Probate and Trust Administration

What is Probate?

Probate is the legal process during which the court oversees the distribution of assets of the decedent to settle an estate. The purpose of Probate is to give notice to the creditors, gather the assets, pay the creditors and distribute the remaining assets to the heirs of the estate. The assets are distributed according to the terms of a valid will. If there is no will, the law of intestate succession applies and the assets are distributed between relatives depending upon their relationship to the decedent. Most people wish to avoid probate, but often estate planning is not done correctly to circumvent having to go through the court probate process.

 

Where does probate occur?

A will is probated in the Court of the county and state in which the person lived at the time of his/her death. If property is located in another state, an additional probate proceeding will be started in that state and county.

What assets are subject to probate administration?

All assets owned by the deceased person in his/her own name (not in joint tenancy, in trust or with a beneficiary designation) are subject to probate administration when he/she dies.

How is the Will probated?

The Probate process can be complicated but the shortened version is as follows:

 

• The original of the Will (if any) is deposited with the Court.

 

• The Petition for Probate first needs to be published in a local newspaper, before the Executor named in the Will (if one exists) or Administrator (if there is no Will) is appointed. Executors and Administrators are commonly referred to as Personal Representatives, so from this point forward in our outline, we will refer to Will Executors and Administrators simply as Personal Representatives.

 

• The Petition for Probate of the Estate is filed by the Personal Representative.

 

• Generally, for a period of four months from the date of publication of the Petition for Probate, creditors of the Estate can file claims against the Estate. This would include any prior creditors or judgment holders, debts resulting from last illness, funeral expenses, taxing authorities, etc.

 

• During this time period, the Personal Representative has to:
  
  

  a. identify and collect assets of the Estate and create a checklist for all financial matters. To do this, the Personal Representative finds all bank and security accounts, accounts receivable, jewelry, art objects, furniture and furnishings, automobiles, creditor’s bills, property owned by the Decedent, etc.
  b. maintain the assets in good condition, and to collect income for the Estate. This consists of maintaining insurance coverage, collecting rent, protecting assets from theft or damage, etc.
  c. may liquidate assets such as cars, real estate, etc.
  

  d. may obtain a family allowance for the spouse,

  e. may confirm property to surviving spouse of the community property,

  f. consider the possibility of Petition for Spousal Order,

  g. set aside the property to the surviving spouse without administration,

  h. handle special types of creditors’ claim,

  i. arrange for appraisals of property or evaluations of business interests

  j. allocate marital debts between estate and surviving spouse,

  k. adjust for gifts made without 3 years of death (General rule: certain gifts within 3 years of death is included in decedent’s gross estate and subject to tax), transfer insurance, apply for an extension of times to pay taxes,

  l. prepare (usually with assistance of a CPA or Attorney) and file an Estate Tax return with Internal Revenue Service, usually due 9 months after death, subject to extension of time,

  m. obtain Form 712 for each insurance policy attached to Form I-706

  n. arrange for payment of estate taxes, if any, and,

  o. do any other act necessary to create closure for the probate

 

• When the four month Claims period has expired, and when all assets have been collected, real property sold, and assuming no problems have presented themselves such as the Will being contested, the Personal Representative then files a petition with the probate court to allow a distribution of all remaining assets to the beneficiaries/heirs, and files a detailed accounting with the Court setting forth all monies received, monies disbursed, how assets were invested, and the proposed plan for distribution.


• If the Court approves the plan, the Personal Representative then divides the assets as instructed in the Will, or as required by statute if no Will exists.

 

The minimum amount of time that the probate process can be completed is approximately six months, but it sometimes takes longer. Reasons for delays can include Will contests, property cannot be sold, one or more claimants not being notified in the original four-month Claim period so they end up having to be re-noticed, etc.

Is there any way to avoid probate?

Yes, most states have a summary procedure whereby probate is avoided if the value of the assets are less than a certain value, or if the only heir or beneficiary is the spouse. For example, in California, if the assets amount to less than $100,000, probate can be avoided entirely. Property held in joint tenancy or with a beneficiary designation is not counted toward this $100,000. Also, no more than $10,000 of this $100,000 can be held in real estate. Otherwise, there is a need to prepare a Trust in order for the assets to be distributed outside of probate court. Please consult with an attorney regarding avoiding probate with small or large estates.

How does property of an intestate estate get distributed?

This is a complex issue, but below is a simplified overview of the manner in which assets are divided when there is no valid will. There are many exceptions and other issues which may influence the distribution, so be sure to check with an attorney for your specific case. Distribution is as follows:

 

• The surviving spouse receives one-half of the community property. The surviving spouse receives the entire separate property, if children, parent(s), sibling(s), or nieces or nephews do not survive the decedent. The surviving spouse receives one-half of the separate property of the estate if only one child or grandchild, or one parent survives the decedent. The surviving spouse receives one-third of the separate property of the estate when more than one child, or one child survives the decedent and one or more grandchildren, or two or more grandchildren.

 

• The part of the intestate estate not going to the surviving spouse is divided up as follows:

 

• First the children of the decedent receive equal shares.

 

• If there are no surviving children then the decedent’s parents share the remaining portion equally.

 

• If the decedent is not survived by children or parents, then the decedent’s siblings receive equal shares of the estate.

 

• If there are no children, parents, or siblings surviving the decedent, then the decedent’s grandparents inherit equal shares of the estate.

 

• The next in line to inherit would be the siblings of the decedent’s parents.

 

• If there are no surviving children, parents, siblings, grandparents, or siblings of the decedent’s parents, then the children of a predeceased spouse inherits equally from the estate.

 

• If there are no surviving children of a predeceased spouse then the deceased’s next of kin inherits the estate.

 

• If there is no surviving next of kin, then the parents of the predeceased spouse of the decedent inherits the estate.

 

• If there are no surviving parents of the predeceased spouse of the decedent then the children of the parents of the predeceased spouse inherit the estate.

 

• Eventually the property will go to the State if there are no relatives found who are included in the intestacy laws.

 

We recommend that you seek the advice of an attorney at all stages of estate planning, probate and administration. Our firm’s goal is to process the probate and administration of any size of estate as fast, simple and cost effective as possible. We aim to protect our client’s rights in the process. We strive to provide the highest level of service and accountability while handling estates for our clients. We have relationships with realtors, business brokers, and other sales representatives that streamline the process of sale so that delays are minimized.