Anthony S. Park

We all know siblings who are constantly competing or comparing with each other. Let’s talk about how those rivalries cause problems during probate.

Which sibling inherits more?

If there is any slight imbalance of inheritance amounts, there’s an issue of who was the favorite. Or maybe it’s an issue of who took care of mom or dad at the end of life. Maybe there is compensation or gratitude for whoever dedicated the time when things got difficult at the end. It might also be a reflection of who already received lifetime gifts or support. Maybe the parent helped with a down payment for one sibling's house or tuition for another sibling’s children.

There could be many reasons for each sibling inheriting different amounts, but the siblings will see it the way they want to see it, and this imbalance can create conflict.

Which sibling gets more control, communications during probate?

It’s not just about competing for dollars or inheritance amounts. Even if everything is divided equally, there could still be disputes or harsh feelings about who gets to be the executor. In this case, it may be better to hire an independent executor. It could relieve some stress.

But, even if you have an independent executor, there could be disputes about who talks to the lawyer/executor more! We get this a lot: “I heard that my sister emailed you several times, and I want to know everything you told her.”  Making the attorney the middleman slows things down and creates more billable time.

When siblings don’t talk

When siblings don’t talk to each other, the attorney ends up having double communications - which increases costs. For example, I may have a phone call with the older sister to explain the file status. Then, I have the same phone call with the other two siblings separately. That’s three billed items that could have been just one.

In severe situations, siblings want to make sure the other siblings never get their contact information. We have to ensure that phone, email, and home addresses never get shared with the other! It’s a lot to keep track of.

For example, we’ve had to file probate petitions in such a way that the addresses of the heirs are hidden. In another recent example, we had to mail out 18 separate letters instead of one mass letter, so that no one has each other’s contact information. If that’s what the siblings want, we’ll do it. They just have to understand that there’s a cost involved.

To learn more about what probate entails, check out my book, “How Probate Works,” available on Amazon.

 

Let’s answer a crypto question from Haille: How does crypto transfer on death?

We’ve covered this topic in episodes 214, Transferring Bitcoin Upon Death, and E222, Beneficiary Designations for Cryptocurrency Exchanges, but we’re happy to answer Hallie’s specific questions here.

Is the will required to be probated if the beneficiary of the will has access to the Coinbase holder's account?

Yes, to legally access that account, you must probate the Last Will and Testament of the decedent.

Individual Coinbase accounts do not have beneficiary designations. (Most major exchanges don’t; this is not specific to Coinbase). A formal beneficiary designation means that it is technically your account, but that is not the case here. You need to submit letters testamentary and death certificate to Coinbase, and they will grant access to you.

Could the beneficiary simply transfer those funds to themselves?

Technically, yes, but it could lead to legal problems.

This is substantially similar to dealing with a traditional bank/brokerage account. Like a Chase or a Fidelity account, for example: just because you have the decedent’s username and password does not mean that you can legally access the account. You have to go through the process before you make transactions. It's tempting to think of these as different situations, because cryptocurrency might not feel like “real” money. But, once you compare it to a bank account, then it makes sense to go through the proper process to access the funds.

Why can’t I access deceased online accounts?

As a general explanation, the probate process is meant to protect all possible heirs/creditors.

“I’m the heir named in the will, why can’t I just take the money?” Well, what if the will is invalid for some reason? Maybe it wasn’t signed correctly or signed by an incompetent person.

Even if the will is valid, there are situations where other people are entitled to the funds before you. There could be a “spousal election” where a disinherited spouse has a right to submit court paperwork and take a share before you.

Additionally, IRS or other creditors are entitled to receive funds before you. Suppose the decedent died with major debts. The beneficiary named in the will gets what is left after the debts are paid.

These are just a few examples. Even if these don’t apply to your situation, it doesn’t mean that you can skip probate! The probate process, albeit long and involved, is an important layer of protection.

Hopefully this answers Haillie’s questions. We love trying to wrap our heads around these cryptocurrency situations, so please feel free to keep sending questions!

If you want to learn more about probate in general, please check out my book, “How Probate Works.” I don’t have a Bitcoin chapter yet, but you will get a sense of how the probate process applies to your Bitcoin situation.

