As an estate planning attorney, I am always amazed at the number of misconceptions that people hold regarding a certain process or proceeding, especially one as important as estate planning and probate. One of the many misconceptions that I hear consist of “I have a very simple situation, my financial accounts are already set up with beneficiaries and POD designations, and I will not have to go through probate.”
This couldn’t be further from the truth! The word probate in Latin means “to test or prove.” When a person dies, their estate must be administered through the proper probate court administration process. This includes proving that the will (if there is a will, is valid). This process also involves the payment of your valid debts and expenses, hearing any disputes from any parties and beneficiaries, and when everything else is settled, distributing what is left to your named beneficiaries (or according to Tennessee law if you have no will).
However, that is just the quick version of what occurs in probate! There are many other issues that occur in probate. One involves your executor or personal representative. This is the person that you named (or is appointed by the court if you have no will) who is in charge of paying all your final expenses, funeral expenses, final debts, putting your creditors on notice, putting your beneficiaries on notice, and distributing the remaining assets to the beneficiaries.
However, an important point … Did You Know That The Executor Sits in a Fiduciary Capacity? What this means is that your executor can be held personally liable to the estate for any mistakes that he or she makes. Let me show you how this works in action.
John the Executor and His Mistake
John’s brother Bill passed away, and Bill named his brother John as executor of his last will and testament. John had been staying in Bill’s house for quite some time, was going to continue living in the house. John was also named on each one of Bill’s financial accounts and bank accounts. When Bill passed away, John did nothing. He kept living in Bill’s house, paid all the expenses, property taxes and insurance, and continued to use Bill’s bank account as he was named on the account. One day, about three years later, John decided that he needed to sell the home and move out. The realtor and title company informed John that the home was in Bill’s name and that he would likely need an attorney. John hired an attorney and started the Probate proceeding. Bill’s last will and testament indicated that his estate was to be divided three ways among Bill’s three children. What was John to do now? John knew that the bank accounts did not have much money left in them and he had not done a great job of taking care of the home since Bill’s death.
This is a nightmare scenario to be in. First, an executor has a legal duty to file the will with the probate court. Second, failure to administer the estate properly can result in personal liability for the executor. In the example above, the executor could find himself in a situation of being liable to the estate for the money removed from the bank accounts as well as being responsible for the decline in value to the home!
This is just one of the many different pitfalls that can occur when someone operates under the misconception that they do not have to go through probate. There are a variety of other pitfalls that can occur when the rules and the law are not followed.
Before you make the decision that you do not need to go through probate of a loved one’s estate, please contact a competent and experienced estate planning and probate attorney.
If you have experienced the death of a loved one and you are not sure what to do, please CLICK HERE to download our Free Report Tennessee Probate: The Secrets You Need to Know to Avoid Unnecessary Costs, Administrative Expenses, and Attorney Fees!. If you have questions after reading our Free Report, please feel free to contact us at (615) 472-2482 or e-mail us at [email protected].
As always, we are here to help!