How Probate Works. A Guide for Executors, Heirs, and Families.

E223 How to Prove Paternity After Death


Earl Simmons (known as rapper “DMX”) recently passed with 11 possible non-marital children. This certainly has the potential to become a complex and interesting probate case. Are any of them heirs? How do they prove they were his kids? Can they prove it without DNA? Let’s break it down:

Does the birth certificate prove paternity?

Does the birth certificate prove paternity?

If DMX was named on the birth certificate as the father, isn’t that enough? The answer is actually YES for moms, and NO for dads. Why? Because mom is the one laying in the hospital physically giving birth. There’s no doubt there. Whereas, you can write anyone’s name down as the father on the birth certificate. The hospital doesn’t verify that a person is the father. In theory, you could write whomever you want.

How to prove paternity without DNA

If you don’t want to exhume the body to get samples, then how do you prove paternity without DNA?

The father’s name on the birth certificate is a helpful starting point, but you will need more. The court will take everything into consideration, so the more proof you have, the better.

First, a court order for child support is extremely helpful. This means that at some point, a court determined that he is the father and had to pay support.

How to prove paternity without DNA

Additionally, was there open and notorious acknowledgement? Did DMX act like he was their father? Was he in family photos? Did he send them birthday cards? Did he tell others and act like a father? Did he do fatherly things such as attended parent teacher conferences or take them for medical care? Did they post about their kids on social media? It’s going to be much harder to prove paternity if none of this existed. Not impossible, but certainly difficult.

It is quite a process to prove paternity during the probate process, especially with a high-profile celebrity. It will be interesting to see how DMX’s estate unfolds.

If you want to learn more about how probate works (what DMX’s family will have to go through), check out my book on Amazon, “How Probate Works.”

E110 What Happens to Your Debt When You Die

E110 What Happens to Your Debt When You Die [REPOST]


You probably don’t want to burden your kids or family with your debt when you die. Here, we’ll cover the ins and outs of debt and death, including an overview of what happens to your debt when you die and how to handle an estate with debt.

We’ll also cover when heirs do not inherit debt (with some exceptions), and why debt collectors keep calling heirs. Lastly, I’ll explain how your heirs can turn the table and actually increase their inheritance.

When Heirs do NOT Inherit Debt

Generally, debt dies with borrower, and the estate will pay, if it can. When someone dies, their assets and debts all get thrown into an entity called the “Estate.”

If the Estate is positive, then the heirs will inherit the assets. For example: Your aunt died with a $100,000 house having a $30,000 mortgage, no cash, and another $30,000 in credit card debt. The executor will need to sell the house and pay off the bills, but now the heirs will inherit the $40,000 remainder.

If the Estate is negative, then the heirs get nothing. However, the heirs DO NOT owe the difference. The creditors have to eat the loss, and usually cannot come after the heirs. For example, your Grandpa rented his home and pretty much spent what he had. He then died with $5,000 in his checking account, but also with $25,000 in credit card debt and medical bills. Now, Grandpa’s estate is $20,000 negative. Do his heirs have to reach into their pockets and settle the $20,000 difference? No. Credit card companies and hospital must eat that $20,000 loss.

There are some exceptions, however:

  1. Co-signers and co-borrowers on mortgage will be held responsible because they were equally responsible when they took out the loan.
  2. Another example is when parents guaranteeing private student loans (you can avoid this with federal loans which don’t require co-signers).
  3. Some hospitals will nudge a spouse or family to co-sign medical bills (check with your attorney before signing). This happens when your loved one is in the hospital and you want to make sure he gets the best possible care. You’re not thinking about the dollar amounts in that emotional state when the hospital administrator puts a pile of papers in front of you to sign in order to continue his care. Your first thought probably isn’t to call your lawyer, but you may be co-signing something that you don’t really have to sign.
  4. Joint credit cards (between husband and wife or business partners) are another exception. Some people make themselves joint signers for convenience (allowance cards for adult kids, or retired parents). Both parties might be liable for that line of credit, which might not be your intention. FYI: This doesn’t apply to authorized users, such as employees. So, you may want to make your child an authorized user rather than a co-signer.
  5. Some states (California and Texas) have community property, meaning that spouses share everything even if the asset not co-signed or joint.

