NH Elder Law and Estate Planning

Transfer Of Assets At Death

At your death, how will your assets be distributed?  Who will settle your affairs?  Will there be a need for probate? Learn more about wills, living trusts, and inexpensive ways to avoid probate.
The Basics

When someone dies, who becomes the owner of his property?  A bank account for instance.  During this person's life, only he could take money out of the account.  Or perhaps someone else had the right to access the account under power of attorney or as joint owner.   What rights do these people have after the owner has died? 

Example One:  Robert and Joan have a bank account together.  It is known as a joint account.  The statement reads Robert OR Joan.  At Robert's death Joan becomes the sole owner of the account.  She can close the account if she wishes. 

Example Two  Robert has a bank account in his name alone.  He named Joan as a "Pay on Death" beneficiary.  The bank calls this a custodial account, or a transfer on death account, or a totem trust account.  At Robert's death Joan will provide the bank with a death certificate and the money in the account will be given to her.

Example Three.  Robert created a trust.  His bank account is owned by his trust.  The statement reads:  "The Robert Revocable Trust."   The trust says that during Robert's life he is the trustee and can access the bank account.  It says that at Robert's death Joan automatically becomes the Trustee.  It also says that when Robert dies the Trustee must close the bank account and give the money to Stephen.  At Robert's death, Joan provides the bank with the death certificate and shows them the Trust provision saying that she is the new Trustee.  The bank closes the account and gives Joan the money.  Joan gives the money to Stephen. 

Example Four:  Peter has a bank account in his name alone, but gave Marilyn the power to access the account so she could pay his bills if became ill.  The statement reads Peter.  Marilyn, POA .  (Power of Attorney)  At Peter's  death, Marilyn's  right to access the account ends.   After Peter's  death no one can access the account without the permission of a probate court judge. 

Example Five:  Peter has a bank account in his name alone.  No one has the right to access the account.  After Peter's death no one can access the account without the permission of a probate court judge. 

Who will get Peter's bank account?

Example One:  Peter had a will.  The will says that Peter wants Marilyn to handle his affairs after his death.  It says that he wants Philip to get the money in his bank account.  At Peter's death Marilyn would file the will with the Probate Court.  A judge would appoint her as Executor of the Estate of Peter.  She would show the bank the document that names her "Executor  and the bank would them allow her to close the account.  She then transfers the money to Philip.

Example Two:  Peter didn't have a will.  The family would tell the Probate Court that there is no will.  The judge would appoint someone as Executor of the Estate.   That person would be able to close the bank account.  She would then transfer the money to the person that New Hampshire law says is the rightful owner - the spouse, children, etc.  This is known as intestate succession.

Notice that if a bank account is held jointly, is a transfer on death account, or is held in the name of a trust the account is transferred at death without the need for probate.  If the account is held in a single name, even if someone has power of attorney, the probate court must become involved.  EVEN IF THERE IS A WILL.

The Will

A will allows you to indicate who you want to handle your affairs at your death (by naming an executor), indicate who you want to act as guardian of minor children, and indicate who you want your property distributed to.   If you do not have a will, the judge would appoint as executor or guardian the person she considers best for the position - but would have no guidance from you.  If you do not have a will, state law prescribes who inherits your estate

The validity of a will is determined by the probate court after death. (N.H. does not have a will registry where wills are filed before death)    Although the law does not require that an attorney prepare a will, it's validity will depend on adherence to complex law.   Of all the do-it-yourself projects, preparing a will may be the most risky.  Remember when you need to use the will, you won't be around to interpret it!  The New Hampshire Bar Association offers information on wills in the guide:  "Wills and Trusts"

The Probate Process

 The Probate Court is a county court.  The process will take place in county in which the deceased resided at the time of death.  The process is public, meaning that the will becomes a public document.  A statement is filed with the court indicating all the assets the decedent owned.  This document is made public as well.  There are different forms of probate administration, depending on the circumstances.  Each form of administration has different forms, requirements, and fees. 

