What is Probate?
Probate is the legal process by which someone is given authority by a Court to gather, manage and distribute the assets of a person who has died. The person who has died is known as a Decedent. If a Decedent had a Last Will and Testament, the person who is given authority to gather, manage and distribute the Decedent’s assets is known as a Personal Representative. If the Decedent did not have a Last Will and Testament, the person may be known as either a Personal Representative or as an Administrator. The word Executor is a word commonly used to describe both a Personal Representative and an Administrator.
When is Probate Necessary?
Probate is necessary if the Decedent owned assets that require Court authority to transfer after the Decedent’s death. Probate is usually required if the Decedent owned:
- Land, houses or buildings in just his or her name;
- More than four vehicles;
- Life insurance, retirement accounts, investment and/or bank accounts without proper beneficiary designations;
- Certain business interests.
When a Decedent’s assets total less than $100,000.00 and the Decedent does not own land, houses or buildings, it is sometimes possible to avoid Probate by using a Personal Property Affidavit process. Furthermore, if a Decedent held his or her assets in a correctly drafted Living Trust, Probate is very seldom required.
Informal and Formal Probate.
The Probate process may be an Informal Probate or a Formal Probate. An Informal Probate is one in which the person seeking appointment as Executor prepares and submits appropriate documents to the Court and the assigned Judge reviews and approves the documents without the need for a Court hearing. In an Informal Probate, the Executor can act without first seeking approval by the Judge. In an Informal Probate, the Judge is available to hear and resolve any disputes between the Executor and potential heirs or between the Executor and the Decedent’s creditors; however, the Judge does not require any Court hearings unless a dispute arises. In a Formal Probate, a Court hearing is required before an Executor will be appointed and all actions by the Executor must first be approved by the Judge. Generally, whenever possible, an Informal Probate is sought because it minimizes time and money spent in attending Court hearings and allows the Executor to gather and manage the Decedent’s assets more efficiently. Executors’ attorney fees and Court costs may be paid out of the Decedent’s assets.
The Probate Process.
The Probate process is started by preparing and submitting to the Court an Application for Appointment of Personal Representative/Administrator. If the Decedent had a Last Will and Testament, a copy must be attached so the Judge can determine whether it is a valid Last Will and Testament. If the Judge decides that the Last Will and Testament is valid, generally the Judge will allow the Executor to follow the wishes of the Decedent expressed in the Last Will and Testament. If the Decedent died without a valid Last Will and Testament, the Decedent’s assets must be distributed according to the default laws for the state in which the Decedent lived when he or she died. These default laws are called the Intestacy Code, and may or may not reflect what the Decedent would have wanted happen to his or her assets after death. The Intestacy Code requires distribution of the Decedent’s assets based upon various family relations and can be very complex.
Starting The Probate Process.
Whether an informal Probate or a Formal Probate is sought, there are a number of documents that must be filed with the Court in order for an Executor to be appointed by the Judge. After the Judge has approved the appointment of an Executor, the Court Clerk will sign Letters Testamentary in a Probate with a Last Will and Testament or Letters of Appointment in a Probate which falls under the Intestacy Code. These are commonly just referred to simply as Letters. The Letters is the document that proves that the Judge has appointed that person as the Executor and which the Executor uses to gather in and manage the Decedent’s assets.
Publication In The Newspaper.
Once Letters have been issued to the Executor, the Executor is required to publish notice in the newspaper that a Probate has been filed, or his or her appointment as Executor and notifying all potential creditors to file a claim with the Court or with the Executor, or their claim will be automatically denied. This notice is published in the newspaper once a week for three consecutive weeks and then creditors have three months (from the first date of filing) to file a claim or their claim will be barred forever. During the three month period in which creditors have to file a claim, the Executor will be gathering and protecting the Decedent’s assets and create an inventory of these assets.
The Executor has the right to require creditors to prove their claims and can either accept a claim as valid or reject a claim as invalid. If the Executor accepts a claim, it must be paid out of the Decedent’s assets with claims being paid in a particular order of priority based upon the law. No claims may be paid until after the three month period for creditors to file claims because the Executor needs to be aware of all claims in order to pay the claims according to their priority under the law. If an Executor denies a creditor’s claim, the creditor has 60 days to request a Court hearing to have the Judge decide whether the claim is valid and must be paid or not.
Don’t forget, just because someone has died doesn’t mean that they don’t owe taxes – tax returns must be filed on behalf of the Decedent and taxes paid. The government is not subject to the same three month claim period as other creditors.
Distribution of Assets To Heirs.
Once all creditor claims have been either paid or denied, the Executor is required to distribute the Decedent’s remaining assets to those people or entities identified in the Last Will and Testament or according to the Intestacy Code if the Decedent died without a Last Will and Testament. The people and/or entities which are designated by a Last Will and Testament or in the Intestacy Code to receive assets are commonly known as Heirs. The Executor is required to provide a copy of the inventory of assets to all of the Heirs before making distributions. It is good practice for the Executor to require all Heirs to sign a document acknowledging that the Heir received a copy of the inventory. It is also a good idea, before making distributions, for the Executor to have each Heir sign a document acknowledging which assets the Heir will receive and that he or she agrees that these are the correct assets for that Heir to receive under the provisions of the Last Will and Testament or the Intestacy Code. This helps protect the Executor from Heirs making claims later that the Heir wasn’t treated fairly by the Executor.
Closing The Probate.
Once all the assets have been gathered, valid creditors paid and the remaining assets distributed to the Heirs, the Executor may ask the Judge to close the Probate. An Informal Probate may be closed by filing appropriate documents with the Court; however, a Formal Probate may require a Court hearing before the Probate is closed.
Are You Required To Have an Attorney Represent You In a Probate?
The law does not mandate that any person have an attorney represent them in the Probate process. Entities, such as businesses or charities, are required to have attorneys represent them in court proceedings, including Probate. Because of the complexity of the Probate process, it is generally a very good idea to have a knowledgeable, experienced Probate attorney represent you in the Probate process if you are seeking to be appointed an Executor. If you are an Heir and someone else is acting as Executor, you typically won’t need an attorney unless: one, you feel that the Executor is not following the provisions of the Last Will and Testament or the Intestacy Code; two, you are concerned that the Executor may be using the Decedent’s assets to benefit someone such as a family member rather than proper Heirs; three, the Executor is not providing you an inventory of assets, or; four, the Executor is simply not doing his or her job as Executor in a timely manner.