Request your free consultation

 

Death, family, and money are always an emotional mix. And those emotions can lead to headaches and expensive problems during probate.

How to clean out house after death

In general, the clean-out can be an emotional and cathartic process as people journey down memory lane. But in our case, the daughters are from out of state. They had limited time to just tag items for the executor to keep or trash, then leave.

Then, we hired a realtor who was willing to box and move the items to storage on behalf of the daughters. Unfortunately, making decisions in an emotional state caused very confusing, very long lists. As a result, the realtor accidentally took golf clubs to be appraised, rather than leaving them in the “keep” pile. The realtor thought these nice golf clubs were in the “trash” pile, so he decided to see what they were worth instead of throwing them away. He did this so the heirs wouldn’t lose money by throwing away something potentially valuable. He had good intentions with his actions.

Little did the realtor know, the golf clubs had strong sentimental value. The daughters went ballistic when they found out that the realtor handled the golf clubs. The daughters threatened to sue the realtor and call the police on him.

How this created probate issues

The incident resulted in weeks of emails and phone calls between lawyers, daughters, and realtor to sort out and calm down the situation. Of course, this was all billable work.

The next consequence was that the realtor quit. This was unfortunate because the realtor was doing an excellent job in going above and beyond. Not only did we lose a great realtor, but it will be nearly IMPOSSIBLE to hire someone else to handle the packing and storage. Now there is a precedent that if someone makes the slightest error, the daughters might sue them or call the police.

Of course, this was not a small mistake to the daughters, but their reaction was not proportionate to the circumstances. Their response far outweighed the mistake. By the way, the golf clubs were immediately returned to the daughters with the appraised value.

Why an Independent Executor may help?

An independent executor is emotionally unattached. As most of you may know, I am a professional executor. If there was a mistake made, I can dispassionately evaluate if someone made an honest mistake or acted out of line.

I take pride in being a professional executor, but I don’t take it personally. Mistakes won’t flare my emotions as if it were my father’s estate. Even if I think the realtor messed up, my response would be proportional. I wouldn’t have a ballistic reaction that scares other realtors away. There are consequences as to how you go about your business as an executor.

You may say, “Oh, I would never call the police on a realtor who made a mistake.” But most people are prone to some level of emotional response when grieving. Professional executors definitely care about your case and your family, but they do not have the emotional attachment. This emotional detachment allows a professional executor to make professional, independent, unbiased decisions.

You can read more about professional executors by checking out my book, “How to Hire a Professional Executor,” available on Amazon.

Sometimes the biggest problem in probate is the people, specifically when there are too many people involved.

When there are too many lawyers

You may be wondering: “Why would anyone want too many lawyers involved?” Sometimes there are situations where everyone lawyers-up: the executor has his, the heirs each have their own, and so on.

We recently had a situation where two of the heirs had multiple lawyers. There was a language barrier because the heirs were not English speakers. They had lawyers from their own country and those lawyers had translators in the United States. That translator didn’t have any probate experience, so the family friend contacted us to explain what the probate lawyer is saying. Now, there are three layers of lawyers between the heirs and the actual work that is being done.

Sometimes heirs have multiple lawyers for other reasons. Sometimes a relative or family friend is a lawyer, but do not specialize in probate. They may act as a back-seat driver to the hired probate attorney.

None of these situations are great, because in most cases, everyone is billing. Just imagine: three lawyers multiplied by one email is now 3 billable increments. Or if you have four lawyers and the average billing is $400 an hour, that is now $1,600 an hour. Not to mention paralegals and legal assistant who are billing in addition to the attorneys. It adds up fast!

When there’s too many layers

As mentioned above, there was an issue with three layers of lawyers between the heirs and the actual work that is being done. Why is that a problem? Remember the game “telephone” where you whisper something to the person next to you, and they whisper it to the person next to them and so on? By the end of the line, the final recipient has nothing close to the original message! It’s no different with professional lawyers in between.

It’s not just garbled messages or lack of communication skills, but their biases get inserted along the way. There are also delays while passing information along. If the message from the executor needs to pass through three lawyers before reaching the heir, it will take a while. What if each step takes up to twelve hours to review the information? It could be days before the message gets to the recipient, when it was a simple question that could have taken just a few minutes and one quick email.