Waiver

The process is most simplified if:

1) the decedent dies with a will and the surviving spouse (or, if no spouse, an only child)
is named in the will as the sole beneficiary and is appointed to serve as executor; or

 (2) the decedent dies without a will and the surviving spouse (or, if no spouse, an only child) is the sole
heir and is appointed to serve as administrator.

Under these circumstances there will be a Waiver of Full Administration and the estate can be closed after six months if the executor files an affidavit certifying that there are no outstanding debts. 
 

Voluntary or Small Estate Administration

The process is also simplified if the estate does not include real estate and is small -  a value of $10,000 or less.  This is known as "Voluntary Administration." 

Regular Administration

If the estate contains real estate, or is valued over $10,000 and the conditions for a Waiver of Administration don't exist regular administration will be necessary. 

The New Hampshire Bar Association and the Administrative Judge of the Probate Court have published a guide which explains the probate process:  "Administering and Estate"   It is not necessary to hire an attorney however, Regular Administration involves many forms and filings which can be confusing.  The court clerks and staff are helpful but they are not able to give legal advice. 

Avoiding Probate

Because the probate process is public, time consuming, and possibly expensive, many people take steps to avoid probate.  

Assets which name a beneficiary. 

It is possible to name beneficiaries on many accounts.  When you purchase life insurance, IRAs, or  annuities you are asked to name one or more beneficiaries.   You should be sure to name a secondary beneficiary in case the person you name dies before you.  If no secondary beneficiary is named, the asset would be payable to "the estate"  - which means probate would be necessary.

You may also ask that bank accounts and brokerage accounts be set up to pass to a beneficiary at your death.  Understand that many banks or investment advisors will not automatically offer this option and there may be a cost.   Stocks and bonds can also have the "transfer on death" feature.

Remember, someone named as a POA on your account does not have the right to the account, or even to access the account, after your death.

Joint ownership

It is common to hold real estate and financial accounts jointly.  When one person dies, the other becomes the sole owner.  However, just because two names are listed on an account or in a deed does not guarantee that the asset will be considered jointly held.   If the deed does not say "as joint tenants with rights of survivorship" when one person dies his share of the property passes to his heirs - in probate!  Financial accounts might also be held as tenants in common rather than jointly.  If the statement does not say "or" between the two names it is likely that the account is not considered joint.

It is not advisable to own an asset jointly if the sole reason is to avoid probate.  A joint owner has full right to the account and could deplete the funds entirely.  There are significant tax and Medicaid law implications when a name is added to an account or deed.   Making an account a transfer on death account is the better solution.   A deed to real estate, however, can not name a beneficiary.  If you own real estate and want to avoid probate, and if you don't own the real estate jointly with a life or business partner, usually the best solution is to create a revocable trust. 

Revocable or Living Trusts

A Revocable or "Living" Trust is a will substitute. (IMPORTANT:   The "Living Trust" is often confused with the "Living Will"  A living will has to do with end of life medical decisions.  It has nothing to do with financial assets or probate! )

Like a will, a Living Trust directs who you want your property to go to at your death.  After a living trust is created the trust must be funded.  Financial Institutions are instructed to change ownership of accounts from the individual to the trust.  A deed is prepared transferring title to real estate to the trust.   If a trust is created and all individually held assets are transferred to the trust, probate will be avoided.

Probate Avoidance Check List

Take these precautions in order to avoid probate at your death.  If you are acting as agent under power of attorney, it is likely you will have the power to accomplish many of these tasks on behalf of your loved one:

  • Financial accounts, stocks, and bonds, are held jointly, in trust, or transfer on death to a beneficiary
  • Real estate is held jointly with a life or business partner or is held in trust
  • Life Insurance, IRAs, Annuities, Veterans Benefits,  Pensions, name a beneficiary - NOT the estate
  • All assets which name a beneficiary name a secondary beneficiary in the event the primary beneficiary predeceases you
  • Long-term care insurance, pensions, etc., sometimes have a small death benefit.  Check to be sure that a primary and secondary beneficiary has been named. 
Copyright 2007
Judith Fox
8 Farmwood Rd. Concord, NH 03301
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