Minimizing the Cost of Administering the Small

Estate

Presented By:JAY GOODMAN, ESQUIRE

2019 Galisteo Suite C3Santa Fe, New Mexico 87505

(505) 989-8117 http://www.jaygoodman.com/

Legal Notices

These materials are copyrighted and all rights are reserved. These materials may not be reproduced in any way without the written permission of Jay Goodman and Associates, PC. This seminar is designed to provide general information on the seminar topic presented. As such, this material is not intended to provide legal advice tailored to individual circumstances. Accordingly, you should seek qualified legal advice for individual circumstances.

Seminar Goals♦ Importance of Client Toolkits. ♦ Leveraging client and legal assistant/paralegal efforts to

keep costs down. ♦ Common statutory forms and affidavits.♦ Client Comprehension of fiduciary duties and the

importance of following procedures and keeping good records.

♦ Family communication regarding end of life decisions, wishes, and directives.

♦ Estate Planning tools for the Small Estate: Living Revocable Trusts, Durable Powers of Attorney and Advanced Healthcare Directives.

Client Toolkits♦ TIME IS MONEY.♦ Confer with your client at least once per year regarding

updates to wills/trusts etc.♦ Counsel all estate planning clients to maintain the

following in a safe place that is accessible to the personal representative or Trustee:– Most recent will or trust agreement, including codicils

or amendments.– Copies of all insurance policies, including burial plans.– Names and addresses for decedent, spouse, children

and any other specified heirs under the will/trust or family members who may have an interest in the estate.

– Social Security numbers and dates of birth of decedent, spouse, and children.

Client Toolkit Continued– Certified copies of the death certificate (from Bureau of Vital

Statistics).– Copy of certificate of honorable discharge (if a veteran).– Copies of marriage certificate.– Copies of birth certificates for all dependent children.– A complete list of all property, including real estate, stocks, bonds,

savings accounts, safety deposit boxes, cds and mutual funds held, and personal property of the deceased.

– A list indicating the contact information for all accounts and property held as “Payable on Death” or “Transfer of Death”.

– H.R. contact information for past employers that might provided survivor’s benefits or pension information.

– Copies of all deeds for real property.– A list of all creditors and debtors, including any promissory notes.– A list of any gifts made against distributions devised in the Will.

Leveraging Client and Paralegal Efforts to Keep Costs Down

♦ Have clients gather the items specified in the Toolkit if they were not already kept together.

♦ Clients should fill out forms themselves and provide supporting documentation.

♦ Make sure your legal assistant/paralegal has read statutory/ procedural underpinnings/local rules pertaining to their efforts.

♦ Have paralegal revise templates/draft appropriate affidavits for filing.♦ Paralegals can assist clients fill in gaps and details contained in forms.♦ Paralegals can use document assembly programs and Computerized

Estate Planning Software.♦ Paralegals should use a detailed case plan. ♦ Attorneys should send a detailed case plan to client from the outset

and must review all documents before sending and filing forms/pleadings.

Probate case plans

♦ Purpose, goals, tactics, strategy♦ Non Probate Transfers♦ Trust Administration♦ Size of Estate♦ The Personal Representative♦ Formal vs. Informal♦ Intestacy♦ Probate vs. District Court

Transfer of Personal Property by AffidavitSections 45-3-1201 and –1202 NMSA 1978

– Allows for collection of personal property ONLY.

– Any person indebted to decedent or having his or her personal property or an instrument claiming such an interest SHALL make payment of the same upon presentation of an affidavit made by or on behalf of successor stating that:

• Value of entire estate, wherever located, less liens and encumbrances, does not exceed $30,000.

• 30 days has elapsed since death of decedent.

• No application or petition for the appointment of a personal representative is pending or has been granted in any jurisdiction.

• The claiming successor is entitled to payment or delivery of the property.

– The effect of the affidavit:

• The person paying or turning over the property is discharged of their obligation.

• No obligation to see underlying documents or question truth of any statement in the document.

• If he or she refuses to deliver, they may be compelled to turn over the item(s) upon proof of the claimant’s right in a proceeding before the Court.

• Any person collecting under an Affidavit is answerable and accountable to any personal representative of the estate or any other person having a superior right.

Small Estates; Summary Administrative ProceduresSection 45-3-1203 and –1204 NMSA 1978

- If a court proceeding will be needed to transfer some of all of the estate, qualifying small estates can complete the property transfer and closing process on an expedited basis.

- To qualify:

- An inventory and appraisal for value of entire estate, less liens and encumbrances, does not exceed family allowance plus personal property allowance (i.e. $45,000), costs and expenses of administration, reasonable and necessary medical expenses of the last illness and reasonable funeral expenses;

- Then the personal representative, without giving notice to creditors, may immediately disperse and distribute the estate to entitled persons and file a

closing statement by sworn statement (see below).

♦ Closing small estates by sworn statement of personal representative can be done unless prohibited by Order of District Court and except for Supervised administrations.