When there’s to many emails

Whether it’s because everyone has their own lawyer or there are multiple layers, important information gets lost in the barrage of emails.

If there are ten people included in an email chain, there may be times where everyone wants to chime in and respond to something that isn’t necessary. It’s not easy to scroll through ten emails and immediately pull out the important information. It takes time to go back and look through the previous emails.

Another issue with a large email chain is that no one knows who is doing what. It’s like taking your kids out with other families who have kids. Who’s watching the kids? It’s one of those situations where people might assume that everyone else is handling the situation.

Having “too many cooks in the kitchen” can lead to problems based on just communication issues alone. If you want to be armed with knowledge before tackling probate, check out my book, “How Probate Works,” available on Amazon.

In this episode, we bring you a real-world story of “Ms. H.,” who got a court-appointed stranger guardian instead of her family or her own attorney. This a cautionary tale for anyone who is dragging their feet on getting their planning done.

Why Ms. H. needs a guardian

Ms. H. is a Solo Ager. (For those of you who are new here, a Solo Ager is someone who is getting on in years and is unmarried or has no available immediate family to fulfill traditional roles). Ms. H. prepared her Last Will and Testament ten years ago when she in great health and named me as her executor. Her only family are nieces and nephews, whom she disinherited because they were estranged.

A will is great for after you pass away, but you still should have a plan in place for when you decline and are unable to make your own decisions. As her health slowly deteriorated, I advised Ms. H. to make a trust or power of attorney, but unfortunately, she did not.

Sadly, Ms. H. got to the point where she was no longer able to care for herself and was hospitalized (during COVID lockdowns) for dehydration and malnourishment. She was not eating or drinking enough.

Now that she was in “the system,” she was bounced around among social workers, rehabs, and nursing homes. No one knew where she was until she finally got in touch with me and her estranged niece. I suppose in the end, family does matter no matter what transpired in the past. We then petitioned court to be her guardians (niece as guardian of person and me as guardian of property).

Who became Guardian her person?

The guardian of person has legal authority to make healthcare decisions such as whether to stay in nursing home or try to arrange home care. In this case, moving back home was very important to Ms. H.

Ms. H. asked for her estranged (now reconciled) niece to serve. Unfortunately, the niece very politely declined this large task. She promised to stay in touch, but she did not want the responsibility of making major decisions and doing all the work. A nomination does not mean that someone must accept, so the judge appointed a stranger.

In this case, the stranger was an attorney chosen from a pool of attorneys who do this sort of thing for a living. The attorney had only spoken to Ms. H. once before. Would this attorney fight tooth and nail to get Ms. H. home with an aide, or would she take the easier route of leaving her in the nursing home? I know would want someone who is personally invested in my care.

Who became Guardian her property?

The guardian of property has legal authority over her funds and makes investing and spending decisions.

Ten years ago, Ms. H. asked for me to handle her financial affairs upon her death. So, it makes sense that she asked the court to be the guardian of her property during the final phase of her life.

Again, the judge ignored Ms. H.’s request and handed financial reins to the court appointed stranger. I am not sure why this was the Court’s decision. Sadly, a court-appointed stranger now has full legal control over Ms. H.’s personal care (instead of family) and all her money (instead of her self-selected attorney). This stranger guardian will have to do her best, based on the information she has about Ms. H., even though she did not know Ms. H. or her wishes prior to being appointed.

This is a cautionary tale that if you fail to plan properly, you will be at the mercy of the court should you ever need a guardian for health and finances. I wish we could have gotten Ms. H. the team she wanted during her final phase of life.

I hope Ms. H.’s situation helps motivate someone else to get their estate plan in order. If you want to know how to avoid a scenario like Ms. H.’s, click the link below for a free copy of my book, “The Solo Ager Estate Plan.”

Free copy of "The Solo Ager Estate Plan"

Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”

Unlike real estate, most people (including heirs and executors) have never owned a business, let alone sold one. So, when it comes up in an estate probate, understandably, folks are lost. We have a recent estate example, which included a retail business.

