Probate: Exempt Property & Family Allowance
By Douglas A. Turner, Esq. • Apr 13th, 2007 • Category: Estate Planning & Colorado ProbateToday I am going to write about something mundane and boring – unless of course you find yourself in this situation. In that case, it could net you about $30,000.00+. The topic is the exempt property allowance and family allowance.
The Exempt Property Allowance and the Family Allowance
When a person dies and a probate proceeding is commenced, certain payments and expenses have priority over the others. Right at the top of that list is the exempt property allowance and the family allowance.
Exempt Property: Priority Over all Claims Against the Estate
The decedent’s surviving spouse is entitled to exempt property from the estate in the amount of $26,000.00. If there is no surviving spouse, the decedent’s dependent children are entitled to the same exempt property. Rights to exempt property have priority over all claims against the estate, except claims for the costs and expenses of administration, and reasonable funeral and burial, interment, or cremation expenses. This is in addition to any benefit passing to the surviving spouse or dependent children under the will.
Family Allowance: Additional Benefit
In addition to the right to exempt property, the decedent’s surviving spouse and minor children who the decedent was obligated to support and children who were in fact being supported by the decedent are entitled to a reasonable allowance in money out of the estate for their maintenance during the period of administration.
Family Allowance in an Inadequate Estate
The family allowance may not continue for longer than one year if the estate is inadequate to discharge valid claims against the estate. Like the exempt property allowance, the family allowance is exempt from and has priority over all claims except claims for the costs and expenses of administration, and reasonable funeral and burial, interment, or cremation expenses. The family allowance is in addition to any benefit passing to the surviving spouse or dependent children under the will. The amount of the family allowance can vary greatly from one estate to the next.
In an estate that has more bills to pay than money to pay them with, the exempt property allowance and family allowance can divert money to the surviving spouse and dependent children. However, these allowances must be requested within approximately six months from date of death. Failure to timely make the request terminates the right.
Exercising the Right for Exempt Property and Family Allowance
Many surviving spouses and dependent children never make the election to take the exempt property and family allowances. They assume that there will be enough money to pay all the bills and then distribute the remainder to them. This can be a mistake. On occasion, expenses end up being much higher than expected. As the saying goes, stuff happens. Making the request for these two allowances should always be considered.
The exempt property and family allowances can be used strategically when a spouse or dependent children are not provided for in the deceased’s will or only receive part of the estate. For example, in a second marriage situation, the deceased may have left his estate to children from a prior relationship. Absent a prenuptial agreement, the surviving spouse can exercise her right to the two allowances netting $30,000.00 or more. This is why a prenuptial agreement is always advisable for a married couple, especially those in second marriages. The right to these two allowances is typically waived in the prenuptial agreement.
The exempt property allowance and the family allowance exist to provide support for a surviving spouse and dependent children. Exercising the right to these allowances should always be considered, even in estates with significant assets.
Douglas A. Turner, Esq..
This column is not legal advice nor does it create an attorney-client relationship with the reader. Due to limited space, complex legal concepts and rules may be stated in terms of general concepts.
Based on 2007 Colorado and Federal law. Consult legal counsel before acting on any information contained in this column.
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Nice article about the “Family Allowance” rule. Are the funds utilized under the allowance exempt from probate?
Under what condition do the courts grant “Extraordinary fees” to a probatge attorney?
Are the Family Allowances deducted from the probate account before the attorney takes the California - assigned percentage fee?
If a house is appraised at $175,000 and sells for $130,000…. and mortgages subtracted were about $70K…
is it appropriate for the attorney to get have the remaining $60K? (The house was the only item in probate).
What happens to the $2,000 ramaining in excrow for the next year? heh! If I ask the attorney by phone he will deduct another $350 and let me guess.
Ok, the REAL question… can I get the executor removed for any reason during the last year of escrow time after the probate case is essentially closed? — The executor cashed the surviving spouse’s death benifit check from Social Security among other nicities.
If I ask the probate attorney to fire the executor or replace… they said the executor was their client… not us.
Is that true?
Our complaints to the probate court were returned “without reading”.
Thanks for your comments back.
Greg:
We cannot give legal advice in a public forum. If you would like to set up an appointment to discuss your legal concerns, please give us a call.
Douglas Turner
I’ve seacrched Google for information related to any fees that an attorney can charge related to the probate of an estate.
I managed to find court related fees, but nothing that relates attorney’s fees. If could provide that information or direct me to a site that has same that would be very helpful.
Sincerely,
Bonnie S. Aborne.
Is the Family Allowance limited only to the surviving spouse, and children who are not adults or othewise self-sufficent? Thanks.
Brian:
Here are the statutes:
15-11-403. Exempt property.
The decedent’s surviving spouse is entitled to exempt property from the
estate in the form of cash in the amount of or other property of the estate
in the value of twenty-six thousand dollars in excess of any security
interests therein. If there is no surviving spouse, the decedent’s
dependent children are entitled jointly to the same exempt property. Rights
to exempt property have priority over all claims against the estate, except
claims for the costs and expenses of administration, and reasonable funeral
and burial, interment, or cremation expenses, which shall be paid in the
priority and manner set forth in section 15-12-805. The right to exempt
property shall abate as necessary to permit payment of the family
allowance. These rights are in addition to any benefit or share passing to
the surviving spouse or dependent children by the decedent’s will, unless
otherwise provided, by intestate succession, or by way of elective-share.
15-11-404. Family allowance.
(1) In addition to the right to exempt property, the decedent’s surviving
spouse and minor children who the decedent was obligated to support and
children who were in fact being supported by the decedent are entitled to
a reasonable allowance in money out of the estate for their maintenance
during the period of administration, which allowance may not continue for
longer than one year if the estate is inadequate to discharge allowed
claims. The allowance may be paid as a lump sum or in periodic
installments. It is payable to the surviving spouse, if living, for the
use of the surviving spouse and minor and dependent children; otherwise
to the children, or persons having their care and custody. If a minor
child or dependent child is not living with the surviving spouse, the
allowance may be made partially to the child or his or her guardian or
other person having the child’s care and custody, and partially to the
spouse, as their needs may appear. The family allowance is exempt from and
has priority over all claims except claims for the costs and expenses of
administration, and reasonable funeral and burial, interment, or
cremation expenses, which shall be paid in the priority and manner set
forth in section 15-12-805.
(2) The family allowance is not chargeable against any benefit or share
passing to the surviving spouse or children by the will of the decedent,
unless otherwise provided, by intestate succession, or by way of
elective-share. The death of any person entitled to a family allowance
terminates the right to receive an allowance for any period arising after
his or her death, but does not affect the right of his or her estate to
recover the unpaid allowance for periods prior to his or her death.
Source: L. 94: Entire part R&RE, p. 996, § 3, effective July 1, 1995.
Editor’s note: This section was contained in a part that was repealed and
reenacted in 1994. Provisions of this section, as it existed in 1994, are
similar to those contained in 15-11-403 as said section existed in 1993,
the year prior to the repeal and reenactment of this part.