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Posted 7/11/2007 Printable Fact Sheet

Probate... why are you avoiding it?

This page is designed to provide information to help you understand the probate process.

Probate is the legal procedure used to settle the estate of a deceased person. The "estate" consists of the property owned by the decedent at the time of death.

If you have a Will, the person named as your Executor or Personal Representative is responsible for probating your estate. If you have no Will, the court will appoint someone, usually a close relative, to be the Administrator of your estate. The discussion of the Executor's rights and obligations below applies equally to Personal Representatives and Administrators.

The Executor must:

a.  Safeguard the estate's property;
b.  Inventory the property;
c.  Submit accounts and inventories to the court, if required;
d.  Pay the debts and expenses of the deceased, including funeral and burial expenses and outstanding medical bills;
e.  File any tax returns required and pay any estate or inheritance taxes required;
f.   Pay any court costs, attorney fees, and other expenses associated with filing for probate and closing the estate; and
g.  Distribute the estate to the beneficiaries named in the Will or, if no Will exists, to the next-of-kin. 

Don't worry about your Executor having to pay those expenses out of the Executor's own funds; the expenses are taken out of the assets in your estate. These debts and expenses must be paid first, and if anything is left over, then the remaining assets can be given to your next-of-kin or your heirs under your Will.

Your Executor may request reimbursement out of the assets of the estate for any out-of-pocket expenses, such as postage stamps, bank charges, and mileage. Your Executor may also request compensation for services performed by the Executor. The probate court usually grants such requests, basing the amount of the payment on the amount of work done, the complexity of the work, and the size of the estate.

If you aren't absolutely sure that your Executor will follow the instructions in your Will, you can put in a requirement that the Executor post a bond or other security. A bond is like an insurance policy. If your Executor, for example, steals all the money, the bonding company will reimburse your heirs for the money stolen. The cost of the bond is also paid by the estate.

Your Executor must place a legal notice in the newspaper after your death to notify all of your creditors of their right to submit claims against your estate. Generally, creditor claims must be submitted to the Executor within six months of the notice. Any claims not presented on time are usually dismissed.

Valid claims presented within the time limit, and other debts and expenses known to the Executor, may be paid out of the available funds in the estate.

The inventories and accounts filed by the Executor should enable you to keep track of the value of the property in the estate at the time of the decedent's death; any income earned by the property prior to final distribution; any expenses, debts, taxes, etc., paid by the estate; and who received which property upon final distribution of the estate.

A simple estate can usually be closed in 8-12 months, but if the estate isn't settled within a year, an Annual Inventory is required every year that the estate stays open.

The Executor is allowed to open the safe deposit box of the decedent and obtain the decedent's bank and other financial records. The manager of the bank or other institution will probably require the Executor to provide proof of the Executor's authority, such as a death certificate and authorization from the court. The manager and a court official may also want to supervise the opening of the safety deposit box and inventory its contents.

The Executor must keep the estate's assets and funds in a separate account to prevent mixing up or "commingling" the Executor's personal funds with those of the estate. The Executor should deposit or transfer the funds of the deceased into this separate account. Paychecks, rental income, and employee death benefits may be deposited directly into the estate account. Other financial assets can be transferred only after the Executor obtains a tax waiver from the state Department of Revenue. Tax waivers, if needed, are usually very easy to obtain.

There are two types of tax returns required (six, if you include state and local returns). If the decedent had any income in the year of death, then an income tax return is due. If the value of the estate is more than the threshold set by the IRS (see IRS.gov for current amount), then a federal estate tax return is due. Most states follow the federal limit, but some states have different limits.

For estate tax purposes, the Executor must include life insurance proceeds on the estate tax return if the decedent owned the policy. However, policies and proceeds payable to individual beneficiaries pass by contract, not through the Will or the estate, and so the Executor does not have to account for those policies to the court or to beneficiaries of the Will.

Jointly owned property is treated exactly the same. Part of its value is included for estate tax purposes, but it does not pass through the estate and does not need to be accounted for by the Executor.

There are many special income tax breaks for soldiers who die on active duty, especially if the death was due to combat or occurred in a combat zone. A Casualty Assistance Officer should be appointed to help your next-of-kin with those issues. If one is not appointed, your next-of-kin should call the commander or legal assistance office and ask for one.

After the Executor has paid all the appropriate debts, filed all the necessary tax returns, and paid all the necessary taxes, the estate is cleared for closing. The next step is to distribute the estate among the beneficiaries designated in the Will or the heirs-at-law if there was no Will. The Executor should obtain a receipt stating that all heirs or beneficiaries have received their share of the estate. After the Executor has accounted for all assets and expenses, the estate will be closed.

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