What Is Probate And Estate Administration?
When a loved one passes away, his or her estate often goes through a court-managed process called probate or estate administration where the assets of the deceased are managed and distributed. If your loved-one owned his or her assets through a well drafted and properly funded revocable trust, it is likely that no court-managed administration is necessary, though the successor trustee needs to administer the distribution of the deceased’s assets. The length of time needed to complete the probate of an estate depends on the size and complexity of the estate and the local rules and schedule of the probate court.
Every probate estate is unique, but most involve the following steps:
- Filing of a petition with the proper probate court.
- Notice to heirs under the Will or to statutory heirs (if no Will exists).
- Petition to appoint Personal Representative (in the case of a Will) or Administrator for the estate.
- Inventory and appraisal of estate assets by Personal Representative/Administrator.
- Payment of estate debt to rightful creditors.
- Sale of estate assets (as appropriate).
- Payment of estate taxes, if applicable.
- Final distribution of assets to heirs.
FREQUENTLY ASKED QUESTIONS
What happens if someone objects to the Will?
An objection to a Will, also known as a “Will contest” is a fairly common occurrence during the probate proceedings and can be incredibly costly to litigate.
In order to contest a Will, one has to have legal “standing” to raise objections. This usually occurs when, for example children are to receive disproportionate shares under the Will, or when distribution schemes change from a prior Will to a later Will. In addition to disputes over the tangible distributions, Will contests can be a quarrel over the person designated to serve as Personal Representative.
Does probate administer all property of the deceased?
Probate is primarily a process through which title is transferred from the name of the deceased to the names of the beneficiaries.
Certain types of assets are “non-probate assets,” which are not subject to administration by the probate court. These include:
- Property in which you own title as “joint tenants with right of survivorship” or as “tenants by the entirety.” Such property passes to the co-owners by operation of law and does not go through probate.
- Retirement accounts such as IRA and 401(k) accounts where there are designated beneficiaries.
- Life insurance policies where there is one or more designated beneficiaries (other than the insured’s estate).
- Bank accounts with “pay on death” (POD) designations or “in trust for” designations.
- Property owned by a revocable trust. Legal title to such property passes to successor trustees without having to go through probate.
Do I get paid for serving as an Personal Representative?
Personal Representatives are reimbursed for all legitimate out-of-pocket expenses incurred in the process of management and distribution of the deceased person’s estate. In addition, you may be entitled to statutory fees, which vary from location to location and on the size of the probate estate. The Personal Representative has to fulfill his or her fiduciary duties on behalf of the estate with the highest degree of integrity and can be held liable for mismanagement of estate assets in his or her care. It is advised that the Personal Representative retain an attorney and an accountant to advise and assist him with his or her duties.
How much does probate cost? How long does it take?
The cost and duration of probate can vary substantially depending on a number of factors such as the value and complexity of the estate, the existence of a Will and the location of real property owned by the estate. Will contests or disputes with alleged creditors over the debts of the estate can also add significant cost and delay. Common expenses of an estate include Personal Representatives’ fees, attorneys’ fees, accounting fees, court fees, appraisal costs, and surety bonds. These typically add up to 2% to 7% of the total estate value, depending on the size and complexity of the estate. Most estates are settled though probate in about 9 to 18 months, assuming there is no litigation involved.
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