What is probate?
Probate is the legal term that describes the process of settling up the estate of someone who has passed away. An heir, family member, attorney, or acquaintance is designated the estate executor (also known as personal representative) by a will, or is appointed by the court, to oversee the probate process.
The courts often supervise each step of the probate process to ensure the affairs of the deceased are handled in an equitable and legal manner. In the case of any discrepancies, violations, or disagreements amongst the heirs or beneficiaries, the courts intervene to determine the best course of action. Once a thorough inventory of assets is established and all outstanding financial obligations are settles, the estate disburses inheritance to the heirs and beneficiaries. At the conclusion of this process, the personal representative petitions the court to close probate.
The personal representative is legally bound to ensure fair and equitable settling of the estate, and oversees disbursement of assets and inheritance. The financial aspects of probate include drawing up a full inventory of all assets, ongoing business interests, property, and debts of the deceased. Taxes must be filed on behalf of the estate, including the final year of income tax, any property taxes, and both state and federal income taxes.
Every estate is unique
Supervised vs. Unsupervised Estates
Estates with a total asset value of $50 thousand dollars or less don’t need to go through the court. Total asset value includes things like property, bank accounts, automobiles, and business interests. Life insurance and retirement benefits are not included in the total asset value of the estate. Follow this link to learn more – Probate Estate Basics
Will vs. No Will
Estates with wills simplify the probate process. However, if no will is present, the decedent’s estate is considered “in testate,” meaning the court will need to provide supervision and guidance in inventorying and disbursing assets.
Assets Excluded from Probate
Certain assets, such as life insurance payouts or retirement benefits, are excluded from the probate process regardless of the size of the estate. An attorney can provide detailed guidance on how to treat these assets in the context of a specific estate.
Other Probate Considerations
Each estate brings a unique set of circumstance and conditions that impact the way the estate is managed. Personal representatives should seek counsel from an attorney to determine the best course of action when dealing with situations such involving outstanding debt, care for dependents, or contested wills.
Trusts & Estates
One way to ensure beneficiaries receive the most value from an estate is to transfer property into a living trust. Living trusts are easy to transfer, and move outside the probate realm, so they avoid the typical taxes associated with transferring assets to heirs and beneficiaries. The creator of the trust is designated as the trustee. They are in charge of the trust’s structure, the assets included in the trust, and the succession plan for the trust. Often, married couples are joint trustees for their own trust. The person meant to inherit the trust upon the trustees’ death is designated the successor trustee.