Whatcom County Probate: An Overview
The blog post I wrote on May 3, 2022 inspired the most feedback, input, thank you's, and outreach with follow-up questions of any blog posts since I began writing them.
As you can imagine, that has filled my heart and inspired more research and study.
To refresh your memory, it was all about last wills and testaments, and:
Their tremendous power to avoid a logistical, financial, and familial nightmare for the decedent's heirs, their business, colleagues, creditors, and more;
Their relative scarcity in American society;
Their relative ease of creation;
And I included some links to DIY will-writing.
I had mentioned that it wasn't specifically "wills", per se, that I had set out to study or write about.It was a much larger subject that fit squarely into the category of, "The more I learn about this, the less I realize I actually know."
I was going to shelve it for a good long while, even though it continues to be something I read on constantly and become more and more fascinated with.
Then, this morning, my phone rang.
It was someone who had read the blog post about wills, and is in the position now of handling an estate after a death.
That estate, it happens, has many assets......it also has some debt......it has multiple heirs......and it has a decedent who died intestate.
That is, the decedent had no will.
The caller had a TON of very good questions, and I was grateful to have been able to offer some help.
Therefore, in today's blog post, I am going to recap the Q&A from that call, and add a few more points and tips for good measure.
The topic... one I have become completely captivated with: Probate.
First, a Disclaimer
The subject of Probate is as vast and varied as it is fascinating.Every state has its own probate laws and of course they differ.
While probate is not an "infinitely complex" subject, it has enough nuance and includes enough of a "human element" that it would be utterly impossible for any one resource -- much less a simple blog post -- to hit every sub-topic and cover every angle.(A VERY good resource if you want to jump right to the real meat and potatoes, is www.WA-probate.com).What appears below is meant to be a useful but shallow dive into the subject.
In real estate we deal with the various elements of probate on a regular basis, but please do not consider anything written here to be conclusive advice.
If you have questions because you are now or believe you will be in the role of Personal Representative of an estate, I highly encourage you to consult with an estate attorney.
Q: My parents both passed away. They left a large estate but no will. Can I ask you some questions?
And so began my phone conversation with that question.
The caller had all the normal feelings and thoughts a healthy person has after losing both parents, the 2nd one very recently:
Grief, naturally
Confusion over the process ahead
Some measure of overwhelm
Uncertainty of next steps, applicable laws, potential liability
Curiosity about what resources exist
And openness
Openness to not having to figure it all out alone; openness to asking for help.
He knew I wasn't an attorney, and recommending he work with one that specializes in estate planning was one of the first things I mentioned.
(If you need a recommendation for an estate attorney, email me.)But he had read the blog post on writing wills and had a long list of excellent questions.
In the first few minutes of our conversation, I learned:
Despite his urging over time, his parents never wrote a will or any form of an estate plan.
There are assets in abundance, including well-funded bank accounts, real estate, vehicles, and valuable personal property.
There is some debt, too.
He is not the only heir; there is one sibling, and they are on good terms.
Thus began our talk, from which I will pull much of the content below.
Q: Where should I begin?
The first thing to know is that probate is not the enemy.
Probate is a formal legal process to help you navigate this journey of legally, financially, and logistically settling the decedent's estate.
Probate will ensure you pay the estate's debt and taxes in the proper sequence or priority of payments, properly settle with the heirs, and ultimately maximize the value of the estate.
Probate is overseen by a court-approved person called a personal representative (I'll list a few variations on that label at the end of this section).
I asked the caller, "Are you confident that you are the person who will be in charge of handling the settling of the estate... or would you like to earnestly try to become that person?"
He said Yes, and that he didn't have any reason to believe the sibling would protest him being appointed as such.
To be officially given that role of Administrator, you are going to petition (apply to) the Superior Court in whatever Washington county is convenient to you.
You will ultimately be issued Letters of Administration (actually just one page) giving you the legal right to effectively stand in the decedent's shoes, sign legal documents, sell or transfer assets, access accounts, and take all the steps necessary to settle the estate.
Before you apply for the Letters of Administration, though, you'll need a copy of the decedent's death certificate.
It's a good idea to get multiple copies upfront, and you can order them from the WA State Dept. of Health website.
The Label of "Personal Representative" of an Estate
If there is a will and it names a person to act as Personal Representative (or "PR"), that person is called an Executor (male) or Executrix (female).
If there was no will and the PR is court-appointed, that person is called an Administrator (male) or Administratrix (female).Any of the above can be generically called the Personal Representative of the estate.
