Definition of Probarte – Probate court is an in-depth kind of court that manages the property and debts of an individual that has passed away.
The primary responsibility of the probate court judge is to guarantee that the deceased individual’s creditors get paid, and that any lingering assets are allocated to the appropriate beneficiaries.
What Is Probate?
Probate is a legal process in which a court manages the allocation of property of an individual that has passed away. A lot of states have an in-depth probate court.
In many states it is known by other monikers, like Surrogate’s, Orphan’s or Chancery Court, respectively.
The court designates an individual to manage the deceased individual’s assets, guarantee that all debts are correctly paid, and allocate the leftover property to the appropriate beneficiaries.
Probate Not Having a Will
When someone passes away with a will (often called a last will and testament), the property goes to the individuals or organizations specified in the will, like charities.
To probate a will, the court also needs to confirm that the will is real. If someone questions the validity of the will, the court will decide the matter.
In every state, even if there’s a will, the surviving spouse is entitled to a certain part of the property. This is called the surviving spouse’s elective share, and the amount varies by state.
In community property states, unless there’s a separate agreement between spouses, half of the property acquired during the marriage belongs to the surviving spouse. The will determines how the decedent’s share of both community property and individual property is distributed.
Probate Having a Will
When an individual with a will (commonly known as a last will and testament) passes away, the property is distributed to the individuals or entities specified in the will, such as charities.
For the probate of a will, the court must confirm the will’s authenticity. If the validity of the will is contested, the court will address the matter.
In every state, even with a will, the surviving spouse is entitled to a specific portion of the property, known as the surviving spouse’s elective share, and the share’s amount varies by state.
In community property states, barring a separate agreement between spouses, half of the property acquired during the marriage belongs to the surviving spouse. The will dictates the distribution of the decedent’s share of both community property and individual property.
The Probate Process
The court then issues an order designating an individual to represent the estate. Typically, this individual is known as an executor, but can also be named an administrator if there isn’t a will, and an executor if there is one. A lot of, if not every, wills designate an individual to perform that role.
The executor responsible for managing the administration of the estate. This includes things like:
- Opening an estate financial institution account
- The arrangement of publication of legal notices in a periodical
- Establishing the viability of claims by creditors and getting them paid (particularly the funeral expenses and closing medical bills)
- Sending notifications to beneficiaries
- Selling assets if required
- Filing court paper
- Filing a closing tax return for the deceased individual
- The transference of assets to beneficiaries.
Typically, the executor hires a probate lawyer to help with some of these tasks.
The Cost of Probate
The costs of probate comprise of, amongst other things, fees for court filings, costs for publishing notices in periodicals, and attorneys and executor’s costs. Fees for a probate attorney might be based on an hourly rate, a percentage of the estate worth, or a combination of them.
A probate could take months, or even years, to finalize. For your average low-key estate, it can take from 6 months up to 2 years. The longer probate takes, the more it is going to cost. If any heirs challenge a will, it gets more arduous and costly.
Probate causes the deceased individual’s financial situation to be a matter of public record. This comprises of the nature and degree of the assets, the individual’s debts, and who is going to receive the assets.
Streamlined Probate Procedures
A lot of states have a streamlined procedure for estates that under a specific value, for specific kinds of property, or if is all left to the surviving spouse.
Probate and Taxes
In numerous states, there’s a tax known as estate or inheritance tax, levied on the value of assets in the probate estate. Usually, this tax is applicable only when the estate’s value surpasses a specific limit.
If the estate’s value exceeds a particular amount, the federal Unified Gift and Estate Tax may be applicable. The threshold for triggering this tax varies each year.
Probate and Lawyers
For relatively straightforward estates, having or not having a will, it might be possible to go through probate not having a lawyer. Nevertheless, a lot of estates are more complicated than they originally appear.
Considering the points mentioned earlier, many people aim to avoid or reduce probate on their property.
To accomplish this, you can restructure how you own property and transfer assets into a living trust. If the gift to any person surpasses $14,000 in a year, you may need to file a federal gift return.
Although completely avoiding probate is difficult, having a fundamental understanding of probate law is crucial for crafting an efficient estate plan.
Edward A. Haman, E. (2020, October 13). What Is Probate Court? Retrieved November 17, 2020, from https://www.legalzoom.com/articles/what-is-probate-court