Given these pretty clear rules, you may be wondering why debt collectors keep calling heirs? Debt collectors can be pretty aggressive and cold in calling the surviving family. They do it because often, it works! They can guilt or trick heirs into paying debts that the heirs never had a legal obligation to pay. It’s horrible that debt collectors take advantage of grieving, disoriented families. It’s gotten so bad that the Federal Trade Commission has made rules that debt collectors can’t mislead family members into thinking they have to pay. As with all rules, there will always be loopholes.

So, how do you turn the tables on these debt collector bad guys?

Don’t just avoid getting scammed. If you negotiate HARD enough with estate creditors, you can significantly reduce the amount you pay on the bills. As a professional executor, I’ve settled debts for as low as 33 cents on the dollar. By negotiating hard, there were tens of thousands more left for the heirs. I increased their inheritance by knowing the law and flipping the script and getting aggressive with the creditors.

Knowledge is key! Most people don’t have the information they need for successful estate administration. If you want to learn more about probate, check out my book “How Probate Works”  on Amazon

E220 5 Ways to Secure the House When Someone Dies

E220 5 Ways to Secure the House When Someone Dies


When someone passes away and you are in charge, one of the top priorities is securing the house. In order to do this, you need to start with the following five steps.

1. Take care of the lights, mail, etc. to keep criminals from thinking the house is vacant.

Use automatic lights and don’t let mail or newspapers pile up on the porch. Just think about things you might do when going on a long vacation.

2. Change the locks…maybe.

In most cases, you want to change the locks in case someone else out there has an extra key. However, if there are tenants, you cannot change the lock without a court order in New York. If you do, you could be charged with a crime. If there is a possible tenant (even your sister or cousin), don’t change the locks.

3. Winterize the home.

This can mean different things in different parts of the country. Take into consideration things like pipes freezing or bursting or snow piling up on a roof. Make sure you don’t incur any additional damage based on the weather. Probate can take a long time, so start thinking about winterizing in the beginning.

4. Set a routine to check in on the home or ask a neighbor to check in.

If you live close, you could drive by often. If not, you can ask someone to routinely check on it for you. You want to make sure that the home is in good shape and there is no criminal activity.

5. If you live in New York – tell the doorman.

There could have been a dog sitter or cleaning person who has ongoing access to the apartment. The best person to stop that (a gatekeeper) is the doorman. Let him know that your loved one has passed away and there is to be no more plant watering, dog walking, or house cleaning until someone is appointed to do that.

To learn more, read my book “How Probate Works.”

E219 What Happens to Your Stuff Upon Death? Probate vs Non-Probate Assets

E219 What Happens to Your Stuff Upon Death?


It is helpful to know what happens to your probate vs. non-probate assets when thinking about your estate plan or your future inheritance. Do you really know how assets transfer upon your death? You may think there is a shortcut to use in your estate planning but read below to see what really happens.

First, there are in-court and out-of-court assets. In-court means that there is a type of asset that has to go through the probate court. Probate court is an extremely specific court that every county in the country has. Their job is to make sure that assets transfer properly. They make sure that the Will is correct and real, and that the proper heirs are notified. If someone dies with a Will, it’s called the probate process. If there is no Will, it is called the intestate process. By default, anything in your name or your name alone will go through probate.

What are the advantages of probate assets?

In general, the pros are related to a legal finality.

