Episode 18: Louisville attorney Scott Scheynost has years of experience helping clients with Wills, probate and estate matters. Probate can be a time-consuming process involving taxes and fees. However, you may be able to avoid it by filing a petition to “dispense with probate.” Scott explains this process in related issue in today’s episode.
Editor’s Note: Scott Scheynost is also an accomplished Kentucky workers’ compensation attorney. This episode appears on his HURT AT WORK podcast. This note is an attempt to avoid any confusion for the listeners. There is a link to all of his podcast episodes at the bottom of this page.
What is Probate?
The probate process is designed to legally transfer a title and ownership of an asset from the deceased person to the heir (including a spouse, children or others). Once a person dies, his/her estate is often required to go through the probate process. However, not every estate has to do that in Kentucky.
Dispense with Probate in the State of Kentucky
In Kentucky, there’s a short cut in the probate process for estates with a value of $30,000 or less. It can save both time and expense. As you might imagine, there are many rules and guidelines involved in this process. The assets of the estate would be going to the spouse or children of the deceased. It does not apply to other heirs (including other family members).
What is an Estate?
Scott explains that an estate is, again, property owned in the decedent’s name when he or she dies. This does not include joint-property. We are referring only to assets belonging to (i.e. titled to) the person who passed away.
Joint-property, such as a home titled in both spouse’s names, automatically transfers to the surviving spouse. The deed has to be set up this way, before the death of the spouse. The term is “Joint Ownership with Right of Survivorship.” It would not be included in the estate.
Benefits of a Trust
A trust is not included inside of the estate. It’s considered a separate entity. The assets will need to be transferred into the trust either before or at the time of the person’s passing. This is referred to as “funding the trust.” The trust and the assets properly transferred into the trust pass outside of the probate process. The trust typically has designated beneficiaries who will receive the assets from the trust, depending upon how it was set up.
Scott points out that the trust is not a public document, so it keeps information about the assets private.
A trust can help to avoid inheritance taxes.
A trust can be used to provide for the care and well-being of a person, once they’ve become legally incompetent or otherwise unable to handle their own affairs.
Kentucky’s Spousal Exemption
The spousal exemption provides the surviving spouse a right to the first $30,000 in personal property of the deceased spouse’s estate. If there’s no spouse, it would apply to the children of the deceased individual. If the entire estate is valued at $30,000 or less, the spousal exemption can avoid a formal probate process. There are still legal forms and the petition to dispense with probate. Finally, the judge will need to sign off on the petition. Again, the cost and time involve is a lot less than the normal probate process.
Remember, for the surviving spouse, if the deed was set up properly, the house would not be considered part of the $30,000 estate limitation.
The spousal exemption could be used to take title of a bank account, a car or other vehicle, only titled in the deceased person’s name.
Minimizing the Cost of Probate
One of the first considerations Scott determines is to determine if he can dispense with probate. This is based on that $30,000 limit in Kentucky. If yes, again, this saves time and money. The money is usually filing fees and related attorney fees.
Specifying a Preferred Creditor
This step is a way to add to that $30,000 limit. In this situation, a preferred creditor is the person responsible for paying the funeral expense. Scott explains that in Kentucky, the spouse is not required to pay for the funeral.
For instance, the spouse is usually a life insurance policy beneficiary. If he/she used some of the proceeds from the policy to pay for the funeral, they could be considered a preferred creditor of the estate. They weren’t required to pay for it.
If funeral expenses amounted to $10,000, it could be added to the $30,000, thus increasing the limit for the estate.
Dealing with Debts in the Estate
If the deceased person owed money (i.e. a credit card, loan, etc.), the spousal exemption could be used to shield money from the creditors and collections, assuming the debts were only in the deceased person’s name.
This is especially important in an insolvent estate, where there are more debts than assets. It can help to ensure the spouse is able to get something from the estate proceeds.
An Experienced Louisville Probate Attorney
Scott Scheynost has significant experience dealing with Will planning, Living-Will Directives, Power of Attorney documents and probate.
Many couples set up their accounts in the names of both spouses to avoid probate. Recall the example of the house including joint ownership with right of survival. Upon one spouse’s death, the asset transfers to the other spouse, outside of probate.
Scott Offers a Will Package
If you visit Scott’s website, there’s a page about his simple Will package. This package is a very cost-effective way to set up a Will, Power of Attorney (POA) and Living Will Directive (i.e. Healthcare Directive).
The Power of Attorney Document
In Scott’s opinion, the Power of Attorney (POA) is an extremely important document. It allows you to name someone who can handle your affairs, should you become incapacitated. Some people assume that won’t happen until they get older, but car wrecks happen every day. Medical emergencies are not uncommon. There are many reasons to have your POA properly drafted by an attorney.
Scott goes on to explain that the POA can help you while you’re alive. The Will is there for once you’ve passed away.
Be sure that the person you name as your Power of Attorney is someone you completely trust. Many POA documents are effective the moment they are signed. This can make it much easier for someone to help you in areas you specifically mention, or in general terms, depending upon how the POA is written.
Scott points out that you need to set up these documents while you’re still mentally competent or incapacitated. It may not be possible for someone to understand what he/she is signing. This would invalidate the documents and lead to further complications, time and expense.
NOTE: Your spouse is not automatically entitled to sign your name. This can lead to significant problems. Having a POA, avoids many problems both anticipated and unforeseen.
The Living Will Directive
This document enables people to make healthcare decisions for you, while you’re still living. Many people think is for end-of-life decisions, but it can also be important during medical procedures and in other health-related situations.
Do I Need an Attorney to Dispense with Probate?
Scott explains that there’s actually a document you can use to file to dispense with probate, on your own. The Administrative Office of the Courts provides the form (AOC-830), online. Click here for the form and information.
Scott and his team are happy to help you to file this form. Although, he would have to charge a fee for the assistance. It’s usually a couple hundred dollars and the required filing fees.
Scott advises waiting until after tax season to file the AOC-830. The assets may cause letters or notices to be issued for tax reporting purposes. This can help you to determine what assets may exist. It’s easy to overlook important assets, simply because you didn’t know about then or forgot about them.
It Cost You Nothing to Speak with Scott
Contact Scott Scheynost at (502) 937-5287. This podcast is meant to provide information and is not legal advice. Scott’s principal office is located at 7619 Dixie Highway, Louisville, KY 40258. Co-host Jim Ray is a non-attorney spokesperson. This is an advertisement.
Scott Scheynost is also very experienced in Kentucky workers’ compensation claims. Click here to listen to his HURT AT WORK podcast.