October 1, 2010

Lessons Learned From Probate Administration

Over the years while handling the administration of probate estates, I have seen a number of errors which have adversely effected a decedent's intentions and the administration of their estates.

By probate administration, I am referring to the distribution of a decedent's property pursuant to a probate proceeding in the Register of Wills or Probate Court in the county where the decedent resided at the time of their death.  The assets distributed in probate refer to both real and personal property, and any right or interest therein belonging to a decedent, which does not pass, at the time of the decedent's death to another person by the terms of an instrument under which it is held, or by operation of law.  Some of the errors which I have encountered, include the following.

The Original Will Is Not Available:  In order to probate a decedent's Will, the person named as Personal Representative in the Will, must present the decedent's original Will to the Register of Wills in the county where the decedent resided at the time of their death.  If the decedent's Will is contained in their safe deposit box at a bank, and the Personal Representative does not have access to that box, then the Personal Representative must file a Petition with the Probate Court to obtain an Order allowing the them to gain access to the safe deposit box to retrieve the original Will.  The result is that additional time and money will have to be spent in filing the Petition and obtaining the Court's Order to obtain the original Will.  If the Personal Representative had been given access to the decedent's safe deposit box (preferably upon their death), then the foregoing could have been avoided.  A more difficult and time consuming situation arises, if the decedent's original Will can not be located.  Fortunately, Maryland has enacted laws which permit a copy of a person's Will to be admitted to Probate Administration,  however, a number of conditions must first be met in order to obtain that Order.  First, a Petition for admission of a copy of a Will must be filed with the Probate Court, wherein the Petitioner alleges that the original Will is lost or destroyed. A copy of the executed Will must also be presented, and all of the heirs at law of the decedent, as well as all of the individuals/organizations who are named in the Will to receive the decedent's property, must consent to the admission of a copy of the Will. A remedy yes, but again a time consuming and costly alternative. My suggestion would be to deposit your Will with the Register of Wills for safekeeping in the safe in their office, or grant your personal representative access to your safe deposit box, in the event of your death.

The Will is not Properly Executed:  On several occasions I have been asked to assist with probating a Will which was only signed by the decedent, before one (1) Notary Public.  I have had to explain that having a Will signed before a Notary only, does not make the Will "legal" or valid, just because a Notary witnessed the signing of the Will, and affixed their Seal.  Rather the law in Maryland is quite clear.  In order for a Will to be valid, the Will must be signed before two (2) independent witnesses in order to be valid and enforceable in Maryland. If there are not two competent individuals who sign as witnesses in the Will, then the decedent will be determined to have died "intestate", which means that their probate property will be distributed to those individuals who are entitled to receive such property according to Maryland's intestacy laws, and not pursuant to the wishes expressed by the decedent in their Will.

The Will Has Be Altered:  On a number of occasions, I have been presented with Wills which have words, sentences, or whole paragraphs crossed out and handwritten insertions stating the testator's wishes. Unfortunately, those insertions are not enforceable as they were not prepared, signed, or witnessed, as required under Maryland law.  In Maryland, in order to validly amend a Will, you need to prepare a Codicil, which must meet the requirements of an valid Will in that it must be (1) in writing, (2) signed by the testator or testatrix,  or by some other person for the testator or testatrix, in his or her presence and by his or her express direction (if he or she is incapable to do so themselves due to physical disability); and(3) attested and signed by two or more credible witnesses in the presence of the testator or testatrix.  On some occasions, I have also been provided with a Will which is totally handwritten, and asked to probate it. Unfortunately, in Maryland, such holographic Wills are not valid, unless the person who prepared the holographic Will is serving in the armed services of the United States and the Will is signed by them while they are outside of the United States, the District of Columbia, or a territory of the United States. Note however, holographic Wills are void one year after the preparers discharge from the armed services unless he or she died prior to the expiration of the one year period, or does not then possess testamentary capacity.

The Persons Named As Personal Representative Are Deceased:  It is important thatyou review your Will at least once time a year to be certain that the persons named in your Will to serve as your Personal Representative are still living.  If the persons you have appointed to serve as your Personal Representative are not living at the time of your death, then the person who will serve as your Personal Representative will be appointed pursuant to Maryland law, which may not be the person you would have chosen to serve for you. After all, one of the responsibilities of your Personal Representative is to be certain that your wishes regarding the distribution of your property is carried out.

Provisions For Irresponsible legatees In A Will: When preparing your Will you should consider whether the individuals to whom you would like to leave your property to are responsible enough to manage that property.  I have seen a number of instances where a Will states that hundreds of thousands of dollars are to be distributed to beneficiaries who are spendthrifts, and will most likely consume the inheritance in a short period of time.  In these situations, it would have been preferable to provide that the bequest to them be paid instead to a Trustee, who would provide for discretionary or other orderly distribution of those proceeds to the beneficiaries.  Additionally, a bequest of a house to children who do not work and are unable to afford to pay the mortgage, taxes and upkeep on the property, is ill-advised.

No Tax Planning Done:   In this day and age of the internet and free Wills, I have seen do-it- yourself Wills which in addition to containing other errors effecting the effectiveness or validity of the Will, do not address estate or tax planning issues. The result may be that several hundred dollars are saved with the do- it- yourself Will, however, several hundred thousand dollars can be lost to estate taxes, because the appropriate tax provisions and asset titling were not done.

I hope that the above examples of the errors that I have seen will assist you.

Published in the October 2010 issue of Generations newspaper.