When someone passes away, their estate will need to go through probate. Estate administration rules vary between states, but probate usually involves resolving the decedent’s financial obligations and transferring assets to beneficiaries or heirs before closing the estate.
How does probate work, how much time should it take, and how can families avoid it? Let’s look into the basics.
Probate: The Definition
Probate, or estate administration, means closing a deceased person’s estate. “Estate” refers to the total of the decedent’s property, including bank accounts, stocks and bonds, IRAs, and real property. Families or representatives typically initiate probate soon after the decedent’s passing.
Probate officially transfers the deceased person’s assets to beneficiaries or heirs, either following the decedent’s will or according to the state’s intestacy laws. The process also allows creditors to make valid claims against the estate before it closes.
Courts oversee the probate process to make sure it complies with state laws. It’s possible to handle probate without a lawyer, but hiring legal help may be wise if the estate is large and complex or if inheritance disputes arise.
How Long Should Probate Take?
Formal probate can take several months to a year or more. Several factors may influence the length of probate. For instance, comparatively small, straightforward estates will be quicker and easier to settle than complex estates with holdings across several states. A skilled, hardworking executor can potentially speed up the process.
In contrast, if one of the beneficiaries contests the will’s validity and starts litigation, probate can drag on for years. Disputes over the executor’s appointment may also delay probate.
Probate With vs. Without a Will
Probate is usually faster and easier if the decedent leaves a valid will that appoints a capable executor and specifies what happens to all assets that must undergo probate.
If the deceased person didn’t make a will, the court handling the probate case appoints an executor (known in some states as a personal representative) to handle the estate administration. The assets will pass to heirs according to intestate succession laws, which differ by state.
Filing for Probate
To start probate, someone, like the estate executor or one of the beneficiaries, must file a court petition. Usually, the court in the decedent’s last county of residence will handle probate, but probate may also take place in the county where the deceased person held most of their assets. Some states have designated probate courts, while county courts are responsible for probate in others.
Following the petition, the court will hold a hearing to decide whether the will (if there is one) is valid and enforceable. If the court accepts the will, it will also approve the person the decedent had appointed as the executor.
The executor will then receive testamentary letters that give them the authority to handle the estate, including paying taxes, fees, and bills, managing assets, and using estate funds to settle debts.
Is It Possible To Simplify Probate?
Different states make various provisions to simplify probate by meeting certain criteria. Informal probate, or small estate administration, typically applies to estates worth below a certain threshold and not in debt. Some states limit the number of heirs in informal probate.
Informal probate typically doesn’t involve a court petition or hearing. Instead, the executor or family uses documents like a small estate affidavit to transfer property to its new owners.
Which Assets Are Exempt From Probate?
Even when an estate needs to undergo formal probate, it’s possible to keep some assets out of probate and instead have them pass directly to the people meant to receive them.
For instance, any jointly owned property, like a family home in both spouses’ names, automatically passes to the surviving co-owner. Payable-on-death accounts, transfer-on-death deeds for real estate and motor vehicles, and insurance policies with designated beneficiaries are exempted from probate.
Another effective method of keeping property out of probate is placing it in a revocable living trust. When the owner sets up such a trust, they can still access and manage assets as usual during their lifetime. Once they pass, a trustee distributes assets to beneficiaries according to the trust terms.
What Does the Probate Process Involve?
The person who assumes executor responsibilities has a fiduciary duty to act in the best interest of the beneficiaries. Executors are usually entitled to compensation for the effort they put into settling the estate, which involves the following steps.
Inventorying and Securing Assets
The executor needs to inventory, valuate, and secure any assets the decedent owns. The court may request a full list of these assets.
Notifying Beneficiaries and Creditors
The executor must let any beneficiaries named in the will, or any heirs, know that the estate is under probate. They must also notify creditors of the decedent’s passing so they can issue claims within the state-mandated timeframe.
Estate Management
Probate can take months or even years. During this time, the executor must manage the estate. This may involve anything from paying utility bills and insurance to fixing a leaking roof and making various business decisions.
Paying Debts, Taxes, and Bills
The executor will also file taxes on behalf of the estate and use estate funds to pay any outstanding state or federal taxes. They should also pay any valid debts, bills, attorney fees, and other expenses related to estate administration.
Liquidating and Transferring Assets
Once the executor clears the estate’s financial obligations, they can transfer assets to beneficiaries or sell assets and transfer the proceeds according to the decedent’s will. This step completes estate administration and ends probate.
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Waiting for probate to conclude can be an issue if you need your inheritance right now. At Rockpoint Probate Funding, we offer quick, risk-free funding against your pending estate portion, with no credit or collateral requirements. Apply now, receive a cash advance as soon as today, and repay when you collect your inheritance.
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