Immediately after a loved one dies, the nearest family members — or sometimes close friends if no relatives are nearby — wonder what to do about the estate assets of the decedent.
An individual’s assets can fall into certain categories including:
- Household items;
- Jewelry and other valuables;
- Belongings in a safe deposit box;
- Bank Accounts;
- Brokerage Accounts;
- 401(k) plans;
- Real estate; and
Here are some basic considerations about these assets.
If the decedent was married and living with a spouse, the household items would effectively be the property of the spouse. These items may include furniture, clothing, china, silver, appliances, linens, electronics and other contents of the decedent’s home.
So, unless the decedent specifically designated certain items to beneficiaries in a will, the surviving spouse would receive the household items. If there is no surviving spouse and no instructions in the will, the executor or personal representative must decide how to divide household items — or perhaps, allow the beneficiaries to decide what they want fairly. Alternatively, the executor may sell the items (sometimes in an auction) and if no one wants them, they may be donated to charity or discarded.
Jewelry and Other Valuables
If there are some personal items such as jewelry, antiques or artwork of high value that have not been designated to a beneficiary in a will — or if the value is exceedingly high — a closer look at the estate plan of the decedent is necessary to determine who and how to distribute the valuables. In these cases, the executor or personal representative may have authority to determine the best way to distribute the items if not specifically designated in a will. The same would be true for cash found in the household.
Safe Deposit Box
Sometimes, valuable and important documents are kept in a safe deposit box. In some cases, the safe deposit box is only in the decedent’s name — or perhaps there is another person who also has access to it. When an individual dies, someone may need to get a court order to open the box. If the joint owner can open it, then an inventory should be taken, preferably with a witness.
If a bank account is in the name of the decedent only, then the money in it is effectively frozen until the executor or personal representative opens an estate account. At that point, the money in the personal account is transferred into the estate account.
If the account is a joint bank account, in most cases, the money in the account is a non-probate asset and would belong to the surviving owner of the bank account. One exception is if he decedent opened the account and added the name of the second owner “for convenience only,” wherein the account would be subject to probate and the second owner would not have ownership of the assets in the account.
There also could be bank accounts that have a designated beneficiary or beneficiaries. In those instances, the beneficiary or beneficiaries would inherit the money in the account without going through probate.
Brokerage accounts, in most cases, are similarly treated as bank accounts. However, there could be stocks or bonds held in the name of the decedent with a designated beneficiary, or jointly owned, or there is a transfer upon death provision naming beneficiaries. Depending on how the stocks, bonds or funds are held, they can either be part of the probate process, or go directly to named beneficiary or joint holder.
Pension, IRAs, 401(k)s
If there is a named beneficiary of the accounts, then the named beneficiary obtains the funds without going through probate. If there is a named beneficiary other than the spouse, the surviving spouse may be able to challenge the named beneficiary of certain accounts.
If there is no named beneficiary, then the asset would flow to the estate for probate or administration.
Real estate could be a non probate asset if it is jointly held or if the persons inheriting it receive it by “operation of law.” It is a good idea to check with a title insurance company to make sure that a transfer of the property without probate is considered proper from the title company’s point of view — in case the person receiving it wants to sell at a later date.
Similar to designated accounts, if an insurance policy names a beneficiary, then the beneficiary would receive the funds without the need to go through probate. If there is no named beneficiary, then the proceeds would flow to the estate.
These are only some of the estate assets that may be involved in an estate. Speak to your attorney about these issues, so you are aware of what could happen if a family member dies — or for you to develop a proper estate plan so your heirs will receive your assets according to your wishes.
Who Is in Charge?
Power of Attorney. After someone dies, the person who was named in a Power of Attorney no longer has the authority to conduct the affairs of the decedent. This is the person (sometimes called the attorney-in-fact) who handled the affairs of the decedent prior to his or her death.
The reason: The Power of Attorney is a legal document only effective during the life of someone. It immediately becomes invalid upon death.
This can lead to confusion if the attorney-in-fact is not the same person named in a will as the executor (or is not a nominated administrator if the decedent died without a will). The attorney-in-fact must cease taking action with regard to the estate. Also, the attorney-in-fact should maintain proper records of the transfer of estate assets immediately preceding the death of the decedent in case there is a need for the executor to look at such documents.
Court Appointed Guardian/Conservator. If the decedent was considered incapacitated, the court may have appointed a guardian/conservator to be in charge of the person and his or her property. (The guardian of property is sometimes called a conservator. )
After the decedent dies, the guardian/conservator is no longer necessary and any powers are no longer in effect. The court will generally require the guardian to provide a final accounting. The individual most likely has been required to keep an accounting on an annual basis. A final accounting is necessary to release the guardian/conservator of liability. Sometimes, there are issues with the guardian’s/conservator’s accounting that will need to be addressed during the estate administration. It is advisable for guardians to keep good records.
The Proposed Executor or Nominated Administrator Should Be Proactive. If the decedent had a will, the proposed executor should begin taking steps to probate the will. It’s important to take the steps in a timely manner.
Even before the probate of the will, the proposed executor should take action to protect the estate assets of the estate and to notify all creditors of the death and notify banks where the decedent had accounts.
Further, if there is a need to search a safe deposit box, the executor should immediately get an order to open the safe deposit box if the executor isn’t already named on the box. When opening it, the executor should have a bank representative there and take an inventory of the box.
If there is a need to protect personal belongings in the home of the decedent, the executor can request the court issue a notice that no one is permitted to enter the premises (although if the decedent shared a home with someone, it could be limited to the decedent’s private quarters).
If there is no will, family members generally determine who will be the estate administrator. Hopefully, family members can agree on this.
Complications can arise with these issues. Talk to your attorney prior to taking any action after someone dies to make sure you are the following proper procedures.