By Attorney Isaiah M. Richie, Wisconsin Probate Attorney, Schloemer Law Firm, S.C.
When someone you love has passed away the last thing you want to hear is “court filings”, but that is sometimes the situation you end up in. Either unintentionally, or by design, many decedent’s estates end up in the probate process, either in part or in whole.
What is probate?
Probate, in its most basic form, is the default legal method for transferring assets from a decedent (i.e., the person who passed away) to his or her heirs or beneficiaries. Probate is the court-supervised administration of an individual’s estate.
Many people try to avoid probate in their estate planning using beneficiary designations or a trust, but if those steps haven’t been taken (or properly executed), there is a good chance that an estate will end up in probate.
Does Wisconsin have a small estate administration process?
The first question to ask when determining whether you will have to go through probate is whether the value of “probate assets” does not exceed $50,000. Many states have different methods for the transfer of small estates through less formal means. In Wisconsin, we have what is called a transfer by affidavit. If the gross value of the assets subject to probate is not more than $50,000. See Wis. Stat. § 867.03. So for example, if the only assets of a decedent include a used sedan and a checking account with $2,000, there is a good chance the heirs will be able to use a transfer by affidavit to transfer the car and account without any formal proceedings.
What is a probate asset?
Any asset subject to probate is a probate asset! But of course, that circular definition isn’t very helpful. The default designation for any asset owned by a decedent is that it is subject to probate, so the better question in determining if an asset is subject to probate is whether there is some designation or tool that excludes the asset from probate. Here are some common examples of generally non-probate assets and an explanation of why they are not subject to probate:
|Why is it not included in probate?
|Assets owned by a Trust
|The decedent no longer has title, the Trust does, and the Trust itself has not “died”.
|Assets like a house or bank account owned jointly with survivorship
|Joint ownership with survivorship avoids probate because the joint owner takes title automatically.
|A house with a Transfer on Death or bank or investment accounts with Payable on Death designations
|Transfer on Death, or TOD, and Payable on Death, POD, are Wisconsin statutory methods of automatically transferring assets without probate. See Wis. Stat. §§ 705.10, 705.15.
|Most insurance policies
|Insurance policies are contracts between the company and the individual, they are not subject to probate unless the beneficiary is named as the “estate” or if no beneficiary is named at all.
|Assets addressed by a Marital Property Agreement
|Wisconsin law permits a married couple to transfer assets without probate upon the death of the second spouse.
Keep in mind that there are exceptions to these examples, so it is important to consult with a Wisconsin probate attorney to confirm whether an asset is a probate asset or not.
Does having a Will avoid probate?
Having a Will does not avoid probate, it merely directs it. In other words, a Will tells the court or register in probate who the personal representative should be, what that person’s duties are, and who inherits the assets. It is also used to nominate a guardian for minor children.
How do I start a probate?
Probate is almost entirely structured by specific statute and court forms. The first step is to file an application for formal or informal probate along with the Will, if one exists. You should contact a Wisconsin probate attorney to assist you in preparing the forms. Having an experienced probate attorney can help ensure a smooth process and avoid unnecessary delays and costs. He or she can also help you determine if there are alternatives to probate.
What is the difference between formal and formal probate?
Formal and informal probate are similar, but formal probate takes place in front of a circuit court judge and involves appearing in court, while informal probate in generally handled by the register in probate and does not involve in-person appearances. Most probates are resolved through informal administration, but if there are disputes regarding the will, who should serve as personal representative, and the final accounting and distributions can take an estate into formal probate. Cases can move between formal and informal upon request of the parties.
Is a personal representative the same as an executor?
Many states use the terms “executor” or “administrator” for the person handling a probate estate. In Wisconsin the statutes use the term “personal representative”. It’s generally the same thing.
What happens after you apply for probate proceedings?
Once the court issues domiciliary letters to appoint a personal representative, the representative can then start acting on behalf of the estate. This will involve posting a claims notice, gathering and liquidating the estate assets (unless there are specific bequests), selling real estate, and paying creditors of the estate. Then once the claims period has run, the personal representative files an inventory with the court and prepares a final accounting which shows all of the estate expenses and final distributions. Once the final accounting is done and submitted to the court, the personal representative will send out distributions and file receipts with the court showing that each beneficiary received his or her share of the estate. If you hire an attorney to assist you, he or she will guide you through these steps and assist in preparing most of the required documents. However, keep in mind that there are some things that cannot be done by the attorney because they must be done or signed by the court-appointed personal representative.
To summarize, the personal representative’s main duties are to:
- Identify and collect the decedent’s assets.
- Manage those assets during the probate process.
- Determine the surviving spouse’s (if any) rights under the state Marital Property Law.
- Pay debts, claims, taxes and probate administrative expenses.
- File an inventory with the court.
- Make any distributions to the surviving spouse or dependent children required under state law.
- Distribute the remaining assets to those named in the Will (or if there is no Will, to the heirs-at-law).
What is the claims period and how long is the claims period?
