What Is Probate and Why Is It Important?
As a part of your estate management, you might have heard of the term probate often, but what does it actually mean? In legal terms, probate is a legal process that takes place post-death. This judicial process determines the validity of the will and the process of distributing the assets. Due to the complexity of estate laws, the probate process requires formal supervision by a court. During probate, the probate court oversees the management of the estate. The probate court also ascertains that the laws and legal requirements for the process have been met.
Death doesn’t stop the obligations of a person, and hence, certain legal matters still need to be handled. Main estate administration activities include administration of taxes, real property transactions, resolving bank and investment issues, selling or distributing personal items, and care for minor children . Apart from these tasks, the surviving spouse or children need to look into several other issues as well including filing the final tax returns. So, why should you go through the trouble of estate management? For a practical reason – to prevent financial loss. For instance, Did you know that debt interests are imposed on real estate property if the creditors are not paid, plunging your business into a financial loss? Some of the issues that demand the involvement of an estate executor can be:
The extent of the complications related to an estate administration process might seem daunting, and at times, tricky to navigate for those who lack the knowledge and expertise. However, to understand the complexities of estate management, it is critical to realize the significance of the process.
How to Get Free Legal Advice on Probate
Legal Aid Societies: Many big cities have legal aid societies where they will conduct a phone interview and then refer you to an attorney that participates in their program.
Pro Bono Services: Local Bar Associations often have pro bono services for low and moderate income situations. A member of the local Bar Association will often handle the case at no charge or at a significantly reduced charge.
Online Resources: There are several online services in which you can ask a legal question and receive an answer from an attorney.
Caveat: When you search for free legal advice, consider the source of the advice. Government websites tend to be well thought out and thoroughly vetted. Popular websites may not have the best information. A good starting point is with your state’s probate court. The Supreme Court website for the state will usually have links to the probate court and may have a "legal information" page to assist you.
The Steps of the Probate Process
The probate process will vary from state to state, however; generally it follows a similar series of steps.
Filing the Will
The first step in the probate process is to file the will with the appropriate probate court. This is generally done at the home probate court. For example, if the deceased person resided in Palmdale, the will would be filed at the Antelope Valley probate court in Lancaster. In some cases, it may be necessary to file the will in more than one county court.
Issuing Letters Testamentary
The next step in the probate process is to petition the court for letters testamentary. A petition for letters testamentary is filed once the will has been probated in the home probate court. The purpose of this petition is to ask the clerk of the court to appoint the executor as the legal representative of the deceased person’s estate. It is through this appointment that the executor will have the authority to act on behalf of the estate. For example, the executor will have the authority to contact all institutions which hold property of the deceased person. The executor must keep the court apprised of the estate’s progress throughout the entire probate process.
Inventory and Appraisal
The next step in the probate process is to file an inventory and appraisal of all the assets belonging to the estate. Listed on this document will be all property of the estate with valuations assigned to each asset. Depending upon the size of the estate, it may be required to hire an appraiser who is certified in the field to provide the valuation of certain assets.
Payment of Debts
The next step in the probate process is the payment of all debts of the estate, including creditors and administrative expenses. Applicable creditors must be paid as well as any estate taxes which may be owed. Generally, creditors must be paid outstanding debts before any proceeds can be distributed to beneficiaries.
Distributing Estate Assets
The next step in the probate process is the distribution of assets to named beneficiaries. This may occur over time depending upon the type of assets which are being awarded and how they are held (for example, if the property is held in a limited partnership, the general partner will likely need to approve the transfer of partnership interest).
Final Accounting and Distribution
The last step in the probate process is filing a final accounting which will account for all assets and their distribution to named beneficiaries. Once the court has seen that all estate funds have been properly accounted for, it will issue an order discharging the administrator and distributing the remainder of the assets.
