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Many people put off talking to an estate planning lawyer until they are in their later years, but even young people, and certainly young families, can benefit from the tools used in estate planning.
Just like other important life tasks, your estate plan deserves your time and attention. It's important that you work with us to review your estate plan at least every few years. A meeting within a fixed period isn't the only time you need to consider your estate plan. The occurrence of special life events may mean it is time to pick up the phone and call us.
If you experience any of these significant life events, get in touch with us, and we'll make sure you are up to date.
Have you recently gotten married? Congratulations! Marriage means new ways of sharing and managing finances and assets. It also means any existing will is revoked by marriage under Rhode Island law. As a result, this is an important time to revisit your estate plan. With this life change, you'll need to contact us to make any changes to your beneficiary designations, update your will/trust, and update your powers of attorney. This is especially important if this is a second marriage and/or there are children from a previous relationship involved. Proper estate planning is the only way to ensure that you are protecting your loved ones the way you want.
A new job presents an exciting new set of challenges and opportunities to explore. It also brings very real financial changes. You may be receiving new benefits that require new beneficiary designations on your estate plan. When you are filling out these new forms, it is important that the beneficiaries are named appropriately so your estate plan will work as designed. In addition, you'll need to make sure your estate plan reflects the change to your financial status, whether that's a pay increase or a pay cut.
Similarly, leaving employment brings big changes to your financial situation and to your estate plan. It's important to update your plan to reflect the loss of employer-provided benefits such as life insurance, as well as the change in financial status.
Retirement brings lifestyle changes, more time for loved ones, and important financial developments. We can help you change your plan to reflect that you've stopped earning income and have entered the phase where you will be beginning to use your retirement account. Also, with this new-found freedom, you may find yourself traveling more, making documents such as a Financial Power of Attorney and Health Care Power of Attorney more crucial.
If you have moved across state lines, you'll need to consult with a local estate planning attorney to make sure that the provisions in your estate planning document are still applicable in your new state. A new home is a new asset, and it is important that this asset is titled appropriately to carry out your overall estate plan.
Divorce is, of course, a difficult time. But it is critical to look out for your financial health and future if it occurs. You should make any needed updates to the beneficiaries on your estate plan and ensure your beneficiary designations on any life insurance or retirement accounts are changed so that your ex-spouse does not end up with your assets upon your passing.
There is so much to take care of after the loss of a loved one. Take some time, but don't forget that your estate plan will need to be updated to reflect the change that has taken place. You may need to remove the deceased loved one as a beneficiary from any will, trust, life insurance policy, or retirement account and determine what will now happen to that share. It is also important to verify that your deceased loved one was not appointed as a fiduciary, or if so, to make the necessary adjustments to your documents.
The death of a loved one not only brings a loss but may result in an inheritance. An inheritance can mean property, money, real estate, and more. An increase in assets may necessitate a change in your estate planning strategy. Also, depending on the form of the inheritance you've received, there may be additional asset management or asset protection concerns that your estate planner will need to address with you.
Welcoming a new child to the family is an unforgettable time. You may feel inspired to look toward the future, and you should. This is a great time to plan to provide for your new family member's future. Due to the new arrival's young age, it is important to consider how you would like to provide for the child and who is going to be in charge of handling the assets while he or she is a minor.
Whatever life brings you, the attorneys at Sullivan Estate Law are here to help you weather the storms and celebrate the milestones. We’d be honored to help you ensure your estate plan is up to date to reflect these life changes. Give us a call today!
The Rhode Island Probate Court has jurisdiction over assets of a decedent if those assets are in the decedent’s name alone, there are no surviving joint owners, and there are no beneficiary designations that control the disposition of the assets. If an asset such as a bank account is owned as joint tenants with the right of survivorship, the account will pass to the surviving joint owner without Probate Court involvement. Similarly, tax-deferred assets such as an IRA or 401(k) will pass to the surviving designated beneficiary. Investment accounts can also name a “Transfer on Death” or “Payable on Death” beneficiary.
When there is no surviving joint owner or a beneficiary designation, then the Probate Court will determine the disposition of the decedent’s assets. If a decedent has a valid Will, the assets will be distributed in accordance with the terms of the Will. If a decedent had no Will, the laws of intestacy govern the disposition of the assets. In other words, the State of Rhode Island will supply the decedent with a Will by default.
In Rhode Island, the probate court is a municipal court, meaning that each of the 39 cities and towns has their own court. To initiate the probate process, a petition must be filed in the city or town where the decedent resided. The petition names the decedent and the heirs of the decedent. If the decedent died with a Will, the beneficiaries under the Will are also included in the petition. All those individuals and organizations named in the petition must receive notice in advance describing the hearing date when the probate court will review the petition.
