Law News and Tips

The Little Things

Fred Vilbig - Friday, June 17, 2016

The poet Robert Burns once wrote a poem entitled, “To a mouse.” No one really remembers the poem, but it contains one of the most famous lines (or at least perhaps one of the most often quoted lines) of all poetry. In the original, it reads:

“The best laid schemes o’ Mice an’ Men

Gang aft agley ….”

We know it as, “The best laid plans of mice and men, oft go astray.”

People may do their best to cover all their bases (or maybe not), but inevitably something is overlooked. A person may plan to get all of their assets into joint names, with a POD or TOD beneficiary designation, or into a trust, but they miss something. Usually it is something small, but it can’t be ignored. So what to do?

As I discuss elsewhere in this book, probate can be kind of involved. So the legislature has authorized administration of a “small estate.” Small, of course, is a relative term. Depending on the state, “small” can mean less than $40,000 as in Missouri or up to $100,000 in Illinois ($150,000 in California). Generally these are net amounts after subtracting liens, but check applicable state laws. Regardless of the amount, a qualified small estate can be administered much easier.

In Missouri (as in several other states), we in effect have 2 tiers of small estates. The first tier is sometimes referred to as a “creditor’s refusal.” (Refusal refers to the fact that the court refuses to open a full-blown probate estate by issuing letters of administration that authorize the personal representative to handle the estate.) This is for estates of less than $15,000 consisting of only personal property (no real estate) and where there is no surviving spouse or unmarried minor children. In these estates, no published notice is required (more on that in a minute). In order to process a creditor’s refusal of letters, the creditor just has to file an affidavit with the probate court. As with any claim against an estate, the affidavit must be filed within one year for the date of the person’s death or it is void.

The second tier of small estates is sometimes referred to as a “spousal refusal,” although a surviving spouse is not actually necessary. This is for all estates under $40,000 (or whatever the local maximum is) where a creditor’s refusal does not apply. Notice of the administration is required to be filed in a local newspaper for 2 consecutive week. Notice is a somewhat technical requirement that varies depending on the legal proceeding involved. For regular lawsuits, it might involve a process server. When you don’t know who the other claimants might be or where you can find them, the law allows you to publish the notice in a newspaper of general circulation in the area where the legal action was filed. The idea is that you can’t take something from somebody unless you give them a chance to state their case. Once the notice has been filed, the affidavit then has to sit at court for at least 30 days.

At the end of this process, the court will sign off on the affidavit. You can take the affidavit to the bank or investment advisor and the funds released. If you’re dealing with real estate, you can take the affidavit to the title company as proof of your right to sell.

Small estates are an efficient way to deal with the property that might have been overlooked.

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