One aspect of the distribution of assets after a person becomes deceased that can be very confusing and timely is the probate process. While probate is often seen as a negative, it can be relatively straightforward if you have developed a comprehensive estate plan and last will and testament while you were alive, and if you work with the right lawyers throughout the process. The Orange County probate lawyers at Evolution Tax and Legal are breaking down the probate process: how it works, the timeline and how we can help.
What Is Probate?
Probate is the process of settling the estate of a deceased person. This is a court-supervised legal process that serves to validate any last will and testament, or if no last will and testament was in place the probate process involves appointing an administrator to make decisions on behalf of the estate. Probate also gives the executor in the will the power to oversee the probate process, which includes the payment of debts and distribution of assets.
How Does Probate Work?
The formal probate process varies from state to state, but there are some general requirements that most probate processes follow nationwide. In order to probate a will, the first step is to present the document to the court and schedule a hearing to either appoint the executor that has been named within the will or appoint an administrator for the estate. All heirs and beneficiaries will be notified of the hearing date in order to attend if they wish.
After the executor or administrator is appointed to the estate, they become responsible for notifying any known creditors of the estate and conducting an inventory of all the assets held within the estate. This includes any real property, real estate, buildings, other tangible items, as well as any personal property and any financial property, including stocks, bonds and business interests.
The probate process allows time for any objections to be made by beneficiaries or heirs, and it also allows a probate hearing to work through these objections. Once these objections have been handled, the representative will begin to pay creditors and pay any necessary estate taxes. The representative will then request permission and begin distributing assets among the beneficiaries. Once debts have been paid and remaining assets are distributed among beneficiaries, the court will close the estate and the probate process is completed.
Probate Process Timeline
The probate process should generally not take any longer than a year, although certain cases will take longer depending on circumstances such as will contests, complicated assets such as business interests and a taxable estate. Generally the timeline will look something like the below:
Prepare and File Petition for Probate (1-4 Months)
The first step will be to prepare and file a petition for probate. The decedent’s death certificate and last will and testament will be required for this filing. The will needs to be valid, which means each beneficiary has signed the Waiver of Process Consent to Probate before submitting the filing. This form alerts the courts that all beneficiaries acknowledge the will and do not plan on contesting it. The executor of the estate will need to send an official Notice of Probate at this point, which alerts each beneficiary to the beginning of the probate process. This process will typically take anywhere from 1-4 months.
Court Hearing on Petition for Probate (1-2 Months)
After the petition has been filed to begin the probate process, a hearing will be scheduled on the petition for probate. This usually takes around 1-2 months, and will include the hearing and working through any objections that may come up throughout this process.
Give Notice to Creditors (1-3 Months)
Similar to the beneficiaries, any creditors who have a relevant interest in the estate will need to be notified about the probate process, by the executor or administrator of the estate. The representative will send the Notice of Probate to any and all creditors, businesses, firms or people to whom the deceased had any debts. The executor will be able to determine to whom any debts were owed by requesting a copy of their credit report. This process can take anywhere from 1-3 months.
Inventory Assets (6-12 Months)
The next step in the probate process will be taking inventory of all assets the decedent held within their estate. This includes real property, such as real estate, homes, and other tangible assets. It also includes personal property such as jewelry, clothes and other personal possessions and stocks, bonds, business interests, financial assets and the like. This process is done by the executor and typically takes anywhere from 1-6 months.
Pay Debts and Fees (6-12 Months)
Once all assets have been inventoried and the value is determined, any debts and fees against the estate will need to be paid off by the executor or administrator of the estate. The debts will be paid out of the value of the estate, and any estate tax will be paid based on the value of the estate and the percentage of estate tax owed.
Distribution of Assets to Heirs (9-18 Months)
Once all debts have been paid out of the estate, the assets can be distributed to the heirs per the directives based on the will. The assets distributed to heirs will occur after the debts are paid, due to the fact that executors are required to make every effort to pay debts and fees prior to the distribution of assets to the heirs.
Final Distribution of Estate Funds (9-24 Months)
If there are any additional assets that need to be sold, this can happen after the distribution of assets to the beneficiaries per the will. Once all debts have been paid and assets have been distributed or sold, probate is considered to be completed. Once an executor informs the probate court that they have successfully completed their job, the judge will sign the Final Order for the Discharge of the Personal Representative, officially closing the estate.
Is Probate Necessary?
All wills go through probate court, but it is not necessarily the only option. There are other ways that you can ensure your assets will be properly distributed to your representatives withou the use of a will and ultimately probate court.
Some such options include the establishment of a trust, in which you will appoint an executor to manage the estate and make personal and financial decisions on behalf of the trust creator, or trustator, in case they become incapacitated or deceased. A trust allows an executor to legally communicate your final wishes without the probate process. There is also an option called pre-death proate, which allows an individual to take on the probate process for their own estate while still alive. This process is currently only available in four states: Ohio, North Dakota, Alaska and Arkansas, although there is a push to make this option more readily available. Avoiding the probate process for your estate can be complicated, but if you work with a professional they can provide you guidance on the best option for your estate.
One of the best ways to ensure your family has a seamless probate process once you are gone is working with a professional who understands your situation. At Evolution Tax and Legal, we have the expertise and knowledge of a big business with the personalized care of a small business. We can provide guidance on estate planning and the probate process, before it happens or while your family is going through it. Contact Evolution Tax and Legal to learn more about how to begin planning for your future today.