When we die, our financial matters must be sorted out. Is money owed on a car or other property? What about taxes? After debts are paid, remaining assets can be distributed. Who gets them, in what order? Who handles all these administrative chores? Who oversees the actions for fairness and legality? Simply put: probate is the court supervised process of bringing the affairs of the deceased to closure. Read on for the basics every family ultimately needs to know about probate.
With or Without A Will: Probate Explained
Though wills are very helpful legal documents detailing intentions, plans for assets and naming guardians for minor children, wills are not a “free pass” from the public process of probate. There are however, a few differences in how probate unfolds based on whether or not there is a will, as Metlife explains:
Probate is a legal process that occurs after a person has died. The deceased person’s will is validated by the court and their assets distributed accordingly….After the death of a property owner, known as the decedent, a probate court will review their assets and help manage their distribution. Typically, this involves validating and executing instructions left in the …will….“Property” in this case refers not just to land and real estate, but also vehicles, capital, and any other assets owned by the decedent….If the deceased didn’t leave a last will and testament, or if the probate court couldn’t validate the will, then their estate becomes intestate…. An impartial administrator is appointed to distribute the assets. This process can involve finding…legal heirs, starting with surviving spouses, then children, and then additional family members….Heirs must…claim their inheritance within a specific window of time….Once that window closes, the state takes possession of the assets.
Whether assets are distributed via a will or the intestate process, this remains true: debts must be paid off and reported in probate court, before any assets can be distributed. Property can even be sold off if necessary to resolve debts, and: “If the decedent’s debts and remaining taxes are greater than their assets, their estate is considered insolvent… Any remaining assets will go to the state to pay these debts.” Bottom line: Inheritance, whether via a will or through intestacy, cannot be claimed while debts exist.
The person responsible for seeing the state probate process through is a fiduciary, legally bound to the duties entailed in closing out the affairs of the deceased. When there is a will, typically, the designated fiduciary is named in it, and referred to as an executor. If there is no will, the fiduciary is appointed in probate court and referred to as an administrator. Aside from these differences, the primary responsibilities that both administrators and executors must carry out are essentially the same. In fact, sometimes the term personal representative is used to refer to either an administrator or an executor. Whether the term administrator, executor or personal representative is used, the responsible individual is likely to find themselves with these essential duties involved in closing out the affairs of the deceased:
- Identifying and gathering the decedent’s assets
- Preserving the decedent’s assets
- Appraising the decedent’s assets
- Sending notices to creditors
- Paying any debts owed by the decedent, funeral costs, and administration expenses
- Maintaining an account of financial activity
- Preparing and filing tax returns
- Distributing inheritances to beneficiaries or heirs
- Closing the estate
Given their significant responsibilities, in most states, it’s typical for administrators and executors to “have bonds to ensure their trustworthy behavior in their roles. These bonds guarantee that all the estate debts will be satisfied and that the remaining assets will be properly distributed to the appropriate heirs.” Essentially, administrator and executor bonds serve as guarantees that duties will be carried out in accordance with the law, and in the best interests of the estate and beneficiaries. More information about administrator and executor bonds, as well as help obtaining them, is available right here at Colonial Surety Company:
Executor Bonds and Administrator Bonds
Good To Know: Avoiding Probate?
In most states, probate protocols allow small estates (typically those valued below $100,000) to by-pass probate or pursue an expedited process. When privacy, and speed in distributing assets is a familial goal, carefully made estate plans enable probate to be minimized or even by-passed, and planners offer these strategies:
- Jointly-owned assets: If two or more individuals share ownership of property, when one co-owner passes away, the remaining co-owner(s) gains full ownership or a greater share of ownership.
- Assets in trust: If money is placed in an account known as a revocable living trust, it can be set up to transfer the funds to a designated beneficiary when the trustee dies.
- Life insurance, IRAs, pension plans, and more: These financial assets bypass probate because they’re contract-based. Each contract names a designated benefactor who receives the asset as soon as the terms of the contract are triggered.
- Transfer-on-death accounts: Many banks and other financial institutions will allow you to name a beneficiary for your account. This lets them easily claim the account funds after the owner’s death without going through probate.
Probate Law Practice?
Colonial Surety Company makes it easy and speedy for attorneys across the country to quickly secure personal representative bonds on behalf of clients. Our user-friendly online service allows you to efficiently quote and obtain all kinds of fiduciary and court bonds. With a few clicks on The Partnership Account® for Attorneys, you’ll select the bond needed, send it to your client for payment, and then download, e-file or print the bond.
Our fiduciary bonds include: administrator, estate, executor, guardian, personal representative, probate, surrogate, trustee, conservator and the list goes on. Court bonds include: appeal, supersedeas, injunction, replevin, receiver and more.
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