When a loved one passes away, his or her estate often goes through a court-managed process called probate or estate administration where the assets of the deceased are managed and distributed. The appropriate probate procedure must be followed if assets are transferred pursuant to a Will or if the deceased did not make provisions and passed away intestate. However, if your loved-one owned his or her assets through a well drafted and properly funded Trust, it is likely that no court-managed administration is necessary, though the successor trustee will need to administer the Trust and distribute Trust assets according to the terms set forth in the Trust document.
Where your loved one has used a Will to transfer assets, the length of time needed to complete the probate process depends on the size and complexity of the estate and the local rules and schedule of the probate court. The length of time to complete the administration of a Trust also varies. The length of time involved with Trust administration depends, in large part, upon the terms of the Trust instrument that your loved ones designed. Some Trusts are designed to immediately distribute assets to beneficiaries, while others include provisions that require ongoing administration to protect beneficiaries from creditors, ensure children are old enough to properly manage assets, or to accomplish other goals that were important to your loved one.
FREQUENTLY ASKED QUESTIONS
What happens during probate?
The probate process is a public procedure that takes place in court. The court determines whether the Will presented to it is valid and whether it is your final decision regarding how you want tour assets distributed on your death. The court also confirms the person you appointed to administer your estate. This person may also be called an executor or personal representative. Your executor is responsible for gathering your assets, paying your outstanding debts, preparing and paying estate and personal taxes, distributing property to beneficiaries as directed in your Will, and preparing a record or accounting, for all of these activities.
If you die without preparing a Will you are said to be intestate. If you pass away intestate, the government applies its own rules regarding who inherits your property and how much they will receive. If you pass away intestate, you lose the power to determine what happens to your assets on your death.
Every probate estate is unique, but most involve the following steps:
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Filing of a petition with the proper probate court.
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Notice to heirs under the Will or to statutory heirs (if no Will exists).
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Petition to appoint Executor (in the case of a Will) or Administrator for the estate.
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Inventory and appraisal of estate assets by Executor/Administrator.
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Payment of estate debt to rightful creditors.
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Sale of estate assets.
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Payment of estate taxes, if applicable.
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Final distribution of assets to heirs.
What happens if someone objects to the Will?
An objection to a Will, also known as a “Will contest” is a fairly common occurrence during the probate proceedings and can be incredibly costly to litigate.
In order to contest a Will, one has to have legal “standing” to raise objections. This usually occurs when, for example children are to receive disproportionate shares under the Will, or when distribution schemes change from a prior Will to a later Will. In addition to disputes over the tangible distributions, Will contests can be a quarrel over the person designated to serve as Executor.
Does probate administer all property of the deceased?
Probate is primarily a process through which title is transferred from the name of the deceased to the names of the beneficiaries.
Certain types of assets, called “non-probate assets,” do not go through the probate process. Depending upon how title is held and who the designated beneficiaries are, this may include:
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Property in which you own title as “joint tenants with right of survivorship” (JTWROS). Such property passes to the co-owners by operation of law and do not go through probate. Note that JTWROS is distinct from property where property is titled “joint tenants.”
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Retirement accounts such as IRA and 401(k) accounts.
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Life insurance policies.
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Bank accounts with “pay on death” (POD) designations or “in trust for” designations.
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Property owned by a trust.
Do I get paid for serving as an Executor?
Executors are reimbursed for all legitimate out-of-pocket expenses incurred in the process of management and distribution of the deceased estate. In some situations, the Executor may also receive an additional fee. The Executor has to fulfill his or her fiduciary duties on behalf of the estate with the highest degree of integrity and can be held liable for mismanagement of estate assets in his or her care. It is advised that the Executor retain an attorney and an accountant to advise and assist him with his or her duties.
How much does probate cost? How long does it take?
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a Will and the location of real property owned by the estate. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include executor fees, attorney fees, accounting fees, court fees, appraisal costs, and surety bonds. Most estates are settled though probate in about 9 to 18 months, assuming there is no litigation involved and no unusual circumstances arise. It is important to note, though, that in situations where probate assets, such as real estate, need to be sold in order to close the estate, market conditions may prolong the probate period. |