What is Probate? A Guide to the Probate Process

Probate is the legal process that ensures your debts are paid and the legal title of your assets is transferred to the appropriate heirs and beneficiaries. If you have a will, the probate process will determine whether the will is authentic and valid.

Each state sets its own probate process and rules in its probate code, but the general outline is very similar around the nation. State’s law also will determine how property is distributed when a person dies without having a valid will.

When a person passed without a known last will and testament, someone must go to the court and ask it to appoint an executor, or administrator, for the estate. When the deceased had a will and named one or more executors, the named executor should file the will with the court and ask to be appointed the executor. A person who had a will is known as a testator.

In some states and localities, the probate process can be long and expensive. In those states, estate planners recommend that most people set up a living will or use other strategies so that most of the estate avoids probate. Other areas have a more modern and streamlined process, at least for estates of modest values. There, probate is less expensive and takes less time.

You also should know that probate is a public process. The will and other documents related to probating the estate are filed with the court and are open for public review.

Once a will is submitted to probate, anyone who believes it isn’t the valid last will and testament of the deceased can be challenged through a will contest, a formal objection to the validity of the last will and testament.

Once a will is determined to be valid and an executor is appointed, the executor begins the process of administering and winding down the estate. This process includes having the property appraised, paying debts and taxes, and distributing the remaining property per the instructions of the last will and testament.

The executor or administrator of the estate presents the probate court with an inventory of the estate’s assets and liabilities. A notice is published, usually in a local newspaper, to give any other creditors an opportunity to make their claims. The debts are paid and proof of payment presented to the court.

Then, a schedule of how the net assets will be distributed to the beneficiaries is presented. If the court approves and no one challenges the plan, the estate is distributed.

As long as the estate is in probate, the executor is handling the assets. That could include paying the bills for and providing spending money to the surviving spouse and other loved ones. In a few unusual cases, probate drags on for years.

The executor can reject claims if she thinks they are not legitimate. The creditor might put in a request for the court to have a probate judge determine if the claim should be paid.

The executor files the decedent’s final personal income tax returns for the year in which he died. Then she decides if the estate is liable for any estate taxes. Taxes due are paid from estate funds, which sometimes necessitates liquidating assets to raise the money.

Estate taxes are usually done within nine months of the decedent’s date of death.

While a friend or relative can be appointed executor of the estate without a fee, a lawyer’s help often is needed. Traditionally, the lawyer who drafted the will is named executor and states often allow the executor or lawyer helping the executor to charge a percentage of the estate as a fee. Now, some states outlaw the percentage fee. Many lawyers will do the work at an hourly rate. To ensure the hourly rate, however, reach an agreement with the lawyer as part of your estate plan and put the agreement in the will.

Probate is necessary in all cases. Without legal title to some assets could be challenged. While having a last will and testament can allow the process to be sped up and avoid complications, probate is required whether or not there is a will. Probate without a written last will and testament might take more time and be more expensive. Probate is required even when the deceased used a living trust or other methods to avoid probate because there will be assets that don’t avoid probate and debts and other claims must be settled.

Assets that avoid the probate process include 401(k) plans, individual retirement arrangements (IRAs), pensions with designated beneficiaries, assets held in trusts, life insurance, and annuities.

A Guide to the Probate Process

The probate process typically follows these steps, but details vary by state.

1. Probate proceedings start after a person dies, whether or not the deceased had a will. The executor or another person will present a death certificate with the local probate court and file a request to begin probate. Then, the judge of the probate court will officially appoint and give authority to an executor, which often is called a grant of probate.
2. The executor then takes the testator’s last will and testament, if any, and has it validated by the probate court. This process proves that the last will and testament was written and signed by the testator and intended to have the effect of one. If no valid will is located, the executor informs the court.
3. Next, the executor might be required to post a probate bond for the estate. A probate bond ensures everything is distributed correctly according to the instructions of the last will and testament, state law, or directions of the court. The bond is to protect the beneficiaries from any error that occurs and promises to compensate them for any money lost. However, the testator can waive a bond requirement in the will.
4. The executor then identifies, locates, and prepares an inventory of the assets. The inventory includes an estimate of the value of each asset, which might require an appraisal of some assets.
5. If the estate contains real estate or property that needs to be sold, the executor lists the property, accepts an offer and closes the property sale. The details of this process can vary depending on whether the executor was granted independent or dependent authority by the probate court.
6. The executor notifies the beneficiaries and creditors of the probate process. It is extremely important to be in touch with the creditors.
7. It is essential for the executor to ensure that all debts and liabilities are paid before any bequests are distributed. The executor might have to sell assets to pay all liabilities. At the same time, the executor files the final income tax return of the deceased.
8. Lastly, after all the above steps are taken care of, the executor distributes the estate according to the last will and testament, or state law if there was no will. Specific bequests go to the named beneficiaries, and then general and residual bequests are distributed. The probate process is then closed when proof of these actions is filed with the probate court.

When a last will and testament was not found, the deceased is said to have died intestate. The person appointed by the probate court to close the estate or the administrator still follows the same steps. He or she would follow the probate court’s instructions and state law on distributing assets rather than a last will and testament.

What is Probate? Key Takeaways about Probate

• Probate is the formal legal process that recognizes a last will and testament and appoints the executor to administer the estate of the testator.
• Probate is necessary in all cases.
• If the deceased does not have a last will and testament, the probate court will decide how to distribute the estate according to state law.
• The probate process includes identifying and taking inventory of the deceased person’s property, having the property appraised, selling property when appropriate, paying debts and taxes, and distributing the remaining property, per the instructions of the last will and testament.
• After a last will and testament goes through probate, it becomes a public document.

Valuable contributions to this summary of “What is Probate? A Guide to the Probate Process” were made by Bob Carlson, editor of the Retirement Watch financial advisory service and chairman of the Board of Trustees of Virginia’s Fairfax County Employees’ Retirement System with more than $4 billion in assets.

Katie Kao is an editorial intern with Eagle Financial Publications.