  1. By going through the probate process there are safeguards in place. The court has procedures in place to protect people who may not be able to protect themselves. For example, if you are survived by minors (children) who don’t have the maturity to look out for their own interests, the court can appoint a temporary guardian. If you are survived by an heir with special needs, there is a procedure in place to make sure their best interests are protected.
  2. Probate has processes to make sure final creditors and taxes are paid. If you close the estate properly, there won’t be lingering taxes. If you follow the probate procedure, you won’t be sued later by someone who comes after the estate. There is a 7-month statute of limitations against creditors once probate has taken place. If an executor is appointed on January 1st, any creditor (including the IRS) has 7 months from January 1st to submit their bill or claim. If they don’t do it during that time, they are out of luck.
  3. Probate is all in a centralized place. If someone lived and died in Manhattan, and the next living heir lives far away, he might not know where the decedent stored his/her Will. However, if he knows that the person died in Manhattan, he can contact that courthouse to see if someone set up an estate.

What are the drawbacks of probate?

The cons are generally related to dealing with a government entity.

  1. Probate process is slow. It can take from 9 months to a few years, and in some cases, even longer. It is long because there is a 7-month waiting period for creditors. There is a lot of paperwork to circulate among the heirs, executor, and court. Oftentimes these forms still need to be mailed, and sometimes these documents even have to be notarized. If multiple heirs have to get papers notarized, it can cause a lot of delay and friction. The process of using paper and wet signatures is unfortunately antiquated.
  2. Another drawback are costs. You’ll need to pay court fees, attorney fees, accounting fees, Executor commissions, etc. All these things added up can be tens of thousands of dollars.
  3. Probate is public. If you are a celebrity or a very private person, maybe having your private affairs accessible by the public is not desirable. For example, if you are in New Jersey, you can pull up James Gandolfini’s Will because his estate went through probate. This is also true for Prince and Frank Sinatra. If public access bothers you, then you may want to consider a non-probate method when planning your estate.

Examples of Non-Probate Assets

Probate means you have to go through court. The other option is having non-probate assets. These assets are anything with a named beneficiary or a named/joint owner. One example is life insurance. A life insurance company, for example, might require the beneficiary to turn in a claim form and death certificate in order to receive the money. This is a good thing to set up so there is some cash available while doing the rest of the probate.

Other examples of non-probate accounts are IRAs, retirement accounts, 401(k)s. There are tax benefits for naming your spouse or children as beneficiaries on IRAs and 401(k)s (talk to your tax advisor!).

If you are joint owners of real estate, the survivor automatically owns the whole thing. For example, a husband and wife own a condo in Manhattan. Husband dies, and the wife immediately owns 100% of the condo.

Even bank accounts can be set up as non-probatable assets. You can add a joint owner or use another method such as ITF (in trust for, TOD (transfer on death), POD (paid on death), Totten trust, and many other options.

Trusts are also non-probate assets. These can be revocable, living trusts, or grantor trusts. They act as a wrapper that you put around your assets so that they are no longer owned by you. Rather, they are owned by a trust with its own instructions with what happens when you pass away. These are used to avoid probate court.

You Can Change Your Assets from Probate to Non-Probate Anytime

Let’s’ say that I bought a house before I got married, and it is my name alone. Then I can update the deed to add my wife after we married. I can add my wife easily to a bank account, etc.

Beware: Non-Probate Assets Override Wills

This is extremely important to understand. Let’s say my wife and I have our first child and I go through all of our accounts and name the baby as the secondary beneficiary. Then we have more kids and I forget about the beneficiary designations. Now that I have a big family, I decide to have a Will drafted to leave everything to my wife. If she dies, then I leave everything to my kids. However, the Will only controls anything that comes through probate. So, those beneficiary designations naming my first child will not go through my estate. Then my other kids get nothing from those accounts, even though I named them in the Will. This happens all the time – people forget!

Making Everything Non-Probate is NOT Estate Planning

You might think that making everything non-probate will save time and money. Don’t do that. Here’s why: people forget! Your monthly bank statements do not list your beneficiaries; there are no reminders for updating! Unless you are one of the few conscientious people who remember to update all account beneficiaries, there will be something that doesn’t match your intentions when you die.