The petition requests that the probate court appoint either the executor named under the Will or an administrator for an intestate estate (decedent died without a Will). A common misconception is that the executor listed in the Will can act because the Will names them. That is not the case. The Will essentially nominates the executor, but it is up to the probate court to determine whether the will is valid and appoint the executor.
The petition must be accompanied by the death certificate so the process cannot be initiated until the death certificate is issued. That can take a week or two after the date of death.
The petition must be advertised in the newspaper for 3 weeks before the hearing. All probate courts in Rhode Island meet at least once a month. If all the heirs and beneficiaries under the Will sign a waiver indicating that the hearing does not need to be advertised, then the hearing can be held at the next available hearing date. Getting to the hearing can take as long as two months or as short as two weeks depending on the circumstances.
At the hearing, the probate court judge will inquire about the size of the estate and confirm that the petition and Will comply with all the legal formalities. If everything is in order the court will approve the appointment of the fiduciary (an Executor or Administrator, as appropriate). The court will require that the fiduciary file a bond. Upon receipt of the bond, the probate court will issue a Certificate of Appointment. It can take about a week or two to obtain the Certificate of Appointment.
The fiduciary needs the Certificate of Appointment to prove to third parties such as financial institutions that the fiduciary has the legal authority to deal with the assets passing through the probate process. The fiduciary must identify the assets that are held in the decedent’s name alone.
The fiduciary must file an inventory with the probate court within 90 days after their appointment. This is a list of the assets valued as of the date of the decedent’s death.
The probate court will post a notice in the newspaper after the fiduciary is appointed notifying all creditors of the appointment and the need to file a claim to settle their debt. The fiduciary must also mail notice to any known creditors. The estate must remain open for a minimum of six (6) months from the date of the first advertisement to creditors.
The fiduciary will take control of all assets passing through the probate process, deal with debts, and account to the estate beneficiaries as to how the assets were handled while the fiduciary was in charge of them. This might involve the sale of real estate, liquidation of securities, and submission of claims for assets payable to the estate such as life insurance. When these activities have been completed, the fiduciary will account to the estate beneficiaries. That accounting will show: (i) the value of the assets as of the date of death; (ii) assets acquired after death such as interest and dividends; (iii) expenses incurred in administering the estate such as property taxes, utilities, legal and accounting fees, probate fees, realtor commission if real estate was sold; and (iv) the net estate available for distribution to the estate beneficiaries.
Once the following actions are completed the probate estate can be closed by filing affidavits confirming that the administration of the estate has been completed:
The filing fee for the petition to appoint the fiduciary is $34.
The advertising fee for a notice of filing the petition requesting that the fiduciary be appointed when there are no waivers of advertising is approximately $25, depending on the city or town.
The advertising fee for creditors posted after the fiduciary is appointed is approximately $25, depending on the city or town.
The cost of the bond filed by an executor is typically $0 because most Wills waive the requirement that the bond be insured (surety).
The cost of the bond filed by an administrator of an intestate estate can range from $200 to $800, depending on the value of the probate assets if the court requires surety on the bond. (This is one of the many reasons why it is better to have a Will than not.)
There is a fee paid to the probate court at the time the estate inventory is filed. The fee is 1% of the personal property shown on the inventory. The fee is capped at $1,500. The fee does not apply to real estate. The examples below illustrate how the inventory filing fee is calculated:
$100,000 personal property = $1,000 fee.
$200,000 personal property = $1,500 as the fee is capped after exceeding $150,000 of personal property.
$500,000 house = $0 as the fee is only applied to personal property, not real estate.
When an estate is closed by Affidavit of Complete Administration there is a filing fee of $34.
In addition to filing fees, there may be fees charged by attorneys, accountants, and other professionals.
A probate estate cannot be closed in the probate court without submitting an estate tax clearance letter issued by the Rhode Island Division of Taxation. A fiduciary must file an estate tax return with the Rhode Island Division of Taxation whether estate taxes are due or not.
Rhode Island imposes estate taxes if the decedent’s estate exceeds $1,595,156 (in 2021). This number is called the Rhode Island estate tax exemption equivalent. The exempt amount is attached to an index that goes up a few thousand dollars each year.
The Rhode Island Division of Taxation casts a wider net than the probate court. The taxable estate includes all of the assets controlled by the decedent, including joint property, retirement accounts, life insurance, annuities, real estate, vehicles, jewelry, and household furniture.
Even if the decedent’s estate exceeds $1,579,922, estate taxes may not be due. Assets passing to a surviving spouse can qualify for the unlimited marital deduction. There is a charitable deduction for assets left to qualified charities. When an estate exceeds the exemption amount and there are no deductions, the Rhode Island estate tax rate graduates from 7.2% to 16%.
There is a $50 fee paid to the Rhode Island Division of Taxation at the time the estate tax return is filed whether or not estate taxes are due.
The examples below illustrate how the Rhode Island estate tax is calculated:
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