What is probate?
Probate is a legal process, which is undertaken after a person’s death where a Court supervises the transfer of assets from the deceased person to his or her heirs or named beneficiaries. Probate is designed to settle the decedent’s Last Will and Testament. If there is a Will, its validity is assessed by the Court through probate. If there is no will, an administrator is appointed to oversee the disbursement of assets.
Is probate always necessary?
Probate can be a time consuming and complex task, if the decedent has left a Will there may be people who wish to contest its validity for various reasons, and the court is responsible to give these people a fair chance to contest. Probate is also necessary to ensure that the Will was indeed written by the decedent and that the decedent was in sound mind when it was written, it is necessary to make sure the will is valid. Also, probate is necessary to ensure the proper transfer of real estate, savings accounts, stocks, bonds, and personal property. Someone must also be appointed to ensure that the decedent’s debts are paid to the appropriate creditors and taxing authorities.
Who is responsible for handling the probate process?
A personal representative or administrator is appointed as part of the probate proceeding. He or she is responsible for managing the estate throughout the process, subject to established probate rules and procedures. In a number of states, the probate court has a significant amount of control over the activities of the personal representative, and requires that he or she obtain permission from the court before certain actions can take place, i.e. sale of real estate.
Where does probate take place and how is it handled?
The original Will is deposited with the Court in the county in which the deceased was a permanent resident at time of death. The process is generally dealt with by probate court in this area or an area where the decedent owned real property.
After an interested person or the executor named in the Will, files a petition for Probate, the Court will generally appoint a personal representative or an administrator to handle the administration. The estate then remains open for a period of months or years. In the first months, creditors of the estate can file claims against the estate ( i.e. debts resulting is last minute illness, taxing authorities, funeral expenses, etc.). Also during this time, the personal representative has to identify and collect all assets of the estate. To do this, the personal representative finds all debts owed to the decedent, property owned, etc. When the time period for creditor’s to file claims has lapsed and all of the assets have been collected, (assuming no problems have arisen), then the personal representative must file a petition with the Court to allow for distribution of all remaining assets to the beneficiaries. The personal representative then files a detailed account with the Court setting forth all monies received and disbursed, how the assets were invested and the proposed plan for distribution. If the plan is approved by the Court the personal representative then divides the assets as instructed in the will or by the state statute.
How long does the probate process normally take?
The probate process can take months or in some instances years; the time period depends on numerous factors. Some of these factors include: the size of the estate, the length and time taken to locate and validate the Will, the time taken to appoint an administrator in the absence of a Will and the length of time taken to find and notify all beneficiaries. In addition, if the Will is contested, the probate process may be tied up for years, but in any event until all matters are resolved.
What are the main duties of a personal representative?
- Determine if there are any probate assets
- Identify, and gather the assets of the deceased
- Appraise and value the estates assets
- Receive payments due to the estate, including dividends, interest and other income ( unpaid salary, vacation pay and other company benefits)
- Set up a checking account for the estate
- Investigate the valididty of all the claims against the estate
- Pay funeral bills, outstanding debts and claims
- Pay all expenses of administrating the estate
- File and pay income and estate taxes
- Figure out who is going to get what and under the will, or state law
- Distribute the remaining property per the instructions provided in the deceased’s will, or state code
- Close the estate and finalize probate
Do we have to go through probate if there is a Will? Why can’t we just distribute the assets as the Will states?
Usually it is necessary to go through the process of probate to ensure that all of the decedent’s legally enforceable debts and taxes are paid as well as the legal beneficiaries and/or heirs receive their share of the estate. Unless the decedent had no assets in his or her name, supervision by the probate court must take place before the property can be legally distributed. Furthermore, when a person dies with a Will the Court generally has to have the chance to allow others to contest the will, and if there are any objections, the Court must determine the validity of the Will. It is also possible that a later Will than the one presented was legally executed or that the Will was made at a time when the decedent was not mentally sound. Furthermore, the Will may have been the result of fraud or it may have been improperly executed. If for some reason the Will is not valid or there are creditor’s claims against the decedent’s estate that have not been paid, the Court oversees Probate so that the rights of interested persons are upheld.
What happens if the personal representative fails to perform his or her duty?
An administrator who fails to perform his or her duties is personally liable for all damages caused in the administration of the estate. Improperly managing the assets of the estate, overpaying claimants, failing to collect claims and money due to the estate, selling an asset without the proper authority and distributing property to the wrong beneficiaries are some areas where liability may arise. This means the personal representative my end up paying for the loss out of his or her own pocket.
How does a trust work?
A trust is an agreement in which a grantor transfers the legal ownership to a person or institution that has the job of managing the transferred property for the benefit of another person. Trusts create a fiduciary relationship between the trustee and the beneficiary. If the trustee does not live up to his or her duties, then the trustee is legally accountable to the beneficiary(ies) for any damages or loss in value.