1. How to secure the business location

Vacant storefronts can attract crime, vandals, and the homeless. Just like when you go out of town, make sure the lights are on a timer and use motion sensors. Make sure that the alarm/security system is working and paid-up. Also, keep mail and newspapers from piling up.

2. How to get the business financials

We need these to figure out what the business is worth. Plus, any buyer will want to see the financials before they become serious about purchasing. So, you ask the CPA or piece together from prior tax returns. Many folks take a do-it-yourself (DIY) approach to business these days, so check the decedent’s computer to see if they used QuickBooks or a similar accounting program.

3. How to get a business appraisal

Why do we need this in addition to financials? Well, not everyone will interpret the financials the same way, so getting a qualified appraiser will allow everyone to be on the same page. Also, comparables are not so easy to find for businesses like they are for houses. Businesses are different from each other and are typically hard to compare. Lastly, a business appraiser is a 3rd party, with an independent opinion. This is beneficial for buyers and the heirs. You want to make sure the heirs don’t question you for selling too low. Therefore, having an appraiser gives them an answer for the sale price ballpark.

4. Take stock of the business assets

Figure out what you have and what you need to keep. I’m not necessarily referring to inventory, although that’s important, too. If it is a liquor store, you don't want to see the inventory consumed away by someone! I’m referring more to key assets, like employees. If you want to sell the business with a manager in place, you’d better keep the manager happy. He’s actually part of the value of the business.

If the decedent didn’t own the real estate, you need to understand the lease agreement (terms, time left, relationship with the landlord, etc.). These are what you parcel together to sell the business. If it’s in a great location, but there is only one year left on the lease, that might not be very appealing to the buyer. If it’s in a great location with eight years left on the lease, that’s helpful to know.

5. How to choose a business broker

Why do you need a business broker? As mentioned above, it’s hard to figure out comparables. If you don't have the savvy or the experience, it’s hard to know how to compare this stand-alone liquor store to a wine store in a strip mall. People may try to sell a house on their own, but there are fewer DIY and “for sale by owner” options for businesses. It would be hard to sell without a broker. It’s not just about finding a buyer; brokers help with the grind and paperwork of closing.

How do you find a business broker? Many realtors do both. I’m not a big fan of realtor-brokers, but sometimes this may be your best bet in small cities. In larger cities, there may be more brokers available who are solely business brokers. With most professionals, it’s usually better to use someone who specializes, instead of a jack of all trades.

If the business has a CPA, check with them. CPAs are often good resources for attorneys and brokers.

If you have no luck with the methods above, look for similar businesses that have sold, and find out who they used. This may take more legwork, but the information is usually out there online.

Setting up your estate plan is the key to successful estate administration involving a business. For more information on unexpected twists and turns and why probate can take so long, check out my book, “How Probate Works,” available on Amazon.

Casa is really becoming a leader in Bitcoin estate planning and custody solutions. They recently launched their version of beneficiary designations for cryptocurrency, and I’m really hopeful about this. I think this is something that needs to be in place, because there is always the risk of catastrophic loss. So, let’s take a look.

How Casa Beneficiary works

You start by naming a beneficiary on your cryptocurrency, and he or she gets 2 keys in 3 of 5 multisig.  

Casa uses 3 of 5 multisig as their custody solution for preventing the risk of catastrophic loss and preventing theft.

What is multisig? 3 of 5 means there are 5 keys to your cryptocurrency, and at any time, you need 3 of those 5 keys to take action (such as buying/selling).

In this scenario: you have 3 keys, your attorney or Casa has 1, and your beneficiary has 2. 

No one has access while you’re alive. When you die, your beneficiary shows proof of death to Casa (or your attorney) and your beneficiary combines her 2 keys with that key. With 3 keys, the cryptocurrency can move to the beneficiary. 

Think about it like you’re dealing with a bank or brokerage company. The beneficiary goes to the bank with a claim form and a death certificate. Similarly, the beneficiary goes to Casa with a claim form and death certificate to prove the person died.

