Death is always a complicated process. Not only is there sadness and grieving, there can be confusion and legal complications. Even if you and your family anticipated a death, there are often unexpected things that come up and throw a wrench in the works.
You may feel an instinct to deal with the entire process as quickly as possible, but there are some decisions and actions that you should handle carefully in order to avoid creating future problems.
Here are five of the most commonly made mistakes when it comes to handling a death in the family. This list is designed to help those that are struggling with family financial matters or are currently going through the probate process.
1. Not keeping a detailed log of all assets
While it may seem like an obvious step in the process, it is often overlooked. It is critical to keep a meticulously detailed record of every asset or item that is to be distributed. Particularly if there is not already a will set in place by the decedent.
Keeping a detailed log also helps to keep things organized so that nothing gets misplaced or unaccounted for. Plus, a thorough account of all assets is often asked for by attorneys, representatives, or other parties involved, so it is beneficial to keep a log to prevent any unnecessary barriers or issues later in the process. It is in your best interest to spend some time creating a detailed list of every item prior to distributing anything at all.
2. Prematurely dividing up assets
While it may seem logical or desirable to give some things away immediately, or even to quickly begin dividing up the assets of the estate, it is actually better to wait. We recommend that you keep everything together for now, and plan to distribute later to help prevent any liabilities or issues with creditors.
There are many reasons why. As an example, there may be legal creditors you don’t know about yet, who still have a legal claim on the estate. There are often unexpected legal complexities when it comes to the assets of a decedent.
Keeping everything together until the legal process has fully played out will help to avoid any unwanted drama. Imagine having to ask for an item back after you have given it away to a family member. That can lead to confusion and unnecessary pain for you and the recipient. Keep it all grouped together to avoid this potential trouble.
What’s more, there are differences between probate and non-probate assets, and giving away the wrong assets at the wrong time can cause further stress.
3. Not understanding the difference between probate and non-probate assets
It is necessary to understand the difference between probate and non-probate assets because a person’s will can only direct the disposition of probate assets which he or she owns. Their will does not control the disposition of non-probate assets.
What is the difference?
- Probate assets are any assets legally owned solely by the decedent, such as real property either held in the decedent’s name only or as a tenant in common; personal property items, such as vehicles, jewelry, or furniture; life insurance policies that list the decedent’s name as the sole beneficiary; bank accounts held solely in the decedent’s name; or the decedent’s interest in an LLC or corporation.
- Non-probate assets are those that are not controlled by the disposition of will or devise. They may include the following: real property held as joint tenants, life insurance policies with the beneficiary listed as someone other than the decedent, jointly held bank accounts, or retirement accounts, among others.
When drafting a will, it is important for a person to check to see if he or she owns any real or personal property jointly or if any bank accounts are held jointly, to make sure that these items will be distributed the way he or she wants them to be distributed.
4. Immediately jumping into action
When it comes to dealing with an estate, it is better to notify first and act second. Ensure that everyone that needs to be notified – creditors, heirs, representatives – has been given enough time to get organized and communicate prior to getting to work on the will.
It is important to contact all financial institutions/providers prior to dividing assets to properly manage all insurance policies, bank accounts, retirement accounts, investments and loans. Following the impulse to spring into action after a death can lead to unnecessary hassles and arguments. It can result in further legal action that can easily be avoided if the necessary steps are taken prior to acting upon the terms of the will.
5. Not following or understanding the language of a will
People often can become confused by the language in a will. It’s natural to try and guess at the intent, and to want to follow through on this guess.
For example, if a will states, “My home to Bill, but if Bill ever sells it, then its proceeds to Sally.” This is confusing language on its face, and it doesn’t give a clear direction for the administrator or personal representative of the estate in terms of what definitive rights or interest Bill received upon the decedent’s death.
It is important to understand the language of the will or seek instruction from a judge before proceeding to avoid mistakes that will be costly to correct.
For example, if the personal representative deeded the home to Bill and then Bill decided to sell the home, there might not be adequate safeguards put into place to insure what Sally gets upon the sale. And it is unclear as to whether Bill even should have been deeded the home in the first place. If Bill goes off and sells the home and then refuses to give the proceeds to Sally, Sally’s recourse is limited and court action will be costly for her (and for Bill to defend). Perhaps the language in the will only created a life estate, and Bill only has the power to live in the home, not to sell it. Or perhaps Bill was given the power to sell it, but his interest vanishes in the home at that time.
These questions will require court intervention to resolve. Failing to understand or seek clarification as to the language of the will can lead to greater issues down the road. Often, it can be as simple as asking the court to interpret the confusing language and seek instruction from the court as to how to proceed.
Next Steps
As you can see, there are so many factors that come into play after the death of a family member.
If you find yourself in a situation where the advice of a probate attorney would be helpful, Flynn and Associates is a Seattle-area law firm specializing in probate law and estate and trust disputes. Our knowledgeable probate lawyers can assist in navigating the process that comes with a death of a loved one. We can provide you with comfort and confidence during a difficult time. Located in the Fremont neighborhood of Seattle, Flynn and Associates provides legal services for clients from Everett to Bellevue, Seattle to Tacoma and for the entire Puget Sound region.
Please reach out to us at 206-330-0608 to set up an appointment to meet with an experienced probate & estate lawyer from our firm.