Probate is a court mandated legal process that attempts to distribute the estate of someone who dies. It deals with the validity of wills, administration of estates and sometimes the affairs of minors and persons adjudged incompetent.
Probate is the process by which the legal ownership of a decedent’s property is ascertained and transferred from his/her estate to the designated beneficiaries. The goal of the probate process is to:
- Verify validity of the deceased's will
- Inventory the deceased's property
- Have that property appraised
- Pay deceased's debts and taxes
- Distribute deceased's property
The executor of the deceased's will usually initiates probate proceedings. If there is no will, or no executor is named, the probate court will select an administrator to act as the executor of the will. The administrator is usually the deceased's closest relative or the person that stands to inherit the most.
DUTIES OF THE EXECUTOR
The executor of an estate has several court appointed duties that he or she must comply with. The executor must:
- File papers in local probate court
- Prove the validity of the will
- Provide a list of the deceased's property, debts, and the names of those who stand to inherit
- Give proper notice of death by filing a death certificate
Most States allow a certain amount of property to pass free of probate, or through an expedited probate procedure. Property that passes outside of your will through joint tenancy arrangements or living trusts is not subject to probate.
WILLS & TRUSTS
A will is a written, signed and witnessed statement, made by an individual, that provides specific instructions for the distribution and disposition of a decedent’s property and the care of a decedent’s children.
It essentially dictates your wishes about who gets what, although there are exceptions to what is covered. If you have, a life insurance policy or 401(k) with named beneficiaries, those persons would receive the appropriate distribution. A will must be prepared while you have full legal capacity, so it’s smart to make one even in early adulthood.
If you die without a will - or “intestate” - your estate must be sorted out in probate court, a process that essentially hands your property over to the State for ownership determination and distribution among your legal heirs.
Because intestate rules are complicated and vary state-to-state, probate can cause significant delays and sometimes even default some of your assets to the state. To avoid probate, estate-planning devices should be used – including establishing a “living trust”.
A trust is a legal arrangement in which a person holds the legal title to property for another person. A Living Trust is one created during life, rather than under the terms of a will. The biggest advantage of a living trusts is the avoidance of probate.
Unlike property transferred through a will, which becomes public record once submitted to a probate court, the terms of a living trust can be kept private. It can provide modest protection from creditors as well.
While trusts don’t legally hide property from creditors, its ability to quickly and quietly distribute that property to the beneficiaries can often discourage, if not head off, a creditor’s hunt for property to which they may have a claim.
AVOIDING PROBATE
Depending on your life circumstances, planning to avoid probate may be a wise decision. The two most often cited reasons for avoiding probate are:
- Probate usually ties up property for months, sometimes even a year.
- Probate is costly. Attorney and court fees resulting from probate can take up to 5% of an estate's value.
If you are involved in a probate proceeding, you should consult with an attorney. The right lawyer can inform you of your rights as well as preserve any possible legal remedies you may have. If you wish to avoid probate in administering your estate, the proper estate planning lawyer can also craft a will or trust that is suitable to your situation.
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