Q: Is there a step I should take RIGHT AWAY because there is an important timeline involved?
YES! I am SO GLAD you asked!
As Administrator, as early as possible, you should publish a "Probate Notice to Creditors" in the newspaper where the decedent lived.(Required frequency of publishing the notice and also who you should send copies to can be found in this RCW).
Running this simple public notice in the newspaper reduces the Statute of Limitations for any creditor who is not known to you by a diligent review of the decedent's correspondence, files, and records, to make a Creditor's Claim against the estate for unpaid debt......
from 24 months after the date of death, to just 4 months after first publication of the notice.
That is potentially THE SINGLE BIGGEST hack that exists in shortening the end-to-end timeframe of probate -- second only to the decedent having formed a trust (or written a will, if heirs are potentially numerous).
As soon as you've published that notice, you should make an earnest effort to find any existing creditors the decedent has unpaid debts with, and mail them Creditors Claims Notices.
If you do not give such notice to creditors and you distribute the estate's holdings to the heirs too early in the process, the creditors can come knocking on the heirs' doors for up to 24 months after the date of death to be paid their debts due to them.
Bottom line: FILE THE PROBATE NOTICE TO CREDITORS, and do it early in the process!
Q: How do I keep track of estate funds, expenses, and proceeds from things we sell?
That is such a great question.You should open a new, separate checking account in the name of the estate.This allows you one account where the decedent's cash, proceeds from the sale of assets, checks from refunds or income sources, all monies that are "owned" and/or received by the estate......
and all expenses, bills, debts, fees, maintenance costs, and any other outflow of money can be issued from.
You do not co-mingle any of your own funds with this account.
This single account allows you to keep accurate records of the estate's money so you can easily show and prove any and all deposits and expenses, if that scrutiny becomes necessary at any point.
Furthermore, you'll have an accurate record when it's time to file the estate's tax return in the near future.
Opening an estate checking account is critical to your accurate record keeping.
Q: Shouldn't I use my own funds to pay for the funeral and other expenses?
*An important note that is unique to this decedent's estate, that of course may not be the case with just any estate:
This particular estate was highly solvent.
This estate has, according to the caller, a lot of money in the bank, and a lot of valuable assets including real estate with substantial equity.
Again, there was some debt, too, but the net value of this estate is substantial.
With that understanding...If an estate has adequate funds to pay for funeral / burial / cremation expenses, then the estate -- not you the Administrator from your personal funds -- should absolutely pay those bills.
The same holds true with paying for expenses like:
Maintaining and repairing the decedent's real estate
Securing and maintaining vehicles and other personal property
Storage fees for estate property requiring it
Keeping insurance policies paid up and active on insured assets
The estate attorney's fees
Court filing and legal documents, death certificates, application fees
Accounting fees if an accountant is hired to help with the books
Administrator travel expenses when directly associated with attending to official estate business
Fees associated with posting Probate Notice to Creditors and mailing those notices to known creditors
And of course, estate taxes determined due by the final filing (its own topic).
*A note about careful handling of funds by the Administrator
It can't be overstated how carefully the Administrator should handle the estate's money and assets, and the records that show where every penny has come from and been paid to.
It would be wise to handle things as if you EXPECT a protest, an audit, extreme scrutiny, and having to defend your duties and records in a courtroom, just in case.
Q: What if an estate can't cover all expenses?
While that is not an issue with our caller's estate, it obviously happens all the time.Let's tee this up with a hypothetical case study:
Let's say a divorced-and-never-remarried Dad wrote out a will in his 50's.
At the time he was making good money, owned a primary residence, a vintage sports car, a couple valuable guitars, and had six figures in the bank.In his will he detailed the assets and money he had at that time.
He included a list of beneficiaries including his kids, a couple of grandkids, and even his best fishing buddy all the way back from his high school days.
The years rolled by, and changes happened.Leaner times hit, and new debt was incurred.
His bank balance diminished drastically in the final few years of his life.What the Dad did NOT do, ever, is update his will.When he died, his kids opened probate and submitted the original will to the courts.
His oldest daughter had been named Executrix, and she started the process of valuing the estate and its remaining assets.
It rather quickly came to light that the assets meant to be passed down to the named beneficiaries......instead had to be sold to cover debt and expenses.
The kids were supposed to split the (formerly substantial, but now very meager because of a cash-out refinance) equity after the house was sold.
The grandkids were supposed to get the proceeds from the sale of the Corvette
.And the fishing buddy was supposed to get the guitars.
