Making Sense of Probate
WHEN a loved one dies, it is a difficult and emotional time for everyone – but the difficulties can be enhanced by having to deal with probate if you are not prepared. Probate is the legal process that determines how the estate of the deceased is wrapped up and transferred to new owners.
Hopefully, your loved one planned ahead and left a will clearly stating their intentions – who is to receive what from their assets. Whether or not they did, the probate process will still take place – things get murkier, however, when there is no will to guide the process.
During probate the court will oversee the authentication of the last will and testament, if written, and the person’s assets located, final bills and taxes settled, and the remainder distributed to the beneficiaries of the will. But the process varies by state, so good legal advice should be sought both when preparing a will and when going through the probate process as there are legal differences from state to state.
This is especially important if the deceased did not leave a will – called dying intestate – as then assets will be distributed by the law of the state rather than the person’s wishes as they were not recorded in the appropriate legal way.
Generally, states require that anyone who has the deceased’s will should file it with the probate court as soon as reasonably possible. Usually the petition or application to open probate is filed at the same time. Some states require the death certificate as well. This part is usually quite straightforward, and many courts have pre-prepared forms to simply fill in and file.
If there is a will, the probate judge will rule if it is valid, which may require a court hearing with notice given to all the named beneficiaries as well as any heirs, who are those people that would inherit by state law if no will was found. They may or may not be the same group of people according to the wishes of the deceased.
Anyone concerned in the process can object to the will entering probate – for example, if it was incorrectly written or they have a more recent version. There is also the chance to object to the executor – the person chosen by the deceased to handle the process.
The legal process may rely on witnesses to prove the will is real, though many wills also are written with ‘self-proving affidavits’ at the time of writing signed by the witnesses and deceased, which is usually taken as evidence by the court. If an affidavit is not attached, witnesses may be required to swear or testify they saw the will being signed.
The judge will also appoint the executor to handle the probate process – usually the person nominated in the will, but this can be objected to or the person may refuse. If there is no will, the court usually errs to the next of kin such a spouse or eldest child, provided they accept. That person is then given documents called ‘letters testamentary’ to give them the power to act for the estate, needed for dealing with banks and the like.
An executor may be required to post bond for this to happen, effectively providing an insurance policy that will cover the estate if the executor makes a big mistake, whether unintentionally or intentionally. This requirement varies very much by state from being virtually optional to compulsory.
The executor then must find all the deceased’s assets to protect them. This could be very simple or quite a detective’s case if the person had assets they had not told anyone about or kept easily located. This could become a much bigger problem as assets are increasingly electronic with no physical paperchase and unknown passwords needed to access emails and accounts. The executor may well need to hunt through extensive documentation such as insurance policies, tax returns and similar.
With property, the executor has to make sure that insurance is kept in place, mortgage payments made, and taxes paid to prevent it being lost to foreclosure. Any other physical assets – especially valuables like jewelry – the executor may literally put them in a safe place for the duration of probate.
Different states have different laws governing death values. Some states appoint appraisers, but others allow one to be chosen. They will evaluate everything the deceased owned and calculate a value for it.
Any creditors need to be found and notified, and many states require a death notice to be placed in a newspaper for the benefit of unknown creditors, though states usually have a time limit for creditors to make claims. An executor can reject claims if thought to be invalid, but the creditor can appeal to the court. Estate funds are used to settle valid creditor claims and final bills, including any final medical expenses.
The executor will also file the last income tax return for the deceased and work out if any estate taxes are due, which will also be paid from estate funds. This may require selling – or liquidating – assets such as a house, and estate taxes are usually due within nine months of death.
Finally, the executor can petition the court to let them distribute what is left in the estate to the people named, in the will. This is only granted when the executor has submitted a full record of all financial transactions throughout the process. If all beneficiaries agree, some states let this be waived, and again some states provide forms to help.
If any minors are beneficiaries, the executor may be required to set up a trust to handle any gifts as minors cannot legally own their own property. For adult beneficiaries, any appropriate deeds and documents need to be drawn up and filed with appropriate official bodies.
The process is broadly similar for cases where the deceased died intestate or the will has been successfully challenged by an heir. The key difference is the court will decide how property is passed to close relatives according to state law.
As outlined, the process can be complex and time consuming which makes it all the more important to help your chosen executor know your wishes and leave things as well prepared as possible for them. Seek good legal advice from an estate planner to make your wishes known and properly recorded. RM Nelson Law is available to help through every step of the process, from creating your will, to helping your loved ones navigate the probate process. Contact us today.
