Where Do We Begin?

[parsecnc4]

Our dad just past away last week and we, the family, have no idea what is necessary to settle the finances he left behind. The death is sudden and there is no Will to be executed. We want to know what is the least expensive method to legally transfer our dad's assets as quickly as possible.

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QUICK FACTS:
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Age of deceased: 68
Martial Status: Divorced but living together with Ex-Wife (Mom of all 5 children)
Children: 5
State: CA

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QUESTIONS:
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1. Do we need a Probate & Estate Lawyer to execute any/all legal documents?

2. Will his assets listed below be subjected to estate taxes upon distribution?

a) A home with a mortgage balance of ~60% of home value.
b) Life insurance.
c) Bank accounts.
d) 401K.
e) IRA account.

3. Is there a grace period to pay off his bills and who bears the liability by default?

4. How long does it typically take for assets to be distributed?

5. What costs are involved in seeking an Probate & Estate Lawyer?

6. What will happen to the deceased Social Security and Disability benefits?

Any help/input would be appreciated.

 

[advisor10]

1-4-2002

DEAR PARSECNC4:

Yes, you do need a probate lawyer to handle this situation since your father unfortunately did not make arrangements to take care of his own affairs in advance, which would certainly have made things easier on his survivors.

If someone in the family is business-savvy enough, that person could apply to be the executor of the estate (and could claim a fee for doing it, described in the next paragraph), but you would still need to consider consulting with a probate attorney for advice, and so, if that is the case, if you trust that attorney, it may be easier to let them handle everything. It is the executor who will receive the legal authority to claim any and all assets and pay all estate debts before making distribution to the heirs.

You need to add up all his assets to come up with a ballpark figure of what you think his estate is worth, then consult with 3-4 attorneys to find out what their estimates are for handling the estate. Executor fees in California are 4% of the first $15,000 of the estate, plus 3% of the next $85,000, plus 2% of the next $900,000.

The fact that he left no will almost automatically insures that his assets will be divided according to all surviving relatives (mainly his children and the ex-wife).

2. Assets will be subject to estate tax.

Life insurance is not considered a probate asset and will be paid directly to the named beneficiaries.

Bank accounts are probate assets.

401K, depending on the type of account it is, may be payable first to the wife or ex-wife.

IRA account might not be considered a probate asset--you would need to check with the company holding the IRA to see if he filled out a beneficiary form.

3. No grace period as such, but it usually takes a few months to settle an estate and bills can be paid during that time.

4. No specific answer as to how long it takes assets to be distributed, since it depends on how simple or complicated the estate is. It should be relatively easy to cash in any assets within a month or two and then make the distribution.

6. Executor would have to contact the Social Security agency directly to find out about the disability benefits and how to claim
them.

Be sure to check with your mother to get her opinion about who should be executor, if she has not already hired someone to do it.