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 an individual passes away not having a will, the property is allocated to the deceased individual’s next of kin, as specified by the state’s probate laws. This portion of the probate law is called the law of intestate succession.
It details the order that immediate family inherit. A surviving spouse receives a portion of the decedent’s property. The law additionally deconstructs the order that grandchildren, brothers and/or sisters, parents, and aunts and/or uncles inherit.
The specifics differ from state to state. To some extent, the law of intestate succession could be deemed to be the “will” the state creates for you if you don’t create one for yourself.
Probate Having a Will
When an individual passes away with a will (usually named as a last will and testament), the property is allocated to the individuals or associations (like charities) the will establishes to receive it.
For probating a will, the court must also decide that the will is genuine. If someone challenges the viability of the will, the court will determine the issue.
In every state, even when there is a will, the surviving spouse is warranted to a certain portion of the property. This is known as the surviving spouse’s voluntary portion and the amount of the portion differs by state.
In community property states, with the exception of a separate agreement among spouses, one half of the property acquired by the couple throughout the marriage is owned by the surviving spouse, and the will governs how the decedent’s portion of the community property and the decedent’s individual property are allocated.
The Probate Process
The probate process starts with an individual filing a petition for probate within the probate court. This is typically done by a family member or someone appointed in a will. If a will is present, a copy of the will needs to also be filed (unless it has previously been filed in one of the states that allows filing before death). Many states offer official probate court papers.
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. If the estate is complicated, there could also be cost for a CPA. 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
A lot of states require the payment of some type of tax, usually based on the value of the assets in the probate estate, typically known as an estate tax or inheritance tax. Many states only evaluate the tax if the value of the estate surpasses a specific amount.
When the value of the estate surpasses a specific amount, the federal Unified Gift and Estate Tax may get involved. The dollar amount that causes this tax differ year to year. In 2015, an estate needed to surpass a value of $5.42 million for the tax to be applied.
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. The advisement of a knowledgeable probate attorney can help you through the process fast, assisting in dealing with problems that may come up, make sure the taxes are dealt with properly, and reduce your stress.
Avoiding Probate
Because of what is explained above, a lot of people try and find ways to either avoid probate, or to decrease the amount of their property that will be dependent to probate.
This can be achieved by reconfiguring the way property is held and placing assets in a living trust. Some methods to avoid probate may be deemed a gift because of the federal Unified Gift and Estate Tax.
The federal gift return might be needed if more than $14,000 is given to any 1 individual in any 1 year.
Since probate can seldom be totally avoided, a fundamental understanding of probate law is crucial to making any estate plan.
Source
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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
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