Papers, Please

Managing the affairs of a decedent’s estate is never easy.  Not only are you in shock and grief over losing a loved one, but you are forced to navigate complex rules and barriers when attempting to settle the estate.  Gaining access to accounts or even basic information can seem like an insurmountable hurdle.  If the decedent did not have his/her assets titled to a trust, you will likely be asked to present “Letters of Administration” to the financial institutions before you are allowed any control over the accounts. 

“Letters of Administration” (or “Letters Testamentary”) refers to a document that the court issues to an executor (also known as a “personal representative”) of an estate which gives that person court authority to access the decedent’s accounts.  The problem is that in order to obtain the Letters, you must open up a formal probate which is time consuming, public, and expensive.

You want to avoid probate if you can help it.  Contrary to what a financial institution might tell you, you might be able to avoid a probate if the estate falls within certain categories.

First, if the decedent created a trust but left some bank accounts outside of the trust, you might be able to use a procedure known as a “Heggstad Petition” if there was any writing (such as a “Schedule A”) that provides evidence that the decedent intended to transfer the accounts into the trust.  A “Heggstad Petition” is rather simple and inexpensive, especially when compared to a probate.

Second, the estate might fall into a category known as a “small estate.”  If the total value of the decedent’s estate is worth $150,000 or less, then a “small estate affidavit” would generally be available to take control of the decedent’s personal property, including bank and stock accounts.  Rather than going to Court, certain individuals known as “successors to the decedent” can simply wait 40 days, sign a one-page affidavit containing specific provisions, present it to the bank, and legally compel the bank to transfer the decedent’s accounts. 

Third, for surviving spouses of the decedent, sometimes all or part of the decedent’s property automatically passes to the surviving spouse by operation of law.  If the financial institution refuses to accept this fact, the surviving spouse might decide to pursue a “spousal petition,” a simple petition requesting that the Court issue an order that the decedent’s property in fact belongs to the surviving spouse.

Unfortunately, most employees at financial institutions are unfamiliar with these alternatives to probate and are trained to simply tell you that Letters are required in order to proceed.  This “papers, please” approach can create unnecessary problems if you are not aware that there might be methods other than probate to settle the estate.  An attorney who specializes in estate planning can figure out whether a probate alternative is available, thus saving a great deal of time, effort, expense, and frustration.