What is Probate?

Probate is a court process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under the valid will.

Creditors need to be notified and legal notices published. Trustees need to be guided in how and when to distribute assets and how to take creditors rights into account. A Petition to appoint an Executor or Administrator.  There are time factors involved in filing and objecting to claims against the estate.  Real estate may need to be sold, and Estate taxes must be considered. Other assets may simply need to be transferred from the decedent to his or her heirs. At every step, expert knowledge and advice will help the process go smoother with as little extra stress as possible.

It is worth considering that:

  • Some property never passes through probate.  It might be like insurance and pass by contract or a “payable on death” account at a bank.  Or it might pass by deed as in the case when two people own a house jointly. Generally, property held in a trust created during the grantor’s lifetime also avoids probate. In these cases, no court action is involved and the property is distributed privately, subject to estate taxes.
  • For property that is in probate, the Executor[1] must inventory the property.
  • Next, the Executor pays the debts and taxes.
  • Finally, the Executor distributes what is left to the beneficiaries, as directed by the will or, if there is no will, according to state law.
  • Executors must abide by their fiduciary duties, such as a duty to keep money in interest bearing account and to treat all beneficiaries equally.
  • Probate generally lasts several months, and often over a year before all the property is distributed.

Will Contests involve a direct challenge to the validity of the will, a challenge to the status of the person serving as personal representative, a challenge as to the identity of the heirs, and a challenge to whether the Executor is properly administering the estate.  Steve has successfully lead will contests and successfully defended against them.   Properly drafted and executed documents can avoid will contests, and that is the ideal.

Avoiding Probate

  • One of the many ways to avoid probate is to execute a living trust. Since a probate is a public process, a living trust shields private affairs of the deceased and the heirs from public scrutiny.
  • Probate can also be avoided by setting up P.O.D (paid on death) designations on bank accounts and T.O.D (transfer on death) on brokerage accounts, 401ks and IRAs that pass automatically to designated beneficiaries.
  • The key to avoiding probate is having named beneficiaries on all assets, as is the case for life insurance. A common error in life insurance is naming the insured’s estate as the contingent beneficiary. Doing so will place the proceeds from that policy into probate.
  • Avoiding probate does not eliminate estate taxes.

[1] It could be an “administrator” also.  Where it says “Executor” above it should be taken to mean “Executor or Administrator”

Posted in Estate Planning, Probate, Taxes.

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