Probate is the court-supervised process of gathering the deceased person’s assets, paying debts and taxes, and distributing what’s left to inheritors. Unless family members or creditors are fighting, there’s very little court supervision. Mostly, probate is paperwork.
In some states, including those that have adopted the entire set of laws called the Uniform Probate Code, the process is simpler and quicker than the one described here. It’s worth mentioning that many estates don’t need to go through regular probate; many estates qualify as small estates under state law, even if they contain valuable assets. In that case, survivors may be able to use simplified probate procedure or even transfer property without ever going to court.
Beginning Probate by Requesting Appointment as Executor
When you probate a will, you start by asking the probate court to name you executor or personal representative, whichever term is used in your state. If there’s no will, in some states you’ll ask to be the “administrator.” To make this request, you will probably need to file an application, death certificate, and the original will (if you haven’t deposited it with the court already) with the local probate court in the county where the deceased person was living at the time of death.
The document in which you make your request will probably be called a petition or application. It must contain certain information, such as the date of death, names of surviving family members and of beneficiaries named in the will, and so on. Many courts provide fill-in-the-blanks forms; if yours doesn’t, you’ll have to type something up from scratch. (Every probate court has its own rules about the documents it requires.) If the deceased person owned real estate in more than one county in the same state, you can handle it all in one probate. There’s no need to conduct a separate probate proceeding in the other county.
Understanding What Happens at the First Probate Hearing
The probate court will schedule a hearing to give interested parties a chance to object to your appointment as executor. Before the hearing, you’ll need to send formal legal notice to beneficiaries named in the will and to heirs under state law (the people who inherit if there’s no valid will). You’ll also send notices to creditors you know about, and publish a legal notice in a local newspaper to alert others. In most cases, the hearing is a formality; you probably won’t even need to show up. If your request is approved, the court will issue documents that authorize you to act on behalf of the estate. In most places, these papers are called Letters of Authority or Letters Testamentary, or Letters of Administration if there’s no will. They’re often referred to just as “letters.” If you live in another state, you may have some more requirements to fulfill. For example, you may need to file a document with the court in which you appoint a local resident as your “agent.” This person can accept legal papers on your behalf and is subject to the authority of the court.
Posting a Bond
The probate court may require you to post a bond a kind of insurance policy that protects the estate from losses you cause it, up to a certain dollar amount. Many wills specifically say that no bond is required. If the will doesn’t address this issue, it’s up to the judge. If all the beneficiaries under the will agree, in writing, that it’s not needed, the judge is unlikely to order it. But some courts always require a bond if the executor lives out of state or if the person serving as executor isn’t the person named in the will.
If bond is required, its amount will depend on the size of the estate. Bonding companies, most of which are divisions of insurance companies typically charge a fee of about 10% of the face amount of the bond. You can pay for the bond from estate funds.
Proving the Will’s Validity
If there’s a will, you must prove that it’s valid. Usually, all you need is the statement of one or more of the will’s witnesses, in one of these forms:
• a notarized statement, called a “self-proving affidavit,” which witnesses signed when they witnessed the will
• a sworn statement signed by a witness now, or
• court testimony from a witness.
While the probate case is pending, you can gather assets and open a bank account in the name of the estate, and use the account to pay creditors. This includes obvious bills (outstanding credit card bills, utilities, funeral expenses, and so on), as well as taxes. Probate cases must also stay open for several months about four to six, in most states—to give creditors a chance to come forward.
You’ll probably need to give the court a list of the deceased person’s property and, if necessary, get assets appraised. If you want to sell real estate or a business, you might need to get court permission. (But many wills authorize executors to proceed under a law called the Independent Administration of Estates Act, which gives executors freedom to pay creditors’ claims and sell estate property without prior court approval.)
