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DO I NEED AN ESTATE PLAN?

You DO need an estate plan so that YOU and you alone can make decisions about your property and belongings and your minor children and what you want to happen to them when you die.

1. WILLS AND SETTLEMENT OF ESTATES IN GENERAL

2. FOUR EXAMPLES OF COURT PROCEEDINGS

A. VOLUNTARY EXECUTOR PETITION

B. PROBATE OF WILL

(1.) Fiduciary Duty and Fiduciary Bonds

C. VOLUNTARY ADMINISTRATION

D. ADMINISTRATION OF ESTATE

3. MASSACHUSETTS ESTATE TAX LIENS

 

Release procedure and exemptions

1. WILLS and SETTLEMENT OF ESTATES

OR WHERE THERE’S A WILL THERE'S A RELATIVE

When someone dies owning property alone, if there is no provision for the type of ownership to govern the disposition of property, some legal settlement of the estate under the direction of the Probate Court in Massachusetts, is required to transfer it to the appropriate named persons in a will or under the state's intestacy statute. This applies whether the estate consists of personal property ( such as cars, bank accounts, cash, checks, investments, bank accounts, mutual funds, jewelry, valuable collections or an insurance policy with no named beneficiary) or real estate, (whether unimproved land or something with a house or other improvement located on it).

A fiduciary or representative of the estate must be qualified and appointed in their official office as executor or administrator by the Probate Court prior to being able to conduct business in behalf of the estate or the decedent. Most commercial businesses such as a bank or investment broker, require official current documentation from the Probate Court prior to permitting a person claiming to be the official representative of the estate to act on behalf of the estate. This prohibition on dealing with the property of the decedent even extends to checks made payable to the decedent alone or in the name of the estate.

2A. VOLUNTARY EXECUTOR PETITIONS

SMALL ESTATES UP TO $15,000.00

NO REAL ESTATE

DECEDENT DIES WITH A VALID WILL

EXAMPLE 1

When there is a will but the estate is small a simpler procedure is available to settle estates. Smaller estates with a value of up to $15,000.00 in personal property excluding the value of any one automobile owned by the decedent provided there is no real estate, can be settled by a procedure known as Petition of Voluntary Executor. The person named in the will to be the executor is an appropriate petitioner. Massachusetts law sets out a list of other persons entitled to file the petition.

This procedure is a simpler, faster and less expensive method to settle a small estate. The paperwork and other filing requirements are less complicated but if the total estate exceeds the dollar limit of $15,000.00 by additional assets which are discovered during the course of administration, the regular lengthier more costly probate petition for allowance of the will and appointment of an executor will then be required to settle the estate.

The petition for Voluntary Executor must list all the heirs of law of the decedent and parties who would take the property if there was no will. A brief inventory of the decedent's property is listed on the petition. All parties of interest are entitled to actual notice of the petition. A notice published in the local newspaper is another requirement to notify the general public and other parties of interest, such as creditors. Sending interested parties a copy of the citation (notice) published in the newspaper by certified mail is proper. The original will, signed by the decedent must be filed with the petition and a certified death certificate. A filing fee is required but no bond is necessary with a Voluntary Executor petition.

2B. PROBATE OF WILL & APPOINTMENT OF EXECUTOR

EXAMPLE TWO:

DECEDENT DIES OWNING:

a. TOTAL PROPERTY EXCEEDING $15,000.00

OR

b. TOTAL PERSONAL PROPERTY VALUE LESS THAN $15,000.00 BUT AT LEAST SOME PART OF THE ESTATE IS COMPRISED OF REAL ESTATE

A regular probate petition for allowance of the will as the decedent's valid last will and testament and the appointment of the executor named in the will is required under these circumstances.

The petition lists all the heirs at law of the deceased person and contains a certification by the petitioner that a copy of the petition has been sent to the Department of Health and Human Services. This is to ensure that if the decedent was a recipient of benefits under the Medicaid (or MassHealth) program the appropriate agency is notified. A military affidavit signed by the petitioner indicating whether any of the heirs at law are in the military service is also required. In addition to a fiduciary bond, (See next page) an inventory of all real estate and personal property with appraised values and accounting for all funds and property received and disbursed by the executor are required to be filed as well. All values listed in the inventory are as of the date of death of the decedent.

A notice informing the general public of the petition having been filed must be published in the local newspaper. All the parties of interest are entitled to receive actual notice of the petition.

The notice will contain a deadline, also known as the return day, by which time any objections to the allowance of the will as the valid last testament of the deceased or the petitioner being appointed as the executor of the will, must be filed. Once the return day has gone by, if no objections or appearances are filed by any parties of interest, the return of service (proof of publication and mailing as required by the Court) the appointment can be allowed by the Court. Once the Return of Service is filed with the Court, the petition for appointment can be allowed by the Court.

The Court will issue a Certificate of Appointment which is proof positive of the representative capacity of the executor. The executor can then proceed to follow the instructions from the decedent in the will.