Common Issues and Solutions to Consider During Probate
Common Challenges and Solutions in Probate
One of the complaints against the probate system is the length of time it takes to administer a decedent’s estate. With large estates, the size of the estate is generally the reason the process takes so long. The second most common reason for delays is disputes over the will or its terms. This is the case whether the trust contains real estate, securities, or cash. Once an heir has a dispute with the executor over distributing the estate, probate litigation is not far behind. It should be noted that this is the same whether the estate is administered in Probate Court or by way of trustee. After the creditor’s claims have been paid, there are primarily three options for estate distribution . With small estates, the decedent’s estate can be distributed pro rata, meaning equally among the beneficiaries. Large estates are generally distributed according to a formula stated in the will or trust. In most circumstances this is fairly simple. Debts and taxes are paid, and the remainder is divided up among the beneficiaries. There may be other estate beneficiaries that do not wish to assert a claim to their distribution. It is not always possible to determine the assets available to distribute until the estate administration is finalized. For this reason, estate beneficiaries often have to wait while the estate is administered, and sometimes that takes many years.
When to Get Professional Legal Help
While there are many online resources available at no cost to help you address the myriad issues that come up in the handling of a probate estate, in some cases it is prudent to seek legal advice. You may, for instance, need to hire a probate attorney if you have a complex estate to settle or are personally involved in a contested will situation. There are many scenarios that might warrant bringing an attorney into the mix.
Dealing With Orphaned Assets
In some cases you may find that an asset has been overlooked during administration or that a beneficiary of the estate comes forward and tells you that there is an asset not previously identified by the deceased. A complex real estate transaction might be necessary to deal with the newly-discovered asset. Here, a probate attorney can give you the guidance needed to ensure proper disposition of the discover asset. In addition, if an estate or personal representative has failed to administer property, an attorney can help you navigate through the process and properly account for and distribute the property.
Complex Estates
In some cases, it may take up to three years to fully settle an estate. The more complex the estate, the more involvement an attorney is likely to have in the process. An attorney can provide you with a roadmap to ensure proper handling of all aspects of estate administration so that the court system does not become involved in the process unnecessarily.
Contested Wills
There are many reasons that wills become contested in probate court. Contested wills are generally brought as will probates under the authority of the court. As litigation progresses, you may find the need for an attorney who specializes in litigation to act as your representative while you navigate these complex waters. Immediate heirs that believe they have been written out of a will may find it necessary to retain counsel to pursue their legal rights. The retainer of an attorney represents the best chance for a successful outcome.
Frequently Asked Questions About Probate
Questions and Answers About Probate
Once the estate administration process begins, there are probably several issues that will come up frequently, so we have put together some answers to some of the most frequently asked questions.
How long does it take to probate a will?
The time frame to probate a will varies based on the size of the estate and how many beneficiaries and creditors are involved. The period for a creditor’s claim to be filed is 4 months in Illinois. During this time, the administrator of the estate will not be able to make any distributions to beneficiaries. In addition, if a beneficiary contests the will, the length of the probate will inevitably be prolonged. In most controlled circumstances, the probate process should take anywhere from six months to two years.
Are there taxes due on the Houses, Cars, and Real Estate left by the decedent?
The federal estate tax only applies to estates valued at over $5.45 million, but the states can still impose an estate tax if the value of the estate exceeds the state’s limit. For example, the Connecticut threshold is only $.02 million while the state of Illinois has no estate tax threshold at all. Any estate under those limits has no estate tax due.
What Cost will I incur in probate?
There are costs associated with probate. The most obvious one is attorney fees. However, probate attorneys usually bill by the hour rather than a flat rate . On top of that, there is generally a court filing fee to make the entire process legal, and there will definitely be expenses for things like a copy of the death certificate, mailings, accounting, and notices to beneficiaries. In summary, depending on the estate involved, the court costs involved in probate can add up quickly.
Do I need a lawyer if I have a small estate?
Small estates can be dealt with without an attorney. Small estate is generally defined as anything below $100,000. According to Illinois law, even if you don’t have a will, the state will still be able to clear your assets without having to go through probate. For anything above $100,000, you will have to get a lawyer involved.
As the executor, am I getting paid?
Illinois law allows an executor to be paid 5% of the estate for his or her services. In addition to that, the executor would also be entitled to additional costs. However, if the will of the person who died (the decedent) stated otherwise, then the law would not apply.
Can I contest a will?
Contesting a will requires that you file a "pleading" with the court. In this pleading you will need to show proof that you stand to benefit from the will if it is deemed valid. Then you will establish reasonable legal grounds on which you want the will invalidated. Executors will often want written reasoning for the will contest, even if it is not legally required.