What is a summary administration probate?
Is a summery administration probate appropriate for you? Watch as Attorney Tom Olsen explains what a summary administration probate is and when it can be a helpful tool to use!
John: Yes. I'm reviewing some of your booklets here that you sent me recently and the first question is on probate. The summary administration, is it still 75,000 for the limit on summary?
Attorney Tom Olsen: Summary administration is an abbreviated probate preceding that can be used under certain circumstances. The advantage is, is that it’s quicker and it’s less expensive. It is available when the decedents, the value of their estate is under $75,000 excluding the home. So, the home plus less than $75,000 and there's no creditors, doctors, hospitals, credit cards.
John: Okay. Next question is on What to Do When a Loved One Dies? I don’t understand the requirement for notify the newspaper with obituary information. What’s the purpose for that?
Attorney Tom Olsen: I’m saying most people notify the newspaper and put an obituary when their loved one passes away. There's no law that requires that, John.
John: Okay. That’s what I wanted to know. I haven’t done that yet. I plan on doing it later. Next question was, “Obtain a written valuation of the decedent’s assets.” Who do you obtain that valuation from?
Attorney Tom Olsen: John, I want to bring the listeners up to speed here if we could. So--
Attorney Tom Olsen: - John is talking about some booklets that I have prepared at my office, and we have several booklets. If you want to get one that we happen to be talking about right now, you can call or text Chrissy at 407-808-8398.
The booklet he's talking about is What to Do When a Loved One Dies. It is a list that tells you things that you need to do, most of those things you can do by yourself, some of those things you might need to hire a lawyer for.
One of those things is, “Obtain written valuation of assets for stepped-up basis.” For what I'm saying is this, the stepped-up basis is a good thing within the internal revenue code. It says that when, for example, mom passes away and her home is worth $200,000 and the children inherit mom’s home, their basis for capital gains tax purposes is the value at the date of mom’s death. Mom dies, home was worth 200,000, they sell it for 200,000, they will pay absolutely no capital gains taxes.
If the kid said, “You know what, we’re not going to sell mom’s home right away. We’re going to own it for a few years and rent it out.” Then they would want to get an appraisal done so that when they do so a few years down the road, they can prove to the IRS what was worth when mom died. So, mom dies, it’s worth 200,000; they hold on to the home for a few years, they sell it for 250,000; the kids will then pay capital gains taxes on their $50,000 profit.