In Wisconsin, the probate claims period is four months from the date of publication, which is when the notice is first published in the proper newspaper. That is the period when creditors can make claims against the estate. If they fail to file the claim within that period they are time-barred from collecting.
Should I start paying estate bills, and how do I pay for the funeral?
This is one of the hardest issues to handle unless the decedent had a pre-paid funeral plan. Unless a personal representative is a joint account owner with the decedent, they generally cannot use the decedent’s money to pay for the funeral. This is true even if the personal representative was the power of attorney agent during the decedent’s life. The power of attorney ends at the decedent’s death, and the personal representative is not yet appointed by the court. In most cases, a family member will front the costs, or will pay only a small down payment, and then get reimbursed later by the estate.
BUT BE CAREFULL!
If there is even a small chance there may not be sufficient funds in the estate to pay all of the bills, you should consult a Wisconsin probate attorney prior to making ANY payments. This is because certain creditors have a priority of claims in Wisconsin probate. For example, bills for final medical expenses, funeral expenses, and the cost of administering the estate (attorney fees etc.) take priority over credit card bills, utility bills, and the like. The biggest exception to this is that a secured creditor, like a mortgage holder, will still have that claim against the collateral. This is why we generally recommend against making any payments or distributions until the claims period has run. There are exceptions to this, but those are considered on a case-by-case basis.
Is a beneficiary responsible for estate bills?
A common question in probate is, “Am I responsible for paying my parent’s bills after they die?”, or something similar. Generally, the answer is no. If the estate does not have enough money to pay the bills, there is usually nothing a creditor can do. There are some examples though, such as if a child co-signed or guaranteed a debt, or because Wisconsin is a marital property state the surviving spouse may be responsible for some or all the decedent’s bills. Also, beneficiaries under some TOD or POD assets may have to agree to responsibility for estate bills. Another example is if a personal representative distributes assets without paying certain claims or pays unsecured or non-priority bills first, the personal representative could be required to pay those claims. This is one reason why it is important to have a Wisconsin probate attorney who can assist you in knowing which claims should be paid and when.
How long does probate take?
Most commonly a probate will take between six months and a year. The claims period alone is four months, and there is additional time waiting for the court to issue domiciliary letters and then compiling the final accounting and getting signed receipts back from the beneficiaries. Some things that could extend the probate proceedings are missing deadlines, disputes between the beneficiaries, selling real estate, or dealing with tax issues.
Do I need to file a tax return for the decedent? Do I need to file a tax return for the estate?
Maybe, and yes. Whether you need to file for the decedent depends on whether they had enough income during the months of the year before they died to require filing. This is a very specific inquiry and should be directed to a tax professional or your probate attorney. The estate, however, will always need a final fiduciary return filed, even if there is no income. This is to close out the EIN number associated with the estate and to pass any of the income or losses from the estate to the beneficiaries.
Do I need a lawyer for probate in Wisconsin?
Legally, the personal representative is not required to obtain counsel for filing and settling an estate in Wisconsin. However, there are a lot of reasons why it is prudent for a personal representative to retain an attorney. Keep in mind that the personal representative is not just responsible for his or herself, but they have a fiduciary duty to the other beneficiaries to manage the estate prudently. An attorney can help make it harder for the beneficiaries to come back against the personal representative for mishandling the estate.
Additionally, an attorney can help avoid formal probate and can sometimes mediate between beneficiaries to avoid disputes.
How much does probate cost in Wisconsin?
There are a number of factors that go into the cost of a probate in Wisconsin. Every probate will have some administrative expenses such as the cost of publishing notice and the inventory filing fee which is currently $2 per $1,000 of inventory value (so if the estate owns a house worth $250,000, there is an inventory filing fee of $500 for that asset).
Attorney fees can range widely depending on the amount of work necessary to complete the estate and whether they provide additional services such as filing the estate tax return. It may also depend geographically where the probate takes place, as firms in larger cities generally have higher billable hour rates. In general, an average probate can cost as little as $3,000 but can range much higher, particularly if there are disputes between beneficiaries, issues with land, or other more complicated issues that can arise.
It’s not all bad news, however, because the costs and attorney fees will generally be paid for by the estate as part of the cost of administration. Even if an estate has few assets and substantial debt, the costs of administration generally have priority over other claims as discussed above.
If you have questions regarding a decedent’s assets or documents, or if you would like assistance in administering an estate in West Bend, Slinger, Germantown, Kewaskum, Port Washington, Menomonee Falls, Milwaukee, Washington County, Sheboygan County, Dodge County, Ozaukee County, Waukesha County, or Milwaukee County, Wisconsin, please contact the author of this article, Attorney Isaiah M. Richie, at [email protected] or you can contact Schloemer Law Firm, S.C. at 262-334-3471 or by email at [email protected].
Originally published: November 8, 2022.
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Disclaimer: The information contained in this post is for general informational purposes only and is not legal advice. -Due to the rapidly changing nature of law, Schloemer Law Firm makes no warranty or guarantee concerning the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your unique circumstances before deciding to take—or refrain from taking—any action. If you need legal guidance, please contact us at 262-334-3471 or [email protected].