“Trick or treat” rings out every Halloween as children go door to door hoping for their favorite candy. My kids love sorting the candy at the end of the night and finding surprises in their candy haul.
Part of the fun and excitement of trick or treating is the uncertainty —you don’t know what you are going to get. Dying without estate planning is a lot like trick or treat for your surviving family members—no one knows what they are going to get.
If you die without advance planning, any property you own (your estate) will likely end up in Probate Court. An Administrator will be appointed by the Court. Usually, a family member will file a petition asking to be appointed the Administrator of the estate. The Court will require that all of your heirs be notified and that a notice be published in the newspaper alerting creditors that they can file a claim against your estate to recover any debts they claim you owed. If any of these heirs believe that they are better suited to be Administrator, they can object to the petition. Eventually, the Court will either grant the petition or appoint another person to be the Administrator.
The property in the estate will be distributed according to Georgia law—not necessarily according to your wishes. You may want your spouse to receive all your property when you die. The disappointing fact is that if you die without planning ahead, Georgia law dictates that your spouse must divide your property with your children. The law dictates who qualifies as an heir and the portion of your estate that each heir is entitled to receive. Once the hierarchy of heirs is determined, the Administrator will distribute the assets of the estate. If the assets of the estate cannot be fairly distributed, the Administrator will make decisions about which assets to sell and how to sell those assets. The sale of assets can be time consuming and result in family members waiting long periods of time to receive funds.
Administrators of estates are paid for the work they do managing an estate. They are entitled to two and a half percent of all funds they collect into an estate and two and a half percent of all funds that are paid out of the estate. If there is real estate or other property to distribute, an Administrator (with approval of the Court) can receive as much as three percent of the value of the property. Administrator compensation and legal fees are paid from the estate before heirs receive their inheritance. This means that the heirs get less.
Whether your estate is large or small, planning ahead lets you control costs and take uncertainty out of the process for your family. Planning that includes a will or living trust allows you to appoint the right person to handle your estate and to pay that person as much or as little as you think is right. You can designate the right people to be guardians for your minor children. You can make sure your possessions go to the right people—the people who will truly appreciate them.
Uncertainty is fun and exciting at Halloween but excitement and uncertainty are not so fun for your heirs during a time when they are grieving. Make sure your family doesn’t look back on the administration of your estate and think, like Charlie Brown at Halloween, “I got a rock.”
James M. Miskell received his law degree from the University of Georgia in 1993. His Asset Protection, Estate Planning and Elder Law practice has offices located in Lawrenceville and Johns Creek. He offers educational workshops and free consultations to assist clients as well as fellow professionals in creating individualized solutions. Visit his website: www.LetsTalkEstatePlanning.com. For more information, see his ad in this issue.