For example, Kurt was in love with Jasmine. They weren’t married, but Kurt added Jasmine as beneficiary to his savings account. Unfortunately, Kurt and Jasmine separated. Decades later, Kurt got married and had a daughter. He had a very long, fulfilling life and all the while he maintained that bank account. When he passed, his daughter was going through the estate assets and had to find out why someone named Jasmine was getting all that money!

Hopefully, my examples have been helpful to you in your estate planning or in administering a loved one’s estate. Please check out my book, “How Probate Works,” which covers this and a lot of other topics.

E217 Executor Dies During Probate

E217 Executor Dies During Probate


What happens if the executor dies during probate? It depends on how far along you are in the probate process.

Probate Court Process Just Started

If no one has been officially appointed yet, you either restart the court process or amend your original papers.
Probate court process just started
For example, Matt’s dad died and his mom hired a lawyer to start probate to appoint her as executor. But before it was finalized, she passed away. The court allowed Matt to amend his mom’s papers to name him as executor instead. This saved Matt a couple of weeks in the process, rather than starting over from scratch.

What Does Administrator DBN Mean?

If the executor has already been appointed, then you must ask the court to appoint a new executor. Unfortunately, getting the administrator de bonis non (dbn) swapped in is about as time consuming and complex as getting original letters.
What does administrator dbn mean?
The Latin term de bonis non administratis means, “goods not yet administered.” Once appointed, the administrator dbn is substantially the same as any other executor.

When Estate Is Almost Complete

If the executor has already gathered the assets, completed tax returns, and only accounting is left, the court may allow the executor’s executor to close the estate.
When estate is almost complete
Let’s say that Matt’s mom did almost all of the work and right before her husband’s estate was done, she passed away. Matt is his mom’s executor. As his mom’s executor, he can come in and finish up the accounting as the executor of the executor. This is a niche situation that the court allows when there is almost nothing left to do for the estate. But most of the time, the court will demand that an administrator be appointed.

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E215 What Happens if You Delay Probate

E215 What Happens if You Delay Probate?


A recent example of headaches and costs if you delay probate: Lou’s mom died owning a co-op apartment in New York. Since there was no mortgage, Lou and his sisters didn’t think there was any rush to deal with it. More than a year passed, and the co-op wanted clarity on who the legal owner is. Lou and his sisters each took turns saying they’d handle it, then dropped the ball. Finally, the co-op got tired of waiting and took action.

Co-op Foreclosures in NYC

Co-op foreclosures in nyc

The co-op began a foreclosure proceeding. Condo and co-op foreclosures aren’t just for missed mortgage payments. Foreclosures are also for missed maintenance payments and to clear the title. In this case, the co-op board doesn’t necessarily want the money. They want control so that they can put the apartment on the market and sell as they see fit.

The proceeds from the sale would ultimately go to Lou and his siblings, but they would have no control over the process. And, the co-op’s legal fees will get paid from the sale proceeds.

Someone Else Will Probate

The co-op doesn’t want to be the administrator of someone’s estate. So, the co-op asked the court to name the Public Administrator (PA) to be the executor for Lou’s mom’s estate.

Someone else will probate

As we’ve discussed before, you don’t want the PA in charge of your estate. The PA may be competent, but they are probably not the best fit for your needs in estate administration.

Now that the co-op asked the court to appoint the PA, Lou can’t simply ask the court to become the executor instead. Now Lou and his sisters must fight off the PA (and the PA’s legal fees) if they want to keep control of their mom’s estate.

How Long Do You Have To File Probate After Death

There is no official rule or deadline for how long you have to file after death. Maybe after three months you are still paralyzed by your loved one’s death that you weren’t ready to move forward. Maybe by six months you are overwhelmed in trying to find a lawyer. But the court will start losing sympathy for you after about a year. The court understands that you need time to grieve, but getting started sooner is better.

How long do you have to file probate after death

Of course, Lou’s example is not the only way delaying probate can cause problems. Start talking to an attorney as soon as possible to understand the process. If you reach out to an attorney, they will not sit on your case for a year. They and their team will start working on the process while you are grieving.

