Probate is the procedure through which assets are legally passed. For very large estates, probate can be complex. However, in most cases, it is a formality.
Probate is generally applicable in common law countries (e.g. England, USA, Australia, New Zealand). Civil law countries (e.g. France, Germany, Spain, Italy) follow a different process.
When Does Probate Apply? Steps Involved in Probate Authenticating the Will Appointing the Executor or Administrator Posting Bond Locating the Decedent's Assets Determining Date of Death Values Identifying and Notifying Creditors Paying the Decedent's Debts Preparing and Filing Tax Returns Distributing the Estate
When Does Probate Apply?
Most people think that probate only applies when there is a Will.
However, probate is also applicable when a person dies without a Will and had assets that need to be distributed under intestacy laws (inheritance laws by default, in the absence of a Will). For instance, if the decedent owned an account (such as a retirement account) that named a beneficiary and that beneficiary has passed away before the owner of the account, the account must go through probate so that the funds can be passed to the person legally entitled to them.
Steps Involved in Probate
Authenticating the Will
Most states/countries require anyone who is in possession of a deceased's Will to file it with the probate court as soon as reasonably possible, together with a petition to open probate and the death certificate.
Most courts provide a form to file probate. A court hearing gives all concerned an opportunity to object to the Will being admitted for probate and to the appointment of the executor nominated in the Will to handle the estate.
To determine if the submitted Will is genuine, the court relies on witnesses. Many Wills include so-called "self-proving affidavits" from the witnesses, which this is good enough for the court.
Appointing the Executor or Administrator
The judge appoints an executor, sometimes called administrator. This individual oversees the probate process and settles the estate.
The appointed executor receives "letters testamentary" from the court, which is a fancy way of saying that they receive documentation allowing them to legally act and enter into transactions on behalf of the estate. This documentation is sometimes referred to as "letters of authority" or "letters of administration."
It might be necessary for the executor to post bond before they can accept the letters and act for the estate, although some Wills include provisions stating this is not necessary or the beneficiaries might elect to waive the requirement.
Locating the Decedent's Assets
The executor's first task involves locating and taking possession of all the decedent's assets so they can protect them during the probate process. This involves a fair bit of time and sleuthing. Some people own assets they have told no one about, even their spouses, and these assets might not be delineated in their Will.
In the case of real estate, the executor is not expected to move into the place and remain there throughout the probate process to "protect" it. But they must ensure property taxes are paid, insurance is kept current and any mortgage payments are made to prevent foreclosure so the property is not lost.
The executor might literally take possession of other assets such as collectibles or even vehicles, placing them in a safe location. They collect all statements and other documentation concerning bank and investment accounts, as well as stocks and bonds.
Determining Date of Death Values
Date of death values for the decedent's assets must be determined and this is generally accomplished through account statements and appraisals. The court may appoint appraisers, otherwise the executor chooses someone.
Many jurisdictions require that the executor to submit a written report to the court, listing everything the decedent owned along with relevant value, as well as a notation as to how that value was arrived at.
Identifying and Notifying Creditors
The decedent's creditors must be identified and notified of the death. Some jurisdictions require the executor to publish notice of the death in a local newspaper to alert unknown creditors.
Creditors typically have a limited period of time after receiving the notice to make claims against the estate for any money owed. The exact time period varies.
In some circumstances, the executor can reject claims if they have reason to believe that they are not valid. The creditor might then petition the court to have a probate judge decide whether or not the claim should be paid.
Paying the Decedent's Debts
Valid creditor claims are then paid. The executor uses estate funds to pay all the decedent's debts and final bills, including those that might have been incurred during the final illness.
Preparing and Filing Tax Returns
The executor files the decedent's final personal income tax returns for the year they died. They determine if the estate is liable for any estate taxes, and, if so, file these tax returns as well. Any taxes due are also paid from estate funds.
This sometimes means liquidating assets to raise the money.
Distributing the Estate
When all these steps are completed, the executor petitions the court for permission to distribute what is left of the decedent's assets to the beneficiaries named in the Will. This usually requires permission of the court, which is typically granted only after the executor has submitted a complete accounting of every financial transaction they have engaged in throughout the probate process.
Some jurisdictions allow the estate's beneficiaries to collectively waive this accounting requirement if they are all in agreement that it is not necessary. Otherwise, the executor has to list and explain each and every expense paid and all income earned by the estate. Some jurisdictions provide forms to make this process a little easier.
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This portion of the website is for information only. The statements and opinions are the expression of their author, not of liteWill, and have not been evaluated for accuracy, completeness or changes in the law. Information contained in this article is not a substitute for tax or legal advice.
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