Kinds of Probate
Here at Schmidt & Schmidt, S.C., we have practiced administering families’ and decedents’ estates for over 90 years. We take great pride in the hard work that we do, and the accuracy and the efficiency with which we close out an individual’s estate.
If you need assistance with your estate planning or just want to know more about anything you read in this article, contact our Wausau law firm online or call 715-845-9621 to schedule an appointment.
Probate is the orderly distribution of what is left of your property after you have passed away.
Probate essentially works like this: After your death, an individual you have appointed in your will, typically called a “personal representative,” steps up and files papers asking to become the personal representative with the court. After a period of time, the court approves the appointment of the personal representative and that individual then is in charge of and responsible for (1) finding all of your property, that is, marshalling it together; (2) notifying the public and creditors that you have died and that they have 90 days to file a claim against your money, and (3) the personal representative is then to pay on those claims and after those claims are done, to pay out what is left to your heirs and beneficiaries.
In Wisconsin, there are three major groups of probate. Whether or not you have a will, it does not matter. Probate is frequently divided into formal probate, informal probate and “special” probate.
Let’s start with formal probate. Formal probate is where the personal representative, with the aid of the attorney that the personal representative has hired, commences a court action. In formal probate, the court will monitor all aspects of the handling of the administration of the estate. Therefore, the initial appearance commences what may be several appearances in front of a judge. At court, the personal representative informs the court that the decedent has died, that there is a need for probate of the estate, that the decedent died with or without leaving a family, identifies the family and submits the will and asks the court to take the will and approve it. Then the attorney for the personal representative asks the witnesses to the will to come forward and testify that they did sign the will and it is a true and accurate copy of the will.
Upon approval by the court, the personal representative is then given Domiciliary Letters. This is proof to all individuals that the personal representative is fully authorized by the court to act in the same footsteps as the decedent. They can open and close bank accounts, deposit money in bank accounts, open and close brokerage accounts and collect on insurance policies. They can commence litigation, end litigation, settle claims, sell or purchase real estate, fund or terminate a trust, and in essence do everything that the decedent could have done had the decedent been alive.
However, there is one caveat and that is that the personal representative must strictly account for all money coming in and going out of the estate. If there are any large expenditures necessary or sales of real property, the personal representative may have to step up in front of the judge to get permission to sell the property, if necessary.
Here is an interesting story. Many years ago, Aunt Violet died leaving a rather sizeable estate and no heirs to speak of. She had a rather complex will with many gifts to many individuals. In formal probate, the personal representative soon discovered that Aunt Violet had expenses that needed to be paid. The total of those expenses exceeded her available cash. Aunt Violet’s personal representative went to the court and got permission from the court to sell an old farm that Aunt Violet had inherited many years ago. Although it took a half a year to sell the farm, when the money was raised, that money was then applied to existing debts as well as to the estate.
Informal probate is the standard for many of Wisconsin probates. It is designed to be somewhat easy and not very complex. The difference between informal probate and formal probate is that in informal probate, appearance before a judge is not necessarily required and that is why it is called informal. All the other requirements of accounting for money, handling the money with great care and closing the estate timely and efficiently are still required. The personal representative must account for all the money that comes into the estate and all the money that goes out of the estate.
This is not to say that the personal representative is strictly personally liable for any errors, but if the personal representative makes gross errors or keeps any of the money for himself or herself, that is considered a “conflict of interest” and perhaps could be considered a felony if it was egregious.
“Special” probate or administration involves many different things. Most of all it involves very small estates or estates where many years ago someone forgot an asset or there is a piece of real estate in Wisconsin and the decedent lived in another state.
The most widely used form of “special” probate administration in Wisconsin is called a transfer by affidavit. A transfer by affidavit can be used when the decedent had a total estate of not greater than $50,000. If the decedent had less than this amount, including the home and all property, then the personal representative or a lead family member can assume personal responsibility for taking the decedent’s property under their wing, paying the decedent’s bills and income taxes, and then distributing the remaining amount according to the decedent’s will or according to Wisconsin rules of probate asset distribution.
The personal representative or the individual who handles this money and this kind of estate is more responsible for the quality outcome than he or she is typically with the other estates and there is less protection by the court for errors, bad judgment or outright embezzlement. This is a risky proposition and should be undertaken with extreme care and discipline.
Probate is Hard Work!
As a warning to all individuals who are personal representatives, it is wise to hire an attorney if you do not have the time to do this work, accounting and bookkeeping are difficult for you, you do not wish to be involved in family politics, you don’t live in Wisconsin, or the decedent has an estate that is a little more complex than you thought. You can hire an attorney to reduce your exposure to claims by family or creditors that you have taken or improperly managed the decedent’s money. Hiring an attorney is not very expensive to handle a typical informal probate. Lawyers do not usually charge based on a percentage of the estate. Here at Schmidt & Schmidt, S.C., we charge based on time and materials, our normal hourly rate and any out-of-pocket cost that we have.
We employ ethical constraints to the work that we do. We enjoy assisting our clients, the personal representatives, with administering the estate of the decedent.
While we try to close down estates within four to six months, there are some estates which take longer to close down due to other issues beyond the control of you or this law office. It could be the fact that the decedent owed money to others and there is a dispute as to the amount. There could be difficulty in selling real estate that needs to be taken care of. There could be problems where the decedent gave away his or her cash assets and has no cash left to manage the estate. All of these items can cause delay in the closing down of an estate.
In the experience of Attorney Andrew W. Schmidt and of Schmidt & Schmidt, S.C., we have seen that delays are caused primarily by these factors: 1) having to sell real estate, 2) debts are owed by the decedent and the estate has no cash to pay them until real estate or other assets are sold, and 3) when family members fight with each over personal property issues within the estate. None of these are pretty; all are stressful and can lead to anxiety and difficulties by the personal representative in talking to the decedent’s other heirs and legatees.
At Schmidt & Schmidt, S.C., we take pride in working with every personal representative to come up with a quick solution to difficult problems in order to avoid large attorney’s fees.
No matter what you have in place, what the will says, or what your family would like to do, it is very beneficial to seek out competent legal advice with regard to your probate, if not for the speed and efficiency, definitely for the reassurance that you are handling the process right.