Although it is often assumed that it is best to avoid the probate process when planning how to pass along our assets to loved ones, estate planners find that sometimes the probate process can be very helpful. Here are some circumstances to consider.
Debt or Insolvency?
The Flick Law Group reminds us that probate is not “inherently bad,” noting that probate can be simply defined as “the court-supervised process for distributing a deceased person’s money and property….” Court supervision, for example, can turn out to be very useful in circumstances involving significant debt:
When someone dies, the law requires that, in addition to providing for heirs, the estate (all the money and property the deceased person owned) also pay off any of the decedent’s outstanding debts or bills. This requirement can be a challenge if the bills and debts are high relative to the estate’s value. When someone is insolvent, they do not have enough money to pay bills or debts. Insolvency can also exist at death if someone dies owing more than what their estate is worth.
The probate process can be extremely valuable in such circumstances because the court can determine how creditors are paid and how much they receive. Further, because of the structured nature of probate processes, creditors who want to be paid from the estate must submit to the court’s requirements. One requirement is that they make their requests known within a limited time frame. Failure to adhere to the court’s timeline can restrict a creditor’s ability to show up in the future and ask for payment. In most instances, debts not satisfied are lost. As a result, probate may facilitate greater levels of loan forgiveness for an estate.
Understanding and Obtaining Probate Bonds
Probate courts often require the procurement of a type of fiduciary bond, known as a probate bond. Essentially, these bonds protect the interests of the estate and its beneficiaries in accordance with applicable state law. Although bond names and requirements vary from state to state, when a probate court anywhere in the country requires a bond, national expert, Colonial Surety is here to help. We are a direct, digital provider of a full portfolio of fiduciary bonds, and make it quick and easy to quote, purchase and e-file them, from anywhere, in minutes—even before leaving court.
In a perfect world, proactive communication with loved ones about our intentions and estate plans would prevent the unpleasant surpises and conflict. Flick Law Group points out that sometimes, the public nature of probate can also help keep conflicts in check:
Probate proceedings may also be warranted when there are family disputes or conflicts between heirs (those legally entitled to your money and property at your death). Although privacy is often valued when it comes to family matters, the public nature of probate proceedings may promote accountability among family members in such cases. Heirs who might have acted unscrupulously or unfairly may be restrained if a judge is overseeing the proceedings.
The formalities of probate proceedings may also prompt more reverence for your wishes. As a result, even if some heirs are dissatisfied with your outlined wishes, they will be less likely to contest them because of the court’s involvement. Moreover, there is a finality associated with judicial processes that could further encourage an individual to honor the judge’s ultimate decision. Whether court involvement preserves family dynamics depends on the specific circumstances. However, the court’s objectivity can make the process easier to navigate.
During probate proceedings, courts across the country may require bonds such as: administrator, executor, estate fiduciary and personal representative bonds. At Colonial, the steps to obtaining any of these bonds are easy—get a quote online, fill in the information, and enter a payment method. Print or e-file the bond on the spot. Obtain Court Bonds Here Now.
Probate Law? Partner Up
Chances are that families today are bringing more and more concerns to you for your wise consideration. What to do about the small family run business? Special needs trust? Blended families. Digital assets. Cryptocurrency. Although life’s ever more complicated—bonding does not have to be.
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Founded in 1930, Colonial Surety Company is a direct writer of bonds and insurance products. Colonial is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed, and licensed for business everywhere in the USA.