Continued from the previous blog post...
Last week I explained the term “Mind the Gap” and where it came from and how it also applies to estate planning.
This week I will do as promised and explain to you how you can “mind the gap” in the estate planning process so the entire ordeal will be minimized for your family.
“The gap” we talked about is the time between a person’s death and the Court’s appointment of an Executor to take charge. The Will nominates someone to serve, but the Court must actually appoint them or else they have no power to serve.
In some situations, a person might die while a resident in a nursing home or rural hospital. Only the MD who pronounced the person deceased will sign the death certificate. He or she might not work full-time at the facility and might not be back for a week or three to sign the certificate. Until you have a death certificate, you can’t become appointed as Executor*.
Another delay has to do with notifying next-of-kin as to the actual probate case itself. Under Alabama law, all next-of-kin must consent to waiving the initial hearing, the one where you would be appointed as Executor. If they don’t consent, then a hearing is set and that is about two months out because of judicial backlogs. Until the hearing, no one is Executor.
Another delay is what is known as a “will challenge”, a case where
someone challenges the validity of the will itself or the character and
fitness of the person wanting to serve as Executor. This can
significantly slow down the appointment of the Executor, often by
months!
So when we say “Mind the Gap”, you can see that the gap can be several
weeks to several months and during that time, no one is calling the
shots. No one is paying the bills. No one is protecting and safeguarding
the assets in the estate like the house, the vehicles, the jewelry and
collectibles. If this is OK with you, then don’t read any further. If
you prefer not to subject your lifesavings to waste and mismanagement,
keep reading!
The easiest way for many families to “mind the gap” is to set up what is
known as a “Revocable Living Trust”. These types of trusts are the most
popular kinds in force and I would estimate that over 80% of all trusts
are revocable living trusts. Many people have them- you don’t have to be
a millionaire to have one! Some of your neighbors have them and people
in your church have them. They all have them because they want to mind
the gap, they want to avoid probate, they want to avoid strangers
becoming involved with their affairs and they want to control who gets
what long after they themselves are dead and gone.
Revocable Living Trusts (RLTs from now on) serve as Will substitutes. If
you have an RLT that is properly funded, there should be no need at all
for you to have to open an estate in the probate court. Your Will
becomes unnecessary. The trust, the RLT, controls how your stuff passes
at death. Not only can your assets pass to your chosen loved-ones much
faster than through probate, but they can pass without your creditors
getting first shot at the assets, before your loved-ones, as they would
in probate.
Next blog post we will discuss the specifics of setting up your own RLT.
Stay tuned!
*some probate courts in Alabama still allow probate without a death
certificate, although this is quickly changing.