(414) 276-4366
Milwaukee, WI
Trusts & Estates, Elder Law, Tax and Closely Held Businesses | Attorneys Licensed in Wisconsin and Illinois
(414) 276-4366
Milwaukee, WI
Trusts & Estates, Elder Law, Tax and Closely Held Businesses | Attorneys Licensed in Wisconsin and Illinois
Probate is a court-supervised administration for transferring ownership of a deceased person’s property to legal heirs or beneficiaries. A person’s Will directs how his or her property should be distributed at death. Probate is the process that proves an individual’s Will is the valid and last Will of the decedent and then distributes property as the Will directs. If the deceased individual left no Will or other arrangements for transferring assets upon death, the estate still goes through probate to ensure that the decedent’s property is distributed to his or her heirs at law as provided by the state intestacy law.
The goal of the probate process is to protect the rights of any surviving spouse, creditors, beneficiaries or heirs of the estate, and others who have an interest in the estate. It ensures that once property is transferred to heirs or beneficiaries, it is free from any creditors’ claims, including claims based on medical assistance recovery liens, and any additional tax liability.
In general, solely owned property is subject to probate. If the total of all solely owned property is less than $50,000 the property may be transferred to the heirs by use of an affidavit. Probate may also be avoided if the account owner places a “payable on death” or “POD” designation on a solely owned account. Probate may be avoided for brokerage accounts if the brokerage account has a “transfer on death” or “TOD” designation on the brokerage account. Joint accounts also avoid probate.
The Will names a personal representative (referred to as an “executor” in many states) who oversees the probate of an estate. A personal representative may be a family member, friend, business associate, financial institution, or trust company. If the Will does not designate a personal representative or an individual dies without a Will, the court will appoint one.
The main duties of a personal representative are to:
Serving as a personal representative can be a complicated, demanding role; therefore, it is important to name the right person to perform in this capacity. In selecting someone, it is important to choose someone who:
It is a good idea to consult the person before including his or her name in the Will. An alternate personal representative should be named to act in the event the first person named is unable or unwilling to serve.
The personal representative is entitled to be reimbursed for all necessary expenses relating to the care, management, and settlement of the estate.
Subject to the approval of the court, the personal representative is entitled to receive a fee as a means of compensation for services provided. The amount of compensation is two percent of the inventory value of the property for which the personal representative is accountable, less any mortgages or liens, or such other amount as may be either agreed to by the decedent or beneficiaries or approved by the court.
Additional fees may be allowed in cases of unusual difficulty or extraordinary services.
Lawyers should typically charge on an hourly or fixed-fee basis. Attorneys who charge by the hour keep records of the time spent and of the out-of-pocket expenses. In formal probate proceedings, attorney fees must be approved by the judge. It is important that you clearly understand the fee arrangement.
The size and complexity of the estate will often determine the length of the probate. A small simple estate may be settled within six months. Large estates or contested estates may take two or more years. Estate and income tax planning and marital property issues may affect the length of this process.
Unless an extension has been granted, if the estate is not closed within 12 months (or 18 months in some counties), the court may replace the personal representative or the attorney for the estate, or both.
Both federal and Wisconsin estate taxes may be involved in an estate. Further, there are decisions which may impact income taxes. Contrary to popular belief, the size of the estate may not be what determines the tax decisions to be made. It is critical to discuss probate-related tax issues with an attorney.
No. Federal and Wisconsin estate taxes are applied to the value of the total property at death and includes property that does not go through probate. The personal representative must file and pay any taxes from the estate within nine months of the date of death.
In general, there are no estate taxes due on property distributed to a surviving spouse. For 2012, an individual may also distribute up to $5,120,000 of assets to a non-spouse and be exempt from federal estate taxes. This could be more in some situations upon the death of the second spouse. There is no Wisconsin estate tax.