What Is Probate?

 What is probate?

Probate is the process that transfers legal title of property from the estate of the person who has died (the "decedent") to his or her proper beneficiaries.

The term "probate" refers to a "proving" of the existence of a valid Will, or determining and "proving" who one's legal heirs are if there is no Will. Since the deceased can't take it with him, probate is the process used to determine who gets his or her property.

However, a will does not always exist (or is not available) and laws are established in each state to deal with the orderly distribution of assets to those who are entitled to inherit them.

Why is probate necessary?

The primary function of probate is transferring title of the decedent’s property to his heirs and/or beneficiaries. If there is no property to transfer, there is usually no need for probate.

Another function of probate is to provide for the collection of any taxes due by reason of the deceased's death or on the transfer of his or her property.

The probate process also provides a mechanism for payment of outstanding debts and taxes of the estate, for setting a deadline for creditors to file claims (thus foreclosing any old or unpaid creditors from haunting heirs or beneficiaries) and for the distribution of the remainder of the estate's property to ones' rightful heirs.

How long does probate take?

The duration varies with the size and complexity of the estate, the difficulty in locating the beneficiaries who would take under the Will, if there is one, and the particular state law. In some states, small estates may even avoid a formal probate, however the debts must still be paid. The minimum amount of time an estate will likely be open is from six months to a year; often more depending on the complexity of the estate.

If there is a Will contest, or anyone objects to any actions of the Personal Representative, things can really drag out. Some matters have taken decades to resolve.

Who is responsible for the Probate process?

The Personal Representative (sometime also referred to as the "executor" or "executrix" if there is a Will, or the "administrator" or "administratix" if there is no Will) is appointed as part of the probate proceeding and has the responsibility for managing the estate through the proceeding, subject to established probate rules and procedures.

In many states, the probate court has a considerable amount of control over the activities of the Personal Representative, and requires that she or he obtain prior permission of the court before certain actions, such as the sale of real estate or business interests owned by the estate, may take place.

What are the main duties of a personal representative?

The main tasks of a Personal Representative are to:

1.      Determine if there are any probate assets;

2.      Identify, gather, and inventory the assets of the deceased;

3.      Receive payments due the estate, including interest, dividends, and other income (e.g., unpaid salary, vacation pay, and other company benefits);

4.      Set up a checking account for the estate;

5.      Figure out who is going to get what and how much under the Will (if there is no Will, the state’s "interstate succession laws" apply);

6.      Value or appraise the estate’s assets;

7.      Give legal notice to potential creditors (the procedure and deadlines for creditors to file claims vary from state-to-state);

8.      Investigate the validity of all claims against the estate;

9.      Pay funeral bills, outstanding debts, and valid claims;

10.  Pay the expenses of administrating the estate;

11.  Handle various paperwork, such as discontinuing utilities and charge cards, and notifying Social Security, Civil Service, and Veterans Administration of the death;

12.  File and pay income and estate taxes;

13.  Distribute the remaining property in accordance with the instructions provided in the deceased’s Will; and

14.  Close probate.

 Where is Probate Handled?

Probate usually occurs in the appropriate court in the State and County where the deceased permanently resided at the time of his or her death. Such courts go by different names in various states. In many states the court is simply called the Probate Court. However, in some states they go by different names. In New York, for example, the probate court is known as the Surrogate’s Court while in California it is the Superior Court, Probate Division.

The probate court usually handles all the personal property the deceased owned, plus all of the real estate that the deceased owned that is located in that same state.

How long does probate take?

The duration varies with the size and complexity of the estate, the difficulty in locating the beneficiaries who would take under the Will, if there is one, and under state law.

If there is a Will contest, or anyone objects to any actions of the Personal Representative, things can really drag out. Some matters have taken decades to resolve.

 

How much does probate cost?

The cost of probate may be set by state law or by practice and custom in your community.

When all the costs are added up – and the costs may include appraisal costs, executor’s fees, court costs, costs for a type of insurance policy known as a "surety bond", plus legal and accounting fees, probate can easily cost from 3% to 7% of the total estate value, and more. If there is a "Will contest" all bets are off.

 

For a small estate, is there a simple way to handle it?

Some states have what they think are "simplified procedures" to handle certain estates whose value is below certain dollar limits. The limits may be as low as $5,000 or as high as $100,000, depending on the state.

Whether the simplified procedure is available or even appropriate given the particular circumstances is something that a lawyer can discuss with you. For example, if there are debts against the estate, it may make sense to go through regular probate processes.

 

Does all the property have to go through probate?

No. Some process is a must to transfer legal title from the deceased’s own name to his or her beneficiaries or heirs. Most states also allow a limited amount of several types of property to pass to certain beneficiaries free of probate, or through a simplified probate procedure.

Real and personal property owned as a joint tenant passes to the surviving co-owners without going through probate.

Other types of benefits, such as a life insurance policy or annuity payable directly to a named beneficiary bypass probate. Money from IRAs, Keoghs, and 401(k) accounts transfer automatically, outside probate, to the persons named as beneficiaries. Bank accounts that are set up as payable-on-death account (POD for short) or an "in trust for" account (a "Totten Trust") with a named beneficiary also pass to that beneficiary without probate.

If a Living Trust holds legal title to some of your property, that also passes to the beneficiaries without probate. (The Trust is a legal entity which survives you after your death.)