As executor, you will also be responsible for filing tax returns and paying tax bills on time. Below are possible tax returns you might need to file:
• federal and state income tax returns for the final months of the deceased person’s life
• the previous year’s federal and state income tax returns if the deceased died before filing them (for example, if the deceased died in March 2022 before filing 2021 income tax returns, you will have to file returns for 2021 as well as 2022)
• federal and state income tax returns for the estate itself, if the estate receives more than a minimum amount of income during the probate process
• a federal estate tax return (for deaths in 2022, the federal estate tax applies only to estates worth over $12.06 million)
• a state estate tax return (applicable only in about a dozen states, for estates worth over a certain amount), and
• a state inheritance tax return (applicable only in six states).
If all these tax returns seem like a lot of work, don’t get discouraged—it’s unlikely that you’ll actually need to file more than a few. Keep in mind, too, that expert tax help is readily available and can be paid for with estate assets.
Giving Property to Beneficiaries Early
You can’t give beneficiaries their inheritances until you’re sure the estate has enough assets to pay debts and taxes. As long as you keep enough money to pay final taxes and expenses, however, you may be able to distribute some assets before the probate proceeding ends. State law might limit the amount you can give, and you might also need prior court approval. There can be good reasons for distributing property sooner rather than later, especially if the estate clearly has plenty of money to pay debts. For example, if a car is left to sit, its value is likely to go down, and it’s a bother to maintain. The same may be true for household items that don’t have much monetary value. And some beneficiaries may be in need of money now—a college student, for example. Always remember that you have a legal duty to be fair and impartial when dealing with beneficiaries. If you make early distributions, don’t favor beneficiaries you’re close to—it invites a fight.
Distributing Property and Closing the Estate
When the creditors claim period has passed, you’ve paid debts, filed all necessary tax returns, and settled any disputes, you’re ready to distribute remaining property to the beneficiaries and close the estate. Closing the estate releases you from your duties as executor. Along with your request to close the estate, you’ll need to give the court an accounting of your activities. The accounting shows where all the estate assets are going and shows that you’ve paid creditors. It also documents any income the estate assets received during probate and any losses to the estate—for example, if an asset declined in value. Some courts provide fill-in-the-blanks accounting forms. If yours doesn’t, you can look at documents filed in other cases (probate records are public) to get an idea of what’s required.
What Happens in Probate?
A person who makes a will is known as a “testator.” Their estate is distributed according to their instructions once the will is shown to be valid. A deceased person without a will is said to be “intestate.” In this case, their estate is distributed according to state laws of intestate succession. With or without a will, a deceased person’s estate must be settled and distributed (“probated”). Though probate laws and terminology vary by state, the process typically involves the following steps:
• Petition to Probate. Upon the decedent’s death, the process is initiated by filing a “Petition for Probate” with a local probate court.
• Swear In a Personal Representative. A personal representative is the person responsible for handling and distributing the estate. Before doing so, they swear under oath to the court that they will distribute the decedent’s assets according to law. If appointed by the decedent’s will, the representative is sometimes known as an “executor” and is empowered by “Letters Testamentary.” If appointed by the court, they are sometimes known as an “administrator” and are empowered by “Letters of Administration.”
• Give Notice to Interested Parties. Though local requirements vary, notice is meant to give individuals with a legitimate interest in the estate time to make their claim before the property is distributed. Public notice in a newspaper may be required to inform potential creditors. Similarly, individual notice may be required to inform anyone who could potentially inherit in the absence of a will.
• Determine the Value of the Estate. Before the estate can be distributed, it should be inventoried and appraised. Depending on the estate, this may be one of the most time-consuming responsibilities of a personal representative. An inventory should include real estate, personal property, bank accounts, etc.
• Pay Debts and Taxes. A decedent’s estate is responsible for their debts. Particularly large estates may also be subject to the federal estate tax, as well as state-level estate taxes in the few states that impose them.
• Distribute Remaining Assets. Once debts and taxes are paid, the remaining property can be distributed. Again, this will be done according to the decedent’s will if one exists or according to state laws of intestate succession if one does not.
Most probate proceedings go smoothly. However, wills are sometimes “contested,” meaning their validity, authenticity, or instructions are challenged during probate.