Request your free consultation

Sign-up for your free consultation using the form above, and I’ll be happy to email you a free chapter from Anthony’s best-selling bookHow Probate Works.”

E212 How Does Probate Court Know Who to Notify?


After we published When Does the Executor Tell the Beneficiaries, many listeners and clients have asked: how does the court know who to notify?

Great question; the answer depends on who the heirs are.

If survived by many heirs

If the person who passed is survived by many heirs, the court relies on a system of checks and balances. The court sort of assumes that one of the other heirs will step up and say something is something is out of whack.

If survived by many heirs

For example, let’s say that there are actually seven nieces and nephews, but only six people have signed off on the court papers. The assumption is that one of them would mention the missing seventh person. The court will likely rely on the fact that the family members will keep each other in check.

If survived by one close heir

If survived by one close heir

Perhaps the person who passed is survived by only one heir, such as a sole spouse or an only adult child. The court needs an “affidavit of heirship” or “family tree affidavit.” This is a document that someone else must sign, swearing under oath that this is how the family tree looks. The person who signs the family tree affidavit can’t be the sole surviving spouse or child, or the sole heir’s spouse or child. So, who’s left? Usually you can use another relative (who doesn’t inherit), a longtime friend, or clergy.

If survived by distant heirs

If survived by distant heirs

“Distant heirs” can mean a couple different things. Your situation falls into this category if the family tree heirs involve first cousins or similar. It’s easy enough to prove that the person who passed had five children. But, once there are a certain number of distant heirs, the court needs proof of relationships. The court may require a genealogy report to prove complicated relationships. It is easier for the court to understand the family tree when it’s laid out on paper. In addition to the professionally verified genealogy report, the court may require a court-appointed third-party (usually the public administrator) to review and confirm the family tree. It is another method of checks and balances to make sure one side of cousins isn’t doing something to the exclusion of others.

In conclusion, you can’t go to the court to simply tell them who you are and get the estate moving. There are steps in place to keep people from doing so.

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E209 Do Tenants in Common Need Probate_

E209 Do Tenants in Common Need Probate?


In a recent case, Liz’s dad had bought a co-op with his girlfriend. Liz’s dad broke up with his girlfriend but continued to co-own the apartment as “tenants-in-common.” Liz’s dad passed away, so what happens to the co-op now?

What Happens When a Tenant in Common Dies?

What happens when a tenant in common dies?

Unless there is a specific percentage for the tenants in common, the property divides equally.

If they had owned as “joint tenants” instead of “tenants-in-common,” then the girlfriend would become sole owner. But, the co-op shares certificate states “tenants in common.” So the girlfriend is a half owner, and Liz’s dad’s estate is now a half owner.

Is Probate Required for Tenants in Common?

Is Probate Required for Tenants in Common?

The short answer is yes. Liz and her siblings must probate their dad’s estate to inherit their half share of the co-op. Right now, Liz and her siblings must appoint an executor who has legal authority to conduct business for the estate. A court-appointed executor has the right to enter the premises, to gain information from the co-op, and eventually to sell the property.

Request your free consultation

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E207 Hire a Professional Executor for your Insolvent Estate

E207 Hire a Professional Executor for Your Insolvent Estate


Going through probate is a grueling 1-to-2-year process. Would you want to go through all that if you don’t even get anything out of it?

If you think the estate may be insolvent, consider hiring a professional executor.

What’s an Insolvent Estate?

What’s an insolvent estate?

An insolvent estate is when the decedent’s debts are greater than the assets. For example, the mortgage, credit card debt, and medical bills are greater than the value of the house and bank accounts.

There are also situations where the estate is close to being insolvent and you don’t realize it. Examples of this are Medicare clawback and unseen taxes. If you received medical care paid for by the government, the government will want the money back when you die. This could leave your estate with a large bill. Additionally, the IRS will look over your taxes carefully to be sure they didn’t miss anything.

Who Must Probate the Estate?

Who must probate the estate?

