If you’re like most people, you aren’t eager to spend time thinking about what would happen if you became unable to direct your own medical care because of illness, an accident, or advanced age. However, if you don’t do at least a little bit of planning — writing down your wishes about the kinds of […]
What is Probate?
Probate is the court process of authenticating your last will and testament if you made one. It includes locating and determining the value of the your assets, paying your final bills and taxes, and distributing the remainder of your estate to the beneficiaries.
When Is The Probate Process Required?
Each state has specific laws in place to determine when Probate is required. These laws are included in the estate’s “probate codes,” as well as laws for “intestate succession” when you die without a will.
Probate is still required to pay your final bills and distribute your estate when you die without a will. Although the laws governing probate can vary from state to state, the steps involved are generally very similar regardless of whether a will exists.
Authenticating your Last Will and Testament
Most states have laws in place that require that anyone who is in possession of your will must file it with the probate court as soon as is reasonably possible. An application or petition to open probate of the estate is usually done at the same time. Sometimes it’s necessary to file the death certificate as well, along with the will and the petition.
Completing and submitting the petition doesn’t have to be a daunting challenge. Many state courts provide forms for this.
If you left a will, the judge will confirm that it is valid. This typically involves a court hearing, and notice of the hearing must be given to all the beneficiaries listed in your will as well as his heirs.
The hearing gives everyone concerned an opportunity to object to the will being admitted for probate—maybe because it’s not drafted properly or because someone is in possession of a more recent will. Someone might also object to the appointment of the executor nominated in the will to handle the estate.
Locating your Assets
The executor’s first task involves locating and taking possession of all your assets so she can protect them during the probate process. This is where the Yup I’m Dead…Now What? Planner is extremely helpful. Some people own assets that no one knows about, even their spouses, and these assets might not be listed in their wills.
Without the Yup I’m Dead…Now What? Planner, the executor must hunt for assets, typically through a review of insurance policies, tax returns, and other documentation.
In the case of real estate, the executor must ensure that property taxes are paid, insurance is kept current, and any mortgage payments are made so the property isn’t lost and doesn’t go into foreclosure.
The executor might literally take possession of other assets, such as collectibles or vehicles, placing them in a safe location. He’ll collect all statements and other documentation concerning bank and investment accounts, as well as stocks and bonds.
Determining Date of Death Values
Date of death values for your assets must be determined and this is generally accomplished through account statements and appraisals. The court will appoint appraisers in some states, but in others, the executor can choose someone.
Identifying and Notifying Creditors
Your creditors must be identified and notified of your death. Most states require that the executor publish notice of the death in a local newspaper to alert creditors that she doesn’t know about.
Creditors typically have a limited period of time after receiving the notice to make claims against the estate for any money they’re owed. This can vary state by state.
The executor can reject claims if she has reason to believe they’re not valid. The creditor might then petition the court to have a probate judge decide whether the claim should be paid.
Paying Your Debts
Next, those creditor claims are paid. The executor will pay all your debts and his final bills, including those that might have been incurred by his final illness, from estate funds.
Preparing and Filing Tax Returns
The executor will file your final personal income tax returns for the year in which you died. He/she will determine if the estate is liable for any estate taxes, and, if so, he/she will file these tax returns. Any taxes due are paid from estate funds.
This can sometimes require liquidating assets to raise the money. Estate taxes are usually due within nine months of your date of death.
Distributing your Estate
When all these steps have been completed, the executor can petition the court for permission to distribute what is left of your assets to the beneficiaries named in your will. This usually requires the court’s permission, which is typically only granted after the executor has submitted a complete accounting of every financial transaction he/she is engaged in throughout the probate process.
An intestate estate is one where you did not leave a valid will—either you never made one or your will is not accepted as valid by the probate court due to an error in the document or because an heir successfully contested it. The most significant difference is that in the absence of a will that makes your wishes known, your property will pass to his closest relatives in an order determined by state law.