♦ PR may close an estate under this provision by filing a verified statement stating that:– To the best knowledge of the PR, the value of the entire estate did not

exceed the statutory limit set out above;– The PR has fully administered the estate by disbursing and distributing it

to persons entitled thereto;– The PR has sent a copy of the closing statement to all distributees of the

estate and all creditors or other claimants of whom he is aware whose claims are neither paid nor barred and has furnished a full account in writing of his administration to the distributees whose interests are affected.

♦ If no actions or proceedings involving the PR are pending in court one year after filing the closing statement, his or her appointment terminates.

♦ All types of property can be conveyed.

Surviving Spouse Provisions♦ Transfer of Homestead by Affidavit

Section 45-3-1205 NMSA 1978

– Husband and wife own a homestead as community property and either dies intestate or with a will and devises their interest to the surviving spouse, the homestead passes and no probate is necessary.

– Six months after death of decedent, surviving spouse may record with the county clerk an affidavit describing the real property and stating:

• Six months have passed since death as shown in an attached certified copy of the death certificate;

• That the affiant and decedent were legally married at the time of death and owned the property as community property;

• A copy of the deed with the legal description of the homestead is attached to the affidavit;

• But for the homestead, the estate need not be subject to any judicial probate proceeding in either district or probate court;

• No application for appointment of a personal representative or admittance of a will to probate is pending or has been granted in any jurisdiction;

• Funeral expenses, expenses of last illness and all unsecured debts have decedent have been paid;

• The affiant is the surviving spouse and is entitled to the homestead as provided by Section 45-3-1205;

• If there is a will, a copy must be attached;• No other person has a right to the interest of the decedent in the

property;• No federal or state tax is due on the estate;• Affiant affirms that all statements are true and correct and further

acknowledges that any false statement may subject him or her to penalties related to perjury.

♦ NOTE:

– Maximum property tax value of Homestead is $100,000.

– Homestead is very broadly defined.

– Neither party need live there if their absence is due to illness or incapacity.

– Third party purchaser will be protected under this affidavit.

♦ Collection of Final Employee PaymentsSection 45-3-1301

– Surviving spouse may, without procuring Letters Testamentary, collect any sum representing the final payment owed to the decedent at the time of death for wages, earnings, salary, commissions, travel or other reimbursements.

– Upon receiving an affidavit stating the person previously in its employ is dead and the affiant is the surviving spouse, the employer MAY pay the amount owed, and the affiant’s receipt shall release the payor from all liability.

– NOTE: the surviving spouse may not be entitled to KEEP the property, but they may attempt to COLLECT it.

Client Comprehension♦ To avoid potential problems and unnecessary court involvement, clients

simply must understand what their rights and responsibilities. Use a form letter.

♦ Emphasize the meaning of fiduciary duties and the importance of establishing a bank account for the Estate with a financial institution.

♦ Emphasize the importance of following procedures and keeping good records.

♦ Clients should be counseled to provide excellent communication with family members and avoid conflict with beneficiaries. Contested probate proceedings do not minimize the cost of administering the estate.

Family Communication♦ Family communication regarding end of life decisions, wishes, and directives

are a key to keeping expenses down. Estate Planning Clients should be counseled that family members must be reasonably apprised as to expectations. Leaving this job of communication to the Personal Representative/Trustee may result in the disappointment of years of expectation and feelings of entitlement; this situation may result in will contests and contested probate proceedings.

♦ Discussed further in the last presentation today.

Estate Planning for Small Estates♦ Living Revocable Trusts are a valuable alternative to Wills.♦ Transfer on Death Deeds♦ Payable on Death Accounts.♦ Joint and Survivorship Accounts♦ Durable Powers of Attorney with HIPPA release♦ Advanced Healthcare Directives with HIPPA release♦ Uniform Cremation Authorization.

Forms♦ http://www.supremecourt.nm.org/cgi-bin/doear/download.cgi/supctforms/probate♦ http://www.conwaygreene.com/nmsu/lpext.dll?f=templates&fn=main-h.htm&2.0Probate♦ http://www.irs.gov/formspubs/index.html♦ http://www.irs.gov/busineses/small/article/O..id=102767.00.html♦ http://sa1.www4irs.gov/modein/individual/index.jsp♦ http://www.tax.state.nm.us/trd_form.htm♦ http://www.tax.state.nm.us/forms/year99/acd31015f.pdf♦ http://www.tax.state.nm.us/forms/miscforms/misc_forms.htm♦ http://www.ssa.gov/ww&os1.htm

Resources♦ NMSA

http://www.conwaygreene.com/nmsu/lpext.dll?f=templates&fn=main-h.htm&2.0Probate

♦ Heckerling Institute http://www.law.miami.edu/heckerling/

♦ Resources for Probate Judges http://jec.unm.edu/resources/judges-training-guides/probate-resource-guide.htm

♦ New Mexico Probate Judge Listing– http://jec.unm.edu/communication/jud_directory/probate.htm

♦ Bernalillo County Probate Judge’s Office– http://www.bernco.gov/live/departments.asp?dept=2317 [Site

contains general information as well as county specific information]

For further information and forms, please call us at 505-989-8117

or visit our website:http://www.jaygoodman.com/