Many family members and heirs ask: am I required to be executor? The answer is no! You can decline or not act at all. Although, some may feel like they are dishonoring their deceased loved one by leaving the estate as a mess.

If you think the decedent is close to having an insolvent estate, you have options.

One not-so-great option is to let the state take over. There’s a state office (sort of like the public defender, but called a public administrator) that can step in. But, the interest in the estate and the incentives might not be the same as a person who you hire to help.

Instead, Hire a Professional Executor for the Estate

Instead, hire a professional executor for the estate

A better option is hiring a professional executor. You won’t have to do the stressful work yourself and you don’t have to feel bad about abandoning your loved one’s estate to the public administrator.

Even if the estate is NOT insolvent, you now have a relationship with the hired executor. This helps to make sure you get your inheritance. If the estate IS insolvent, then you can relax knowing that a professional is there to wrap up the estate.

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E206 How to Set Up a Bitcoin Revocable Trust

E206 How to Set Up a Bitcoin Revocable Trust


Cryptocurrency (such as Bitcoin) is a new and unique asset. It’s sort of like cash, personal property, and intellectual property all in one. You need to plan for this type of asset in a different way than you would for your bank or brokerage account.

If you want a revocable trust for your bitcoin, you’ll need both a legal plan and a technical plan.

What to Include in Your Bitcoin Estate Plan?

If you want your trustee to hold bitcoin, you can’t rely on the same old boilerplate trust language. You’ll need to tweak a few things for your legal plan to work.

 

Opt-out of the prudent investor rule

Most trustees must follow the Prudent Investor rule, which (roughly) says the trustee may be liable for losses if he doesn’t invest the trust portfolio according to legacy investment principals. For example, 60% equities, 30% bonds, 10% cash. This doesn’t work for Bitcoin, since most people still consider it highly speculative. So a bitcoin revocable trust must include language opting-out of the prudent investor rule.

Access to devices and logins

What to include in your bitcoin estate plan?

Make sure to include language that gives your trustee access to your computers, devices, and logins. Without this, your trustee may technically be violating privacy laws.

Keep it flexible

It is important to keep your Bitcoin estate plan flexible since cryptocurrency continues to evolve.

Bitcoin in a Living Trust

With a traditional bank, you’d rename your account so that the trust owns it and not the individual. For example, you’d rename your personal checking account from “John Doe,” to “The John Doe Trust.”

But this won’t work if you hold your bitcoin on a centralized exchange. Currently, exchanges don’t open accounts for trustees. Nor do they offer beneficiary designations. So, to make a bitcoin trust, you’ll need to hold via a digital, hardware, or paper wallet where you control your keys.

Bitcoin in living trust

Think of your wallet as personal property, like artwork and other collectables that don’t have a deed or other record of ownership. One way to prove transfer of ownership for personal property is to sign a gift or assignment deed from yourself to your trust.

What Happens to the Bitcoin Trust Upon Your Death?

Now onto your technical plan: how to give access to your trustee when you die.

One solution is to “shard” your seed phrase and break it into chunks. For example, give half of the words to your lawyer, then give the other half of the words to another trusted person. Only upon your death will these two people be able to connect with each other to complete the seed.

A component of those plans could be a “dead man switch.” A dead man switch is where you routinely do something (ex. press a button) to indicate you are still alive. If you fail to press the button or miss two button presses, then it is presumed that you are dead. An email containing seed phrase then goes to your trusted people. (This is not a good plan, since it stores your seed on a ‘hot” device, the email server)

What happens to the bitcoin trust upon your death?

You could also give your seed to your trusted people in sealed envelopes. If this is worrisome, you could tell them to send you pictures to show that the envelope is still sealed (not ideal, just brainstorming here!)

We have worked on several Bitcoin revocable trusts, and these are the types of situations we encounter. It is exciting for us to learn about cryptocurrency and work with our clients to protect these valuable assets.

Request your free consultation

Sign-up for your free consultation using the form above, and I’ll be happy to email you a free chapter from Anthony’s best-selling bookHow Probate Works.”