Probate Law Firm Dothan
What Is Probate?
The term probate refers to a legal process in which the validity and authenticity of a will are determined. Probate also refers to the general administration of a deceased person’s will or the estate of a deceased person without a will. After an asset-holder dies, the court appoints an executor named in the will or an administrator (if there is no will) to administer the process of probate. This involves collecting the deceased’s assets to pay any liabilities that remain on their estate and to distribute the assets to beneficiaries.
- Probate is the legal process for reviewing the assets of a deceased person and determining inheritors.
- Probate proceedings typically focus on the existence, authenticity, and validity of a will.
- Probate can be initiated with or without a will.
- A proceeding is usually essential when a deceased person’s remaining estate is of high value even when there is a will.
- Individuals can avoid exorbitant probate costs and complexities by having an easily authenticated will or using investment vehicles that do not require probate.
How Probate Works
Probate is the analysis and transfer administration of estate assets previously owned by a deceased person. When a property owner dies, their assets are commonly reviewed by a probate court. This court provides the final ruling on the division and distribution of assets to beneficiaries. A probate proceeding will typically begin by analyzing whether or not the deceased person has provided a legalized will.
In many cases, the deceased person has established documentation, which contains instructions on how their assets should be distributed after death. However, in some cases, the deceased does not leave a will. There are special circumstances that occur with both situations that we’ve listed below.
Probate with a Will
A deceased person with a will is known as a testator. When a testator dies, the executor is responsible for initiating the probate process. The executor is typically a family member. The will can also provide details on a specified executor.
A will typically designates a legal representative or executor approved by the court. This person is responsible for locating and overseeing all the assets of the deceased. The executor has to estimate the value of the estate by using either the date of death value or the alternate valuation date, as specified by the Internal Revenue Code (IRC).1
Most assets that are subject to probate administration come under the supervision of the probate court in the place where the decedent lived at death. The exception is real estate. Probate for real estate may need to be extended to any counties in which the real estate is located.
The executor also has to pay off any taxes and debt owed by the deceased from the estate. Creditors usually have a limited amount of time (approximately one year) from the date of death to make any claims against the estate for money owed to them. Claims that are rejected by the executor can be taken to court where a probate judge will have the final say on whether or not the claim is justified.
The executor is also responsible for filing the final, personal income tax returns on behalf of the deceased. Any estate taxes that are pending can also come due within one year from the date of death. After the inventory of the estate has been taken, the value of assets calculated, and debts paid off, the executor will then seek authorization from the court to distribute whatever is left of the estate to the beneficiaries.2
If a deceased person’s estate is insolvent, which means that their debts outweigh their assets, an administrator will likely choose not to initiate probate. In general, individual states may have their own rulings on a statute of limitations for the processing of a will through probate. States can also have thresholds for probate filings.
Probate Without a Will
When a person dies without a will, he is said to have died intestate. An intestate estate is also one where the will presented to the court has been deemed to be invalid. The probate process for an intestate estate includes distributing the decedent’s assets according to state laws. If a deceased person has no assets, probate may not be necessary.
In general, a probate court proceeding usually begins with the appointment of an administrator to oversee the estate of the deceased. The administrator functions as an executor, receiving all legal claims against the estate and paying off the outstanding debts.
The administrator is tasked with locating any legal heirs of the deceased, including surviving spouses, children, and parents. The probate court will assess what assets need to be distributed among the legal heirs and how to distribute them. The probate laws in most states divide property among the surviving spouse and children of the deceased.
Asset transfer to the government is known as escheatment. States do typically have a time frame for the claiming of any assets by an heir who may step forward.
Spouses as Joint Property Owners
Community property laws can recognize both spouses as joint property ownersin an intestate proceeding. In effect, the distribution hierarchy typically starts with the surviving spouse. If unmarried or widowed at the time of death, assets are usually divided among any surviving children. After a spouse and children are considered, other relatives may also be deemed appropriate for distribution.
Close friends of the deceased will not normally be added to the list of beneficiaries under a state’s probate laws for intestate estates. However, If the deceased had a joint account with right of survivorship or owned property jointly with another, the joint asset would automatically be owned by the surviving partner.
Is a Probate Always Required?
It is important to know whether a probate is required following the death of an individual. The probate process can take a long time to finalize. The more complex or contested the estate is, the more time it will take to settle and distribute the assets. The longer the duration, the higher the cost.
Probating an estate without a will is typically costlier than probating one with a valid will. However, the time and cost required of each are still high. Also, since the proceedings of a probate court are publicly recorded, avoiding probate would ensure that all settlements are done privately.
Different states have different laws concerning probate and whether probate is required after the death of a testator. Some states have a specified estate value, which requires probate. For example, probate laws in Texas hold that if the value of the estate is less than $75,000, then probate may be skipped. If an estate is small enough to bypass the probate process, then the estate’s asset may be claimed using alternative legal actions, such as an affidavit. Typically, if a deceased person’s debts exceed their assets, probate is not necessarily initiated and alternative actions may be taken.3
Some assets can bypass probate because beneficiaries have been initiated through contractual terms. Pension plans, life insurance proceeds, 401k plans, medical savings accounts, and individual retirement accounts (IRA) that have designated beneficiaries will not need to be probated. Likewise, assets jointly owned with a right of survivorship can bypass the probate process.
Another popular way to bypass probate is through the use of a trust.
Overall, minimizing costs associated with the probate process can be prudent. Accumulated expenses can include court fees, professional service hours, and administration costs. Having an easily authenticated will is one of the most common ways to quickly move through a probate process and efficiently distribute assets appropriately. Contact Renee W. Lee Law Firm
Reference provided by https://www.investopedia.com