Sometimes when one spouse dies, the other spouse does not do anything to probate their deceased spouse’s estate (which is commonly intestate), but the surviving spouse decides that now he/she needs a will. This article is to discuss some simple things that can be done to clean up the deceased spouse’s probate estate at the same time the surviving spouse’s Will is drawn up.
Begin by identifying and listing all of the decedent’s and client’s significant property (real estate, vehicles, etc.) and its ownership. Married couples in Wyoming can own as Tenants by the Entirety, which has a right of survivorship and is not a probate asset (property owned as husband and wife). If the surviving spouse comes to you, it is simple to draft and record (with the County Clerk where the real property is located) an Affidavit of Survivorship so that it will be solely in the surviving spouse’s name.
Property owned as Joint tenants with right of survivorship is also not a probate asset, and you can record an Affidavit of Survivorship to change the ownership. If property is held by a Trust, it is not a probate asset. Life insurance, retirement accounts, 401(k)s, IRAs, etc. usually have beneficiary designations on them. Those assets then pass to the beneficiaries without probate and are not probate assets, but sometimes clients need help collecting the proceeds. It can be particularly helpful to call such companies while the client is on speaker phone in your office with you, because they generally will not talk to anyone other than a designated beneficiary.
If you need to do a probate for the spouse’s share (i.e., solely owned by the deceased spouse, owned as tenants in common), you can do a small estate/summary probate if the total value of the probate estate located in Wyoming is $200,000.00 or less (minus liens and encumbrances, such as a mortgage). Wyo. Stat. 2-1-201. The $200,000.00 only includes the size of the probate estate. So if there are assets with beneficiary designations, transfer on death deeds, etc., it is very often possible to have estates with many more assets that can be done through summary distribution because many of the assets are not subject to probate.
An Affidavit of Distribution for personal property (vehicles, bank accounts, checks to the deceased spouse that the client cannot cash) under Wyo. Stat. 2-1-201 has to be recorded with the county clerk. It must state that the estate’s value is less than $200,000.00, that it has been at least 30 days since the decedent died (you will need a death certificate to attach), that no application for a personal representative is pending or has been granted in Wyoming, and that the person making the Affidavit has a right to the property being claimed. Wyo. Stat. 2-1-205 applies to personal or real property. The person making the Affidavit (can be any or all of the people who are entitled to distribution of the property) has to swear to the same facts listed and a sworn report of value by a person who has no legal interest in the estate must be attached for real property (have them get a Comparative Market Analysis, and then ask the realtor to sign an Affidavit). The small estate Affidavits can be done all together with real and personal property and filed in the District Court, or separately for real and personal property or just personal property with the County Clerk if there is no real property.
For Summary Distribution of real property, the Petition for Decree of Distribution must be published once a week for two consecutive weeks. It also must be sent by first class mail to the last known address (with a copy of the Petition) to the decedent’s surviving spouse and to all other distributees, as well as any reasonably ascertainable creditors. Notice must be mailed no later than ten days after the date of the first publication of the notice. It is also important to mail notice to the State department of health in case the decedent or a predeceased spouse was a Medicaid recipient. When the process is completed, a copy of the Decree of Distribution is recorded in the County Clerk’s office.
It is important to note, and clients are sometimes dismayed to learn, that Wyo. Stat. 2-4-101 provides that if there was no will and the decedent was married and had children (or grandchildren if any of the decedent’s children are deceased), 50% goes to the husband or wife, and 50% goes to the surviving children and descendents of children. If the decedent was married and had no children (or descendents of a child), the property goes 100% to the surviving spouse.
If property is held by a Trust, it is usually a fairly simple matter to help the client continue to manage the assets. In short terms, carefully review the Trust document and determine what is to happen—i.e., split into multiple Trusts (i.e. survivors, marital, family, etc.). Determine who is to be the new Trustee and prepare a new Certificate/Affidavit of Trust. Your client will need an EIN if the Settlor/Grantor’s Trust makes it irrevocable on death and your successor Trustee needs to administer it. Application for Employer Identification Number needs to be filled out and can be downloaded from the IRS website (www.IRS.gov). If the Trust needs to be distributed, prepare a new Certificate/Affidavit of Trust for the successor Trustee. Do a Notice of Intent to Distribute pursuant to Wyo. Stat. 4-10-506. Publish the Notice twice one week apart in a newspaper of general circulation, and do an Affidavit of Mailing as the attorney to all Trust beneficiaries and known or reasonably ascertainable creditors. Sometimes, a Summary Distribution probate is appropriate in a Trust administration to transfer assets that were left out of the Trust (i.e. bank accounts, vehicles).
The decedent’s income taxes for the year of his/her death (final 1040) must be filed on the usual due date (approx. April 15) to cover the period of January 1st to the date of death in the preceding year. It can be a joint return if the decedent has a surviving spouse. In that case, the return would include the decedent’s income and deductions (up to death) and the spouse’s income and deductions for the year.
In sum, looking at the marital property as a whole before drafting a will for the surviving spouse often reveals simple things that should be done before the surviving spouse completes his/her will, and may help spot issues that would be more complex to deal with down the road.