Joe’s simple rules of probate – your heirs want you to read this!

I have spent today running around Brooklyn managing probate details on my mother’s will.  Sara and I got a lot accomplished, and the end is in sight for getting everything handled, and that’s entirely a good thing.

But over the course of the day, I have learned many things about how to arrange an estate to make things easier on your survivors.  Sometime over the next few days, I’m going to change some of my own financial arrangements to make things easier for Julie and my kids in the event of the big Just In Case.  And because I suspect most of you would like to make things easier on your loved ones, here’s what I’ve learned about how to prepare your estate to make things easier for your survivors.  For their sake, do these things as soon as possible.  And if you expect to be the beneficiary of someone else’s estate, for your own sake get them to do these things.

The big caveat: I am not a lawyer.  I am not an expert on probate.  I’m just a guy who is currently serving as co-executor of one fairly simple estate who has learned a thing or two about it.

On with the rules.

1. Leave a will.

Do this even if you want your estate to go to the default heirs (e.g., spouse, children, etc).  If there is no will, your survivors will have to jump through a whole lot more hoops to settle your estate.  They will have to go before a judge to get someone appointed to manage the estate.  They will probably need a lawyer.  Do you really want your survivors scrambling to find a lawyer right after you die?  I didn’t think so.  Leave a will!

(My mother did this.  Yay!)

Being executor for a will is a pain in the butt.  There’s lots of paperwork.  There’s lots of people to call, certificates to get, and details to manage.  Find someone who will responsibly do all of that and who will not get lost in the details.  If they are motivated to get it done, all the better.

(My mother picked my sister and me.  We are managing just fine.  We’re also motivated, because we are the sole heirs.  Yay!)

It’s amazing how many accounts we accumulate these days.  My mother had a simple estate, and she had accounts with two banks, two brokerages (one for stocks, one for mutual funds), and an additional credit card at one more bank.  (Which is not to mention several rewards programs of various sorts, a library card, a cell phone, and utilities.)  She did not have any big loans or insurance policies, which would have added layers of complications.  I’m sure you have a similar list: I know I do.

By all means, write down all of those accounts.  Write down the institutions involved.  Write down the account numbers.  Write down the phone numbers to call.  Make sure that your notes can be easily found.  Even better, tell your executors where to find them.

A note on passwords: in a lot of cases, having passwords didn’t matter at all in handling my mother’s affairs.  It might have been nice to be able to check her accounts online, but really, it didn’t matter all that much.  So if you are nervous about writing down passwords (and I certainly am), don’t bother writing down your password for online banking or online brokerages.

The exception is something like Ebay where there is poor customer support other than online support.  See my previous post for my wretched experiences with Ebay.  Suffice to say that I would have saved hours of my life had I known my mother’s Ebay password.

(My mother had a notebook that had extensive notes on all of her accounts.  So yay!  But it took a little looking around her apartment before I found it – I didn’t locate it until my second trip to her apartment after her death – and if she told me about it ahead of time, I forgot.  So a half-boo.)

This one surprised me.  And I’m not talking only insurance policies: identify beneficiaries to your bank accounts as well.  It simplifies and speeds access to that money for your survivors.

Here’s what happens if you designate a beneficiary for a bank or brokerage account in the event of your death.  Your designated beneficiary gets a death certificate.  (Those are readily available: the director of a good funeral home will arrange getting them for a nominal fee and your survivors will have them in hand within a week of your death.)  He takes it to the bank.  The banker fills out a bunch of forms, makes a copy of the certificate, and asks your beneficiary if he wants to take over ownership of the account of be given a check.  Either way, the beneficiary has the money in hand.

Here’s what happens if you don’t designate a beneficiary.  The executor of the will delivers the will and death certificate to the clerk of the court to be probated.  The clerk of the court prepares a certificate of probate officially identifying the executors.  This process can take weeks.  It can take months if your situation is at all complicated (e.g., if you have children or a spouse who is not included in the will.)  The executor gets a tax  number for your estate similar to a social security number.  (This isn’t too bad: the IRS has an online site that does it while you wait.)  The executor sets up a bank account for the estate with the tax number.  The executor takes the death certificate and probate certificate to the bank and gets the bank to transfer the money to the estate’s account.  The executor makes sure that all of your debts are paid out of the estate’s accounts.  The executor probably does something else related to taxes, etc – I haven’t gotten that far so can’t speak to the process.  The executor finally gives out the money to the beneficiaries.

And God help your survivors if you did not leave a will or if your executor is not reliable.  (Remember steps 1 and 2!)  It will probably be months before they see any money, and when they do it will probably be reduced by legal fees.

See the difference?  Identifying beneficiaries for your accounts makes life much easier for them.  And if they need the money (for example, if you have a dependent college student as a beneficiary), doing things this way can cut weeks or months off the time it will take them to get their money.

(My mother had my sister and me designated as beneficiaries for her primary checking account.  So yay!  But she did not designate a beneficiary for any of her other accounts.  So boo.  But neither my sister nor I are dependent on the money in the estate, so it’s a wash.)

I’ll add other rules to this list as I get further into the probate process.  But please, do your loved ones who may survive you a favor: get your affairs ready for them.  Because there’s a lot of trucks on that highway, and you never know when one has your name on it.