Instead, after the Creditors Claims arrived and were validated by the court, the oldest daughter who was Executrix was instructed to sell the assets and pay these first:
Estate administrative fees like court and legal fees
Funeral expenses
Medical bills of the last sickness
Wages for work performed in the 60 days prior to death
Debts with preference established by law
Taxes, debts, and any other fees owed to the state
Judgements that are recorded against real property...
...and then, if there's anything left, the beneficiaries might get a piece.
As you can imagine, an insolvent estate that doesn't line up with an outdated will is one area that leads to lengthy legal battles among beneficiaries and creditors (along with at least a hundred other variables).
Note to all of us:
Step one: Write a will.
Step two: Update your will.
Q: Are ALL the assets in the estate subject to probate?
Not necessarily.
When a married couple own real property and one spouse outlives the other, the surviving spouse inherits the property without probate per "community property" laws.
In the caller's case, both parents had passed away.
If the decedent had formed a Revocable Living Trust, it could have been the "owner of record" of real property, thereby foregoing probate -- all of which is another (exciting!) topic for another blog post.
If there were any life insurance policies or investments with named beneficiaries, POD (payable on death) bank accounts, or TOD (transfer on death) investments, those wouldn't be subject to probate.
Also, if there were any jointly owned assets, for example a property held in an LLC with joint tenancy "right of survivorship", those wouldn't necessarily be subject to probate.
But none of those exist in the decedent's estate, according to the caller.
Q: How is the net value of the estate established?
Determining the net value of an estate is a matter of adding up all the various assets' market values. This list could include:
Real estate
Vehicles
Antiques and salable personal property
Investments
Equity or certain types of partial ownership in businesses or legal entities
Insurance policies payable to the estate (versus to an individual or alternative beneficiary)
Bank account balances, CD's
Cash
Potential recurring/ongoing revenue
Possibly pensions and annuities
The sum total of value of the assets is called the Gross Value of the estate.From the Gross Value, you subtract the following:
Debts owed by the estate
Administrative costs of handling the estate (which is that list above including court and legal fees, the Administrator's expenses, maintenance of assets, utility bills, etc.)
The costs associated with selling assets such as real estate fees and closing costs
Potential state death tax deductions
Qualifying charitable donations
All qualifying expenses are subtracted from the estate's Gross Value, and the estate's Net Value is determined.
When there is a house chock full of personal belongings, and/or other assets spread out over a wide area, it can take months to inventory the estate's property and arrive at a market value.
It may be necessary to have professional help appraising personal and real property to determine value.
Of course, with no will to reference and a lot of valuable, potentially meaningful, personal property, the heirs might find they are negotiating (or battling) over certain pieces of furniture, art, jewelry and such.
These battles can go on and on for years in some cases, and can cost a fortune in legal fees.
In our caller's case, because of a healthy relationship with the sibling and only other heir, this wasn't anticipated.
Q: How long does probate take?
If an estate is:
relatively simple with relatively few (complicated) assets
has known, straight-forward creditors and debt (or none)
has a net value below the threshold of state and federal estate taxes
involves known, cooperative heirs and/or beneficiaries
has an organized, diligent Personal Representative who acted swiftly and efficiently from the start
and everything goes well and according to plan...
...then, per my understanding, probate can be opened and closed in 6 months or even slightly less.
If any of the above aren't the case, probate will take longer.
In bad cases, it can take years.
In some cases with no will, it can take a year or more just to identify the heirs.
Again, it can't be overstated strongly enough:
If you are capable of having read this far and you do not yet have a will, or haven't recently reviewed and updated your will, PLEASE DO SO.
If you have any measure of influence over your parents, grandparents, siblings, or adult friends, do what you can to help them properly create a will.
It could be one of your greatest acts of service to your family and friends, and almost certainly has one of the highest future returns for the relatively simple and minimal upfront investment of time and energy.
I must force myself...
I could go on and on, and on.
I could write so much more about my conversation with the caller who is about to embark on the journey of probate.
In the universe of probate, I have barely left the launch pad
.I should mention that probate is NOT a requirement in Washington State.
Probate in our state is entirely discretionary, and it is estimated that only a few percent of deaths involve it.
Because of the nature of our work in real estate, however, we are exposed to a large percent of those who may indeed deal with it.
If this is you, and you find yourself faced with the settling of an estate, please know you can reach out to me and I will help you.And know that, regardless of the wide range of topics I cover in future blog posts, this is an area I will continue to earnestly study and engage in.
