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Month: May 2021

Tips for Avoiding Probate

May 12, 2021

On behalf of The Law Office of Wickersham and Bowers posted in Estate Planning on Wednesday May 12, 2021.

Avoiding probate, the legal process of resolving the estate of a deceased person, and distributing that person’s property to beneficiaries, can save money, accelerate the passing on of assets, and protect a family’s privacy. The two major grounds to avoid probate relate to both the time and to the financial resources typically needed to complete the process. Since probate involves the court system, it requires a variety of time-consuming proceedings and hearings that may take months or sometimes years to complete. Meanwhile, the heirs see no inheritance. Besides the slow administration process are the costs related to settling an estate through probate court. The court reduces part of the estate’s value through probate fees, and if an attorney is involved, even more costs are accrued, thus further cutting into the inheritance.

Another rationale for why you want to avoid probate is to keep one’s financial affairs confidential. Probate proceedings enter public record. This means anyone can get the information on how the estate was allocated. This includes the value and the name of the recipient.

Creating a Living Trust is the Easiest Solution

For these reasons, avoiding probate is often the best course of action. The only realistic way for that to happen is to allocate your assets straight to your loved ones. This can be achieved in several ways, but in most instances, the simplest is by creating what is known as a living trust.

When you create a living trust, the writers or grantors of the trusts fund them by placing assets they select into them. They then keep control of those assets until they pass. The grantors also select a person to be the trustee, distributing the property within the trust, based on the grantor’s directions after that person’s passing. When you have a living trust, the whole process occurs without having to engage probate law or turn to the probate court.

Other Methods You Can Use to Avoid Probate

Besides creating a living trust, there are several other ways that you can avoid probate, such as:

  • Joint ownership of property so that one owner gets full possession after the death of the other;
  • Including beneficiaries on every insurance or retirement account to whom benefits will go after someone passes; and
  • Assigning recipients for TOD or POD accounts. TOD stands for transfer-on-death, while POD stands for pay-on-death. 

A Closing Note to Avoid Probate

Make sure you recognize that there are some states in the US have probate procedures for estates that are below specific value. Some states probate laws are easier, shorter, or simply different than this overview. Therefore, whether you should try to avoid probate is relative to the situation in your area.

The Implications of the Gates’ Divorce Since There Was No Prenup

May 12, 2021

On behalf of The Law Office of Wickersham and Bowers posted in Family Law on Wednesday May 12, 2021.

The recent announcement by billionaire couple Bill and Melinda Gates that they were divorcing after 27 years of marriage caught the world’s attention, as did the fact that they have no prenuptial agreement (prenup) but instead have a “separation contract” that specifies how their property will be split up when they separate. A prenup would have been agreed upon before the couple’s marriage, and would have spelled out how exactly their property would be divided in the event of a legal separation or a divorce. In contrast, a separation contract is part of a divorce proceeding because a divorce demands that a couple separate their property. In their divorce petition, the couple requested that their personal property, real property, and debts be divided based on the terms of their separation contract, which is a confidential document. 

Washington’s Community Property Law could apply to the Gates Divorce

Certain states such as Louisiana, Arizona, Texas, California, and Washington, where the couple lives, have laws stating that all assets obtained during a marriage that were not given as gifts or are part of an inheritance are considered to be “community property.” And, when a prenup is not created, community property should be divided equally (50/50) between the partners when a divorce occurs. Thus, the standard community property law of the State of Washington regarding equitable distribution may be applicable in the Gates case. All premarital assets will be exempt from equal distribution as long as it can be established that they were personally owned before the divorce was initiated. 

Community versus Separate Property

In states that recognize community property, such as Washington, marital property is equally owned by both spouses. Such property includes income, any property that was purchased with this income, and all debts that were accumulated throughout the course of their marriage. The laws regarding community property begin with the start of a marriage, and they end when the couple becomes physically separated and has the goal of discontinuing the marriage. Thus, any income or debts created afterwards will be deemed separate property that is owned only by the original owner. 

 Deciding how to divide assets usually involves the following steps:

  1. All assets and debts are classified as being either community or separate property
  2. Each asset is assigned a value through an expert appraisal or by the couple’s agreement
  3. The assets and debts are divided evenly between the spouses. 

A spouse is not permitted to move, modify, or get rid of any portion of community property without the other’s consent, but can manage his or her own half. However, the whole includes the other spouse’s half interest; that is, a spouse cannot be separated from the half of the property that belongs to them. Moreover, Washington state law stipulates that the court’s division of the divorcing couple’s property be “just and equitable.”