Whether a person dies with our without a will, in most cases, his estate must go through the probate process. Although state probate laws vary, the probate process is fairly uniform throughout the United States. It is generally a court-supervised process for gathering the assets of the deceased, paying his creditors and taxes and then distributing his remaining assets to his beneficiaries if there is a will -- or to his heirs, according to the state's laws of intestate succession, if there is no will. During the probate process, real property owned by the deceased is retitled to his beneficiaries or heirs. To open probate and begin the process, an interested party, typically a beneficiary or heir, must file a petition with the state court that handles probate.
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Once a beneficiary or heir petitions a probate court to open an estate, the court assesses the validity of a will, assuming there is one. The court then appoints a personal representative, also called an executor, if one is named in the will, or an estate administrator if there is no will or no executor is named, to oversee the administration of the estate. The personal representative is sometimes required by state law -- or by instruction of the will -- to post a bond. A bond is like an insurance policy, as the bonding company will reimburse beneficiaries or heirs for assets stolen during the administration of the estate. The executor must notify all beneficiaries and heirs once probate is opened. The personal representative must also notify all creditors in the manner required by state law. Creditors then have a set amount of time, determined by state law, to file a claim against the estate.
The personal representative or administrator must prepare an inventory of the assets of the estate, assess the value of those assets, and submit an inventory to the probate court. The personal representative can hire appraisers, accountants and lawyers to assist with the administration of the estate. The executor must also provide the court with the list of beneficiaries and heirs, as well as other parties of interest such as creditors. The amount of time the executor has to submit this inventory to the court varies according to state law. An executor or administrator has an obligation to the beneficiaries and heirs of the estate to preserve all the assets of the estate including paying taxes on real property and handling all investments properly until distribution occurs.
Debts and Taxes
The estate's personal representative must settle with creditors, pay any debts of the estate, file the last income tax return of the deceased, and in cases of large very large estates, pay any required federal and state estate taxes. The personal representative's required final accounting to the probate court will include a statement of debts and taxes paid.
Several types of challenges can occur during probate that can cause delays or litigation expenses. Beneficiaries may contest the will on the grounds that it was written under fraud or undue pressure, or was not written in accordance with state requirements. If the will is successfully challenged, the court could accept a prior will or decide to proceed as if there was no will. If the estate executor becomes incapable of continuing the complex work of settling the estate, she may resign from her post as executor -- and the court must appoint a new executor or administrator. If the beneficiaries or heirs can prove that the personal representative or administrator has stolen from, or not properly managed, the estate, they can petition the court for removal of the personal representative. If this occurs, the court will appoint a replacement. These challenges are costly and time-consuming, but do occur.
Distribution and Accounting
The personal representative must ultimately ensure that the estate assets are distributed to the rightful recipients. Once all the estate debts and taxes are paid, before distributing the remaining assets to beneficiaries and heirs, the executor must prepare a final accounting. State laws typically require that in cases of court-supervised probate, the court approve the final accounting before the final distribution of the assets can occur. In some states, such as New York, the beneficiaries can agree to approve the accounting informally, or without a separate accounting proceeding in court.
References & Resources
- Internal Revenue Service: Frequently Asked Questions on Estate Taxes
- Bernalillo County: Welcome to the Court of Wills, Estates and Probate
- Chesterfield County South Carolina: Probate
- Oregon State Bar: What is Probate?
- New Jersey Probate: Removal of Executor of a New Jersey Estate
- AARP: Where There's a Will...
- The Florida Bar: Probate in Florida Pamphlet
- Law Offices of Mitchell Wilensky: New York Executor Guide
- New York Probate Lawyer Blog: New York Trust and Estate Lawyers Can Help Obtain Preliminary Letters Testamentary
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