Will contest, estate tax audits, or the transfer of difficult assets such as closely held family businesses, or out of state real estate. Attorneys will either charge an hourly rate or a percentage of the estate as their fee. You should ask the attorney how he/she charges and for an estimate of the cost.
What is the role of the executor?
An executor or administrator of an estate is the person who is responsible for the administration of the estate. They must identify and evaluate the assets. They must identify and pay all liabilities. They are responsible for selling the assets that need to be sold, and for signing the final income tax and estate tax returns. Finally, the executor distributes the assets in accordance with the terms of the Will or state law if there is no Will.
What does an executor get paid?
Ohio law sets the executor’s fee. The executor’s fee is a percentage of the value of the assets of the estate. There is a fee schedule upon which the executor’s fee is determined that ranges from 4% to 2% of the value of the assets of the estate depending upon the size of the estate.
Will the estate have to pay estate tax?
This depends on the size of the estate, and the nature and extent of any estate planning that was done. If everything is left to a surviving spouse, there is no estate tax because of an unlimited marital deduction. Estate tax returns must be filed even though no tax is due. If the decedent was not married and the estate exceeds $5,430,000, estate taxes are paid to the federal government (as of 2015). For deaths prior to 2013, an Ohio estate tax return must also be filed for an estate larger than $338,333; no Ohio estate tax is due for people who have died after 2012.
When is an income tax return due for the decedent?
A final income tax return is prepared for the decedent for the period beginning January 1 through the date of death. All income received during this period is reported on the final income tax return which is due on April 15 of the next year. The surviving spouse is still entitled to file a joint income tax return even though his/her spouse died during the year. All income earned after the date of death is reported on the income tax return for the estate.
How do I locate assets?
The executor will typically locate assets by going through the decedent’s personal records and mail, a review of the past two years of income tax returns, and a review of canceled checks for the past year. You can also locate assets by talking to the decedent’s accountant, financial planner, stockbroker, or attorney who may be familiar with the decedent’s financial affairs.
How are assets valued?
All assets owned by the decedent as of the date of death are valued at fair market value. Therefore, many assets like real estate, closely held family businesses, antiques, and collections need to be appraised by a professional appraiser. Stocks and bonds are evaluated by looking at the stock market on the date of death. Bank accounts and certificates of deposit are determined by looking at the balance as of the date of death.
How are automobiles in the decedent’s name transferred?
A surviving spouse is entitled to two automobiles outside of the probate process. The two automobiles can be transferred to the surviving spouse with a death certificate and an affidavit. Additional automobiles have to go through probate.
How is life insurance collected?
Life insurance is collected by contacting the insurance company who held the life insurance policy. The insurance company will send a claim form which must be filled out and signed by the executor or designated beneficiary. The claim form must be returned with the insurance policy and a certified copy of the death certificate.
Am I entitled to any benefits from my spouse’s employer?
Frequently, employers will have death benefits as part of a retirement package. Additionally, insurance, health plans, and dental plans can sometimes be continued. A surviving spouse should contact the decedent’s employer to determine what benefits might be available.
Am I entitled to social security benefits?
A surviving spouse or dependent child may be entitled to social security. The executor needs to contact the Social Security Administration to stop the decedent’s social security payments and to determine the rights of the spouse and minor children.
How retirement accounts and IRAs are collected and are they taxable?
Retirement accounts and IRAs are not part of the probate estate unless the decedent failed to designate a beneficiary. Retirement accounts and IRAs are paid directly to the named beneficiary outside of probate. Retirement accounts and IRAs are subject to both estate taxes and income taxes. Because the beneficiary may be entitled to delay the payment of income tax, it is extremely important to consult with your attorney before you withdraw any money from the retirement account or IRA.
This brochure is being provided as a general outline of frequently asked questions. Nothing contained in this brochure constitutes legal advice. Nothing herein should be construed as or relied upon as legal advice. Consult an attorney if you have any questions.