2B. (1.)FIDUCIARY DUTY and FIDUCIARY BONDS

A fiduciary is the executor, administrator, guardian, conservator or trustee who owes a duty or responsibility to the estate or ward on whose behalf they were appointed.

There are bonds with sureties and bonds without sureties. Sureties can be either personal or corporate sureties (guarantors). The sureties guarantee that the fiduciary applying to be appointed, will properly perform all the duties required to settle the estate, not abscond with the money, and they are accountable and can be sued with the fiduciary if something along those lines does happen.

There are two acceptable but different types of fiduciary bonds with sureties based on the type of sureties provided. The sureties may be personal (individuals) or corporate (purchased for a fee from a surety bond company.) Individual sureties must be Massachusetts residents.

If there is a provision in the will for an exemption from the fiduciary giving sureties then a bond without sureties is acceptable. Absent any provision for this exemption, a bond with sureties is required. The bond is approved at the time the petition is allowed by the Court.

The bond must recite a penal sum equal to one and one half times the estimated amount of personal property or at least a minimum of $100.00 if there is no personal property.

EXAMPLE 3

2C. VOLUNTARY ADMINISTRATION

DECEDENT DIES WITHOUT A WILL (INTESTATE)

TOTAL ESTATE LESS THAN $15,000.00 EXCLUDING A MOTOR VEHICLE AND DECEDENT OWNED NO REAL ESTATE

A voluntary administration would be the way to settle this estate. As with a Voluntary Executor petition, this procedure is simpler, less costly, less involved and quicker than a regular administration. The heirs at law and the persons who take under the will are listed on the petition. A brief inventory of the decedent's property is listed on the petition. All parties of interest are entitled to actual notice of the petition. Sending them a copy of the citation that is published in the newspaper by certified mail is proper. Once the return day (See above in Example 2 for definition of return day.) has passed and Return of Service is made to the Court, the petition can be allowed and the appointment of the Voluntary Administrator can be finalized by the Court.

The following are NOT required in a Voluntary Administration:

A. A fiduciary bond

B. An separate inventory of decedent's property

C. A fiduciary accounting of funds and personal property received and spent or disbursed

If more assets are discovered during the course of this administration, bringing total assets above the $15,000.00 limit a regular Administration as described in Example 4 below, would be required to settle the estate.

2D. ADMINISTRATION OF AN ESTATE

EXAMPLE 4

DECEDENT DIES INTESTATE (WITH NO VALID WILL)

TOTAL ESTATE EXCEEDS $15,000.00 or

DECEDENT OWNED REAL ESTATE IN HIS OR HER SOLE NAME AT TIME OF DEATH.

Persons entitled to petition the Probate Court to be appointed administrator are spelled out by Massachusetts law. If no one files a petition within thirty days of the date of death, a creditor of the estate or decedent is then entitled to file the petition and become administrator.

Requirements for Administration

1. Petition naming all decedent's heirs at law

2. Fiduciary Bond with Sureties

3. Inventory of all personal property and real estate owned by the decedent

4. Military Affidavit

5. Filing Fee for petition and fiduciary bond

6. Publication of citation issued by Court in local newspaper

7. Accounting for all funds and property received, funds spent, and disbursements to legatees and or heirs, submitted and approved by the Court.

3. MASSACHUSETTS ESTATE TAX LIENS ON

REAL ESTATE

When a person dies owning real estate in Massachusetts by operation of law, an estate tax lien attaches to the property for up to ten years or until the lien is released. This is the case even if there was a joint tenancy or a tenancy by the entirety which vests title to the property in a surviving owner. The lien can be released by the filing of an estate tax return (Form M-706) with the Massachusetts Estate Tax Bureau of the Massachusetts Department of Revenue and an Estate Tax Lien Release (FormM-792) or the party in possession or the estate representative can sign and record an affidavit stating no tax was due and no estate tax return was due for the estate. With the present Massachusetts estate tax exemption for persons dying in 2008 up to $1,000,000.00, unless the decedent's estate exceeds this amount there will be no tax due. The amount of the federal estate tax exemption in 2008 is $2,000,000.00. If no affidavit is filed an Estate Tax return must be filed in order to remove the lien from the property even if the estate is below the exemption. The property cannot be sold free and clear of the lien until it lapses or is released by recording an estate tax lien release or Massachusetts form M-792. If more than ten years has passed since the death of the decedent, the Massachusetts Estate tax lien is dissolved by operation of law. No estate tax lien release is required.

The person responsible for filing the tax return is the owner in possession of the property or the executor or administrator of the estate. The present amount of exemption for Massachusetts Estate tax is $1,000,000.00 for decedents dying in 2008. For Federal Estate tax purposes the tax exemption for decedents dying in 2008 is $2,000,000.00. See chart for annual exemptions for Massachusetts and Federal Estate Taxes in the coming years. If a decedent's estate does not exceed that limit but contains real estate, an estate tax return still must be filed. There may not be any tax due, but that is the only vehicle to release the estate tax lien.

 

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