FAQ's - Probate
What is probate?
Answer: Probate is a legal process that takes place after someone dies. What probate involves is comprised of the following.
• Proving in court the validity of a deceased person's will
• Identifying and inventorying the deceased person's property
• Appraising the deceased person's property
• Payment of all debts and taxes
• Distributing the remaining property as the will or, if there is no will, as state law directs.
Usually, what probate involves is paperwork and court appearances by lawyers. The lawyer and court fees are paid from estate property, which would otherwise go to the beneficiaries who would inherit the deceased person's property.
Question: How does probate work?
Answer: After a person dies, whoever is named in the will as executor files papers in the local probate court. The executor then proves the validity of the will and presents the court with lists of the deceased person's property, debts, and who is to inherit what he has left. After doing so, relatives and creditors are officially notified of his death.
Question: What is the role of the court and the executor?
Answer: During the probate process, the executor must find, secure and manage the assets of the deceased. This takes between a few months to a year. Depending on the contents of the will and on the amount of debts the deceased had, the executor may have to decide whether or not to sell the real estate, securities or other property. For instance, if a will made a number of cash bequests but the estate consists of valuable artwork, the art collection might have to be appraised and sold to produce cash. Or, if the deceased had many outstanding debts, then his executor might have to sell some of his property to pay them.
In most states, immediate family members may petition the court to release short-term support funds while the probate proceedings go on. Eventually, the court grants permission for the executor to pay the deceased person's debts and taxes and divide the rest among the people or organizations named in the will. Finally, the property will be transferred to its new owners.
Question: When a person dies, does all of his property have to go through probate?
Answer: No. Most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure. For instance, in the state of California, up to $100,000 of property can be passed without probate, and there is a simple transfer procedure for property that is left to a surviving spouse.
In addition, property passing outside of a will, say, through joint tenancy or a living trust, will not be subject to probate.
Question: Who has the responsibility for handling probate?
Answer: In the majority of cases, the responsibility is the executor named in the will. If there is no will, or the will fails to name an executor, then the probate court names someone (known as an administrator) to handle the process. More often then not, the job goes to the closest capable relative or the person inheriting the majority of the deceased person's assets. If no formal probate proceeding is necessary, then the court will not appoint an estate administrator. Instead, a close relative or friend serves as an informal estate representative. In most cases, families and friends choose this person, and it is not uncommon for several people to share the responsibilities of paying debts, filing a final income tax return and distributing property to people who are supposed to get it.
Question: Should there be a plan put in place to avoid probate?
Answer: Probate rarely benefits beneficiaries, and it always costs them time and money. Probate makes sense only if the estate has complicated problems, such as a large number of debts that can't be easily paid from the property left behind.
Whether to spend the time and effort to plan on avoiding probate is dependent on a number of factors, most notably the person's age, his health and his wealth. If a person is young and in good health, then adopting a complex probate-avoidance scheme may mean that he would have to change it as his life situation changes. If a person has little or no property, then he might not want to spend the time planning to avoid probate. His property may even fall under his state's probate exemption; most states allow a certain amount of property to pass free of probate, or through a simplified probate procedure.
However, if an individual is over the age of 50, in poor health or owns a significant amount of property, he will probably want to make some plans to avoid probate.
The answer to the question is “yes” there are many ways to pass on inheritance and save the cost of probate.
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