Pros

(1) It avoids probate (for better or worse). “Better” meaning that the surrogate’s court won't have to deal with cryptocurrency. “Worse” meaning that you’d be avoiding checks and balances (such as the ability for a child to contest if disinherited wrongly, or someone taking advantage of you by making himself your beneficiary). While probate is a pain, it is there for a reason: to make sure people get what they’re supposed to get.

(2) Casa’s multisig solution, in general, is an excellent reduction of risk of theft and catastrophic loss. I still think there needs to be a better version of it, but it does do what it’s supposed to do. They will probably work out all the kinks, and this is just one step in the evolutionary process.

(3) Casa will consult with and “handhold” the beneficiary (such as key custody, how to get access). Will your beneficiary even know what to do with the 2 keys from Casa?

Cons

(1) The beneficiary still must maintain 2 keys, and the beneficiary may not even know what they are. It’s unusual for a family to have two people who know how to deal with cryptocurrency. Casa tries to mitigate this by consulting with the beneficiary to make sure she knows what to do. I’m not sure how this will work, as my experience shows that handholding usually just isn’t enough in a sticky situation. 

(2) It’s a bit expensive. To be eligible for this service, you must have a Casa Diamond account, which is $5,000 a year. The cost of an estate planning attorney is about $2,000 to $10,000 every four or five years. If you have a lot of cryptocurrency, it may be worth it since other benefits are included in the account. 

(3) Beneficiary designations are not always ideal, as you may recall from a recent blog on illiquid estates. 

It will be interesting to see how Casa’s multisig solution evolves. Owning cryptocurrency means you will need an estate plan. Every time I sit down to think about writing a bitcoin estate planning book, something new happens! However, if we get a lot of positive feedback, I will consider writing a short guide that includes high-level principals that don’t seem to change. Would you be interested? Let us know in the comments.

If you want to learn more about probate in general, please check out my book, “How Probate Works.” I don’t have a Bitcoin chapter yet, but you will get a sense of how the probate process applies to your Bitcoin situation.

Request your free consultation

 

Sometimes the estate doesn’t have cash on hand and only has illiquid assets like the home, a business, or artwork. But settling the estate has many ongoing bills and expenses, from court fees to movers to accountants. We’ll discuss 3 ways to deal with cash-poor, illiquid estates.

Can the heirs pay?

Sure - If the heirs have the funds, they can “lend” money to the estate to keep things moving. For example, the estate will be worth $200,000 once we liquidate everything, but we have no cash until we sell everything, such as a house. We usually need a couple thousand dollars to hire an appraiser and clean it out prior to the sale. It’s not a good situation.

First of all, not all heirs have the funds or ability to pay. Oftentimes, we’re not looking at hundreds of dollars, but thousands. Even if there is an heir who is well-off, it may create an imbalance. The heir who loaned to the estate feels entitled to run the show and receive information before the other heirs. When the family is upset and grieving, having a wealthy heir loan money to the estate could cause more family problems.

Especially in this situation, the executor must keep excellent records to make sure the repayment in terms of final inheritance adds up properly.

Can you get a loan against your inheritance?

This means borrowing from an “inheritance funding” company. These are basically like payday loans for heirs, but for estates. This is VERY expensive.

 

 

How does it work? I’m not endorsing this, but I want you to understand it. Here is the example: 

You have an inheritance of $10,000 that you should be receiving, but you don’t want to wait. You then pledge up to $10,000 of your inheritance to the lender. In exchange for signing loan documents, the lender gives you $5,000 cash now (half). Depending on how long it takes for the estate to close and repay, the lender will keep up to $10,000 of your inheritance. If the estate takes too long to settle, the lender may keep all $10,000. Or maybe the estate settles quickly, and the lender gives you $2,000. So, essentially you paid $3,000 to borrow $7,000. Estates can take a long time, so most likely you’d walk away with just your 50%. It might be better just to wait to get your money from the closing of the estate instead. 

Heirs need to sign a bunch of paperwork, and the lender will have lots of questions for the beneficiary and executor to make sure it’s likely the lender will be repaid. 

I wouldn’t call this a good option, but it is an option. I think it’s not used as much as we think it would be, because people simply don’t know about.

Can I delay paying estate bills?

Yes, you can try to juggle and pay only the immediate bills, and delay or defer the rest until there’s cash available.

