Probate is a legal process that takes place under the supervision of a court. There are certain steps that must be taken when an estate is being administered during probate, and we will take a look at them in this post.
Initiate the Process
If you are named as the executor of an estate, you would have probably discussed the location of the will and other important documents with the individual in question.
However, if you are a family member and you have not been informed, you have to go through the decedent’s important papers in an effort to find a will. You can also contact their attorney (if they have one) to see if they know anything about an existing estate plan.
Even if there is no will, the probate court would provide supervision during the estate administration process, and the following steps would be necessary.
Open the Estate
Once you have a will in hand, you open the estate with the probate court. You will be formally recognized as the executor or estate administrator, and you will have the legal right to administer the estate.
If there is no will, any interested party can petition the court to appoint an estate administrator, but the petitioner would not necessarily be empowered to assume the role.
Identify and Inventory the Assets
After you are given the reins, you have to get to work. The first order of business will be to go through all of the relevant documents and identify and inventory the assets that will comprise the estate.
In some cases, there will be a letter of last instructions that you can use as a guide. This would provide all the information that will be needed to effectively administer the estate. If there is no such letter, you have to work with what you have to the best of your ability.
You also have to gather all the important paperwork, like ownership documents and tax returns for the three years preceding the decedent’s passing.
Financial institutions that are holding assets would be notified about the death of the account holder, and tangible assets should be physically secured to the extent that it is necessary.
Place a Value on the Assets
The value of the assets must be calculated, and this is pretty straightforward when there are hard numbers on a spreadsheet. However, professional appraisals may be necessary for collectibles and other items.
There are some assets that pass outside of probate, like individual retirement accounts. You will not have to be concerned about the value of non-probate assets unless the estate tax will be a factor. This tax is only applicable on the portion of an estate that exceeds $11.7 million.
Pay Final Taxes
You have to obtain a tax identification number for the estate and establish a bank account. Final taxes will be paid before the assets can be distributed to the heirs.
Clear Up Bills
Creditors must be notified about the passing of the decedent, and all rightful debts will be paid. This would include the decedent’s personal debts and expenses that are accumulated by the estate during the administration process, such as legal and accounting fees.
Distribute the Assets
When all of these administrative tasks have been completed, you will be able to distribute the assets to the beneficiaries in accordance with the wishes of the decedent.
Probate Can Be Avoided
Probate serves a purpose, but it is time consuming and expensive. If you use a living trust to arrange for the transfer of assets that would otherwise go through probate, you can avoid the process. That’s right, transfers through the terms of a living trust are not subject to probate.
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