Probate - Everybody Fears it, But Few Know What it is.
When people consider estate planning, they often list “avoiding probate” as one of the reasons they
need to have a plan. But when you ask “what is probate?” they usually don’t
know, but they know it’s “bad”. That message has been impressed on them for many
years through books, seminars, and advisors. An estate plan, however, usually
works best when the person establishing the plan understands what they are
doing, and why.
Probate and Guardianship is not always
“bad” because quite often it is used to appoint guardians for minor children on
the death of a parent. Probate often is, however, an unnecessary burden that
can be avoided with proper planning. The burden typically falls on the executor
for the deceased (often an untrained family member) or on the beneficiaries
themselves.
The purpose of
probate is to enable a judge to ensure that the instructions of the deceased
person’s will are carried out. If the deceased didn’t have a will or trust
(i.e. they died intestate), the judge’s job is to ensure that assets are
distributed according to that state’s laws of intestacy.
The probate process
can vary widely from state to state and from judge to judge. Some of the
variances depend on the size and complexity of the estate. But in most states,
the probate process will require the executor (usually with an attorney’s help)
to carry out these steps:
- Present an original copy of the will to the court, and ask the court to open a probate
- Be sworn in and formally appointed by the judge as the executor
- If required by the state or the judge, purchase a performance bond
- Obtain several copies of the death certificate to use in closing accounts, filing tax returns, and taking care of other administrative duties
- Set up a new checking account in the name of the estate which will be used to handle funds and make payments
- Locate and make an inventory of every asset owned by the deceased
- Notify all known creditors of the death, providing each with a copy of the death certificate, and publish a notice in the newspaper for creditors who may not be known
- Pay all creditors, and collect debts owed to the deceased
- Protect and manage assets and property, and sell property if required to pay bills
- File a final federal income tax return for the decedent, as well as an estate tax return, paying any taxes that are due
- Complete a report and give a full accounting of all financial transactions to the judge
- Distribute remaining assets and property to the beneficiaries
- Close the estate
As far as cost is
concerned, many items on the list above will be new to the family member or
friend serving as executor. Most executors will retain the services of an
attorney to supervise the process, or to carry out some of the steps. So the
biggest cost to the estate (after debts and taxes are paid) is typically
attorney fees.
Finally, everything
that happens in a court of law becomes part of the public record. Since most
families would prefer that their affairs remain private, they will need to use
other planning methods to avoid the probate process.
If you have questions regarding Probate and Guardianship please contact Orlowsky & Wilson at 847-325-5559 or visit our website www.orlowskywilson.com for more information.
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