 

 

An example of this would be negotiating to pay upon the sale of the home or business. For instance, an appraiser may want $500 up front to do the appraisal, but maybe you can offer to pay them $1,000 (but not until the closing of the sale). 

This option requires savvy and experience to determine who will bend vs. what bills are important and must be paid now. Negotiating doesn’t necessarily mean that letters will stop coming from the debt collectors and such. You will likely continue to receive monthly notices until they are paid. 

In conclusion, none of these options are great, but it’s what you do if you’re stuck in that situation. To dig into this topic a little more, please check out my book, “How Probate Works,” available on Amazon.

The following are three recent questions from our Solo Ager listeners. Thanks for your questions!

Is a bank as an executor better?

This question comes from a Solo Ager who listened to our previous podcast episode 221, where we discussed whether executors are contractually bound to serve.

Our listener asks, “since professional executors are not contractually bound, aren’t banks better?” The short answer is: No. Banks aren’t contractually bound, either. Individuals and banks are on the same level regarding that issue.

This leads us to the next question: why wouldn’t a bank take an estate? To answer this question, you have to think far ahead 10, 15, or even 20 years.

What we have seen happen is that the bank shuts down their estate’s division. Or perhaps between the time they agreed to be your executor and the time that you pass away, the bank increases their estate minimums, so now your estate doesn’t qualify. For example, your estate may have been two million dollars when you appointed the bank, and that amount met the bank’s minimum requirements. But, since then, they bumped up their minimum to five million, which makes your estate ineligible.

Even if you meet the qualifications and the bank still has an estate department, the bank’s review committee may reject your estate. Maybe they see the estate as too risky, due to family feuds and potential litigation. Or maybe the estate has too many illiquid assets (house, art, collectibles, etc.). Banks want to be in this business to control your portfolio, and it is a lot of work to liquidate those kinds of assets.

Should a professional executor review my will before I sign?

I am often asked to be the professional executor for my clients, but I am rarely the attorney who drafts the will. This may be due to the client living in another state, they have an attorney they’re comfortable with, or that we’re not currently drafting wills.

The short answer is: No, it’s not required any more than it’s required for a spouse or best friend to review it.

However, if you name a professional executor (such as a bank or attorney), we can be a good second set of eyes to review your Last Will to make sure it’s what you want. It’s like getting a free second opinion.

But if you’re working with a good attorney, it’s not necessary to have a professional executor review the will. You also don't want your drafting attorney to feel like he is being second-guessed. 

It could also be confusing having a lot of different people with different opinions looking at the will. You don't want too many cooks in that kitchen.

Does naming beneficiaries on my accounts help my professional executor? No, it probably makes things harder! Why? Naming beneficiaries to your account creates liquidity problems. It’s as if you are treating your bank or brokerage account like a life insurance policy: “In case of my death, this account will automatically go to my niece.” You might think this is great because it minimizes probate, but there are complications.

Here’s the problem: if you name beneficiaries on too many (or all) of your accounts, you put your executor in a liquidity crunch. Because those beneficiary accounts go directly to the beneficiary, the executor won’t have operating cash to move the estate forward. The executor may not have enough funds to pay bills, taxes, etc.  

An example of this is one of our estates with two houses, a business, a car, and a bunch of accounts. The accounts and car had beneficiaries on them. So, now I am the executor of two houses and a business, and I have no cash. My job is to settle the estate, but I have no money to clean out the houses, secure the business property, or pay to evict the tenant that won’t leave. There are solutions, but they are not ideal. I’ll probably have to sell the business or house at a severe discount, because who is going to want to buy a house full of junk because I can’t pay to have it cleaned? Who is going to buy a business where I haven’t been able to secure it or get the financials done? No cash means selling the property “as-is,” which means fewer buyers. 

When I am named as executor, I make sure there are more than sufficient accounts in probate to cover the estate bills, or else I usually will decline to serve, as it puts me in a tough position. 

These are great, relevant questions, so please keep them coming! 

Free copy of "The Solo Ager Estate Plan"Complete this form to receive your complimentary copy of Anthony’s Amazon best-seller, “The Solo Ager Estate Plan”