Who might challenge a will? Anyone with an interest in the estate assets, including:
• Disinherited family members;
• Creditors claiming unsettled debts; and
• Co-owners of estate property.
How does someone challenge a will? Arguments raised in court might include:
• The testator was pressured or defrauded when making the will;
• The testator was not of “sound mind” when making the will;
• The will does not meet minimum requirements (e.g., it was not signed before witnesses);
• The will is superseded by a more recent will; or
• The will purports to transfer ineligible property (e.g., property owned subject to a right of survivorship or community property in a marriage).
Depending on the defects, if any, a contested will may be struck down entirely or partially. For example, a single provision that violates a real estate co-owner’s right of survivorship is unlikely to invalidate the entire will. By contrast, a valid will with a more recent date is generally understood to completely replace older wills.
The probate process exists to ensure that a deceased person’s wishes are respected, that their legitimate debts are paid, and that their property is distributed systematically in the absence of a will. Many people think the process is always long, expensive, and to be avoided. This is only sometimes true. The probate process can certainly be expensive. Costs might include fees for personal representatives, attorneys, and appraisers, as well as court costs. As with many legal proceedings, it can also be time-consuming, especially if there is a dispute or some of the estate needs to be liquidated to pay debts.
However, the time and money spent in probate depend greatly on the estate. Resources spent probating a relatively small estate can be minimal. The more extensive, valuable, or complex the estate, the more time probate might take. An estate planning or probate attorney can evaluate your circumstances and help determine the cost-effectiveness of “avoiding probate.”
Avoiding Probate: How?
Probate is the process of distributing a decedent’s property, and property generally cannot be removed from the estate once the owner dies. Therefore, most strategies for avoiding probate require some planning ahead. That said, there are four primary ways to avoid probate:
1. Joint Ownership with Right of Survivorship. Property can be owned individually or jointly. Some forms of joint ownership include a “right of survivorship.” This refers to the automatic transfer of a deceased co-owner’s property interest to surviving owners. The automatic transfer avoids probate.
2. Living Trusts. Only property within a deceased person’s estate goes through probate. Therefore, transferring someone’s property from their estate and into a trust prior to death avoids probate. Note that this is only possible with living trusts, which transfer property immediately upon creation of the trust. By contrast, a testamentary trust is created by a will. Because the testator must die before the will is activated, testamentary trusts do not avoid probate.
3. Beneficiary Designations. Certain assets can transfer directly to a named beneficiary without having to go through probate. By naming beneficiaries ahead of time, you can ensure that they receive the benefit of life insurance policies, certain retirement accounts, payable-on-death accounts, transfer-on-death deeds, and the like without waiting for probate.
4. Gift Giving. If you give something away while alive, it is removed from your estate. Therefore, the gift does not go through probate. However, in deploying this simple method of avoiding probate, make sure you are informed about gift taxes and exemptions.
Should I Have a Will?
The short answer is, “Yes.” A last will and testament provides instructions on how your property and responsibilities will be handled when you die. Do not miss the opportunity to make these decisions yourself. If you do not leave these instructions, your estate will be distributed according to laws of intestate succession. The result may or may not have pleased you in life. In addition to giving you and your loved ones some peace of mind, a well-drafted will also goes a long way in facilitating the probate process.
Many people think that drafting a simple will necessarily requires the help of an attorney. However, if you have a relatively simple estate. Depending on the estate, probate does not have to be an arduously long or expensive process. There are also a number of legal strategies to avoid it. Whether you are a conscientious estate holder trying to keep your property out of probate or a personal representative trying to distribute a deceased person’s estate, a local estate planning or probate attorney can provide valuable legal advice.
Individuals who are considering drafting a trust or a will may wish to consult with an estate planning lawyer. He or she can explain the advantages of using a trust as well as a will. He or she can make recommendations based on the specific considerations of the client. He or she may even recommend using both documents, such as by using a pour-over will that places any property owned at the time of the testator’s death into the trust.