Probate Basics to Help Seniors & Families Plan Ahead

If you need to learn more about probate, unfortunately you may have recently have experienced a death in your family.  By planning ahead you may be able to make just a little easier what is already a difficult time for loved ones.

Disclaimer: We are not attorneys and are not attempting to give legal advice.  Our hope is to provide some basic information so you can decide where more help is needed. We suggest that you contact your own legal adviser to be sure you are fully informed of all options and state regulations.

Probate is the administration of the estate of a person who has passed away and is the process where any claims are resolved and property is distributed under the direction of a will once the will has been verified to be valid or in the event there is no will.  The probate court works with the executor of the will to follow the directions of the will and settle all business of the estate.

The executor is the person who has been designated to carry out the wishes of the will.  If no executor is named, the probate court can name a representative.  This person is usually called the administrator when there is no will.  An executor or administrator can be paid for their services and a probate court can require the executor to get a fidelity bond to protect the estate from mishandling.

The probate process will take time because of the many items that need to be handled in a particular order before assets can be distributed.

• Creditors will have to be contacted.
• A complete inventory of property will have to made.
• Sometimes legal proceedings must occur such as appointing a personal representative.
• Debts and taxes are paid before any disbursements are made to heirs.
• In some states property is dealt with differently.  If it is a homestead property, it is separated from other assets to be dealt with differently according to specific rules.  If property is jointly held, it will revert to the surviving title holder if it is not held as tenant in common.
• Any objections to the estate require time to be filed.  A person can protest the will for a variety of reasons including validity of will, right of executor, identity of the heirs requiring DNA testing and fiduciary accounting of the estate.
• If there are other legal actions pending at the time of the person’s death or arising over the death, these will need to be
  adjudicated.
• Depending on the will, assets or property will need to be sold before disbursement to any heirs.
• Certain taxes such as inheritance taxes, estate taxes or gift taxes need to be determined and paid.  Certain demands for payment such as income tax or administration have to be deducted from the estate prior to disbursement.
• Once all these issues are resolved, the executor/administrator can give heirs any remaining assets according to the will or the state laws if intestate.

What happens if there is no will?

If a person dies intestate, that is without making a will, typically the surviving spouse will receive all assets and joint property without probate.  However, all laws in the state will be followed when disbursing property and assets.  Having a will can reduce uncertainty and complexity during an already tough time.

Items not included in probate

If there was a contract for any of the assets such as a life insurance policy with a named beneficiary, those assets do not enter into probate of the estate.  Another example is when there is a retirement plan that has a beneficiary who receives payment “upon death” of the retiree.

Property that is help in joint ownership with right of survivorship is also not included in probate.  Property that is held in revocable or irrevocable trust is also not included in probate.  This property is distributed separately and subjected to estate taxes.

How long will probate take?

Probate can take several months and as long as a year to finally disburse all assets.  Sometimes it can be costly if the estate is large for administrative and court fees.  In many states, the probate court can release fund to heirs during the time it takes to finalize the process and these will be deducted later.

Can probate be avoided?

Probate can be avoided if an estate is placed in a living trust or if bank assets, IRAs, 401Ks, brokerage accounts are all placed in payable upon death designations or transfer upon death and will therefore pass to the beneficiary.  Property can be placed in joint tenancies with the right of survivorship.  Real estate can be placed in a life estate deed which allows for passing to a named beneficiary.  These legal actions will require fees and should be compared to the cost of probate.  Remember that avoiding probate does not eliminate estate taxes.  All these trusts and other actions are taxable upon death.

You will want to discuss your particular situation with an attorney to help you decide which course of action is best for you and your heirs.

As with other documents such as advance directives, the more prepared your senior loved one is the better for those in the family who need to make decisions about what is desired.  Don’t forget, each state handles wills and probate differently, so be sure to get advice from a trusted source.