Probate is often a scary word for people when discussing estate plans. And it’s often talked about as something to avoid. While there are some scenarios which allow an estate to greatly streamline probate through the strategic usage of trusts, payable-upon-death and transferable-upon-death accounts,as well as beneficiary designations and joint ownership with right of survivorship, the vast majority of estates will still pass through probate court.
What is probate?
Probate simply refers to the legal process through which a deceased person’s estate is properly administered and distributed, with or without a will. The process is necessary for validating the will, paying any debts, and legally transferring property to heirs.
Starting the Process
Typically, the named Personal Representative of the will initiates the probate process by submitting the will and a petition to open probate with the local probate court in the county of the deceased’s residence. If there is no will, the process can be started by a family member or even a creditor. The court then appoints the Personal Representative and issues Letters of Testamentary or Letters of Administration, which grant legal authority to act on behalf of the estate.
Notification of Heirs, Beneficiaries, and Creditors
All beneficiaries named in the will, any living legal heirs, and any known interested parties are notified of the probate administration. A notice is published in the local newspaper, and known creditors are directly notified. This opens a statutory window, typically a few months, during which creditors can step forward and lay claim to any debts owed by the estate. This also gives time for any unknown heirs or other claimants to come forward.
Estate Asset Inventory and Management
Next, the Personal Representative locates all bank accounts, real estate, vehicles, investment portfolios, personal belongings, etc. and begins appraisals of worth. Professional appraisers may be required to provide valuations of real estate, high-value art, or business interests. Real estate must be secured and maintained throughout the process so that insurance policies remain active and other physical assets are protected from loss or theft.
Clearing up Debts, Taxes, and Expenses
Throughout the process, the estate will be responsible for settling any valid claims from creditors such as credit cards, medical bills, and personal loans, which are paid in order of priority as established by the state law. Final individual tax returns need to be filed, and in some cases, an estate income tax return may be necessary if the estate generated any income while open. Court and attorney fees will also be paid out of the estate funds.
Final Asset Distribution and Closing the Estate
Once outstanding debts are settled, the Personal Representative may need to provide a comprehensive accounting of all financial transactions that occurred during the probate process and generate an accurate assessment of the remaining assets in the estate. A final petition is then filed to close the estate and distribute the remaining assets.
Frequently Asked Probate Questions:
How long does probate take? This depends entirely upon the complexity of the estate, whether there was a will or not, testate vs. intestate, if the will is contested, and if there are any other added complexities. But for an average uncontested estate with all paperwork in order, probate can take anywhere from a few months to over a year. Recall that a tax return will likely need to be filed for the decedent.
How much does it cost? Court costs, attorney fees, and sometimes Personal Representative fees are the main costs of probate. These will again depend on the level of complexity and for attorney fees, the amount of time spent on the case.
Can probate be avoided? Yes, but it takes planning. There are ways to bypass the court system entirely, but careful and deliberate planning is required. This typically requires leaving all assets to a trust before death. (See our post on Revocable Trusts.)
What happens if a will is contested? A contested will (wherein an individual has come forward to challenge the directions left in the will) turns the probate process into a lawsuit and follows the traditional path of a lawsuit (discovery, mediation, and sometimes trial). A legal challenge must be based on legal grounds (such as lack of mental capacity, undue influence, fraud, or improper execution) and be posed by someone with legal standing (usually limited to family heirs or beneficiaries of a prior will).
Seek Professional Advice
Probate can seem daunting, but it’s actually a highly structured process designed to ensure fairness and legal compliance. And you don’t have to go it alone. The estate planning attorneys at Snow Atkinson Griess, LLC are here to help you navigate the process.