Probate

The Probate Process—Ensuring the Orderly Distribution of Your Estate

Through the probate process, the probate court oversees the orderly distribution of an estate. If the deceased had a will, the court will confirm the validity of the will and ultimately govern the distribution of assets in accordance with the wishes expressed in the will. If the deceased died without a will, or without any other estate planning measures in place, the court will ensure that the estate is distributed according to the provisions of state laws, known as “intestacy laws.”

The Probate Process

If the decedent had a will, it will most likely name an executor—the person tasked with taking the will through the probate process. Even though the will specifies an executor, the appointment of the executor must be approved by the probate court. If the will does not name an executor, or if the named executor is deceased or otherwise unavailable, the court will appoint an executor.

Once the executor is appointed, the following steps occur:

• The executor must complete and submit an accounting of the debts and assets of the estate The executor must provide public notice of the probate process, so that any party with a potential claim may file with the court. State statutes specify a limited period during which a creditor may file a claim. If a claim is not filed within that period, it is typically lost forever.
• The executor must make arrangements to pay all final debts of the estate (deceased)
• The executor must arrange for the filing and payment of all estate taxes
• The executor must distribute any remaining assets in accordance with the provisions of the will

Because of the many requirements involved, the probate process can take six months to one year or more. Most states, however, allow small estates to pass through probate in a simplified process that is less expensive and less time-consuming.

A probate matter may be contested or uncontested. Parties named in the will, and individuals who stand to inherit some part of the estate if the will is found invalid, are generally given an opportunity to object to a will. The most common objections involve allegations that:

• A beneficiary did not receive his or her fair share
• The deceased did not have the capacity to make the will
• The deceased revoked this will under the terms of a subsequent estate planning document
• The will was forged, or was the product of fraud or misrepresentation
• The deceased was coerced into making the will, or was a victim of undue influence

Taking an Estate Through the Probate Process

As a general rule, the executor is responsible for completing the probate process. In most instances, the executor will hire an attorney to assist with his or her duties, take care of the necessary court filings and handle legal disputes.

An executor has the following duties:

• Notify potential heirs of the existence of the will. Notice is typically made by registered mail and by notice published several times in a local newspaper approved by the court.
• Obtain a court order granting access to any safe deposit box—the box may be opened in the presence of a bank employee, and the items in the box will be inventoried
• Make a list of assets to be distributed
• Obtain property appraisals, if necessary
• Determine and notify potential creditors
• Provide known creditors notice of the probate case by mail and also publish notice in a local newspaper.
• Make a list of debts and taxes to be paid
• Settle disputes regarding any claims brought by heirs, or creditors
• Resolve all tax issues
• Prepare an accounting of assets, debts, taxes and the remaining assets available to heirs, including the amount to be paid to each heir
• Distribute assets.

Assets Not Subject to Probate

Certain assets may not be subject to probate, depending on how they were legally held. For example, any property held jointly with others –real property, bank accounts, etc.—will generally not go through probate, but will immediately become the property of the joint owners. Furthermore, property held in trust does not go through the probate process. In addition, life insurance proceeds are generally not considered part of the probate estate.

Avoiding Probate

The probate process can be an expensive and time consuming ordeal. As a general rule, the attorney handling the estate takes a percentage of the net worth of the estate…usually anywhere from seven to ten percent.

The most effective way to avoid probate is to create a trust and put all property into the trust. The probate process governs only the assets owned by the decedent. Because a trust is a separate legal entity, property put into the trust is no longer the property of the decedent. The decedent only had use of the property in accordance with the terms of the trust.

You can also avoid probate by jointly titling assets with another person. For example, if you open a bank account jointly with a family member or friend, the funds in that account will pass directly to the joint owner upon your death, and will never be subject to probate.