A large part of creating your estate plan consists of knowing what will happen in the probate process. Probate is the legal process of dealing with a deceased person’s assets and debt, including the court that oversees it and the assets’ actual handling. The purpose of probate is to make sure a person’s will is honored and any liabilities, like final bills or debt, are taken care of. The process includes locating and valuing their assets to distribute the remainder of the estate to the rightful beneficiaries. It’s crucial to know what will happen in the probate process so that you can plan accordingly, making sure that your heirs know what your final wishes are. Here’s a breakdown of what’s included in the probate process:
- Authenticating the last will and testament
- Appointing the executor (sometimes called a personal representative or administrator)
- Posting bond
- Locating the assets
- Determining date of death values
- Identifying and notifying creditors
- Paying any debts
- Preparing and filing tax returns
- Distributing the estate
- Dealing with “intestate” estates
What Is Probate?
As mentioned above, probate is the legal process of dealing with a deceased person’s assets and debts. It is a court-supervised process that includes everything from authenticating the last will and testament to filing tax returns to distributing the estate. It’s important to know which assets go through probate so that you can properly plan in your will. If you have any minor changes to your will, such as changing the beneficiary of a gift, you can add a will codicil. Otherwise, significant life changes necessitate a new will to avoid any confusion. The probate process itself varies by state because specific laws are in place to determine what’s required to probate an estate. It’s always a great idea to work with an experienced estate planning attorney who can help you with the specific details of your will and assets.
Which Assets Go Through Probate?
It might be overwhelming to consider creating your estate plan, including writing a will, establishing legal directives, reviewing your beneficiaries, researching your state’s estate tax laws, and more. One thing that will help make the process a lot easier is identifying which assets will go through probate. That way, you can take your time deciding who you’d like your major assets to go to once you’re gone, and you can value any items that might be hard to quantify. The deceased’s attorney or representative must list all probate assets with their values, then file the list with the probate court. Some assets, such as bank accounts or property, will be easy to value. While others, like jewelry or antiques, might require an appraisal. Listed below are the assets that you can count on to go through probate:
- Real estate, vehicles, and other titled assets that are owned solely by the deceased person.
- A share of property owned as “tenants in common” with someone else.
- Personal possessions such as household items, including clothing, jewelry, and collections.
What Happens In the Probate Process?
Now that you know what the probate process is and which assets are likely to go through probate, let’s discuss what happens in the probate process itself. Listed below are the steps in the probate process you are likely to encounter if a loved one or relative dies.
Authenticating the Will
Whoever has the deceased person’s will should file it with the probate court as soon as they can. It is sometimes necessary to file the death certificate as well. The probate judge will confirm the validity of the will, sometimes involving a court hearing. Notice of this hearing will be given to all beneficiaries and heirs.
Appointing the Executor
At the same hearing, the judge will appoint an executor who will oversee the probate process and settle the estate. Typically this person is already assigned in the will. They will receive documentation that allows them to act and enter into transactions on behalf of the estate.
The rules regarding posting bonds vary from state to state. Bonds act as an insurance policy that will kick in to reimburse the estate in case the executor commits an error that financially damages the estate or its beneficiaries. Some wills may include provisions noting that this isn’t necessary.
Locating the Assets
The first task of the executor is to take possession of all the decedent’s assets to protect them during the probate process. Sometimes this includes finding hidden assets through tax returns and other documents. The executor can either take control of the assets or ensure they’re in a safe location.
Determining Date of Death Values
This part of the probate process involves determining the date of death values for the assets, which is usually done through account statements and appraisals. In some states, the court will appoint an appraiser, otherwise, the executor can choose someone. They might have to submit a report to the court detailing everything the decedent owned along with its values.
Identifying and Notifying Creditors
All of the decedent’s creditors need to be notified of the death. Some states may require the executor to publish a death notice in the paper to alert unknown creditors. The creditors will then have a limited amount of time to make claims against the estate for money owed. These claims can be rejected if the executor has reason to believe they’re invalid.
In this step of the probate process, valid creditor claims are paid. Estate funds are used to pay any debts left after death and final bills.
Filing Tax Returns
Income and estate taxes need to be filed for the year the decedent died. The terms surrounding estate taxes vary, so the executor will need to determine if the estate is liable for estate taxes. They are usually due within nine months of the decedent’s death.
Distributing the Estate
The final step is to distribute what is left of the decedent’s assets to the beneficiaries who are named in the will. This probate process step typically involves getting the court’s permission, which will include the executor submitting records of all the financial transactions they’ve made throughout the whole probate process. When the will involves bequests to minors, the executor will create trusts to accept possession of these assets because children cannot own their own property.
Dealing with “Intestate” Estates
Intestate estates refer to those where the decedent did not leave a valid will. In these cases, the decedent’s property will go to the closest relatives. This order is typically determined by state law.
Understanding the Probate Process
If you understand the probate process, it will be much easier to create your estate plan and ensure all of your wishes are outlined in your will. When there is a detailed estate plan, the executor’s work is made easier, and beneficiaries don’t have to worry about arguments arising over certain assets. Of course, it is always helpful to consult with an estate planning attorney if you have any questions or concerns about the probate process.