When a person dies, a probate proceeding is required unless a trust was established prior to death. Probate is a court supervised proceeding used to validate wills, confirm estate administrators, and other matters related to settling estates.
When a last will exists, the legal term for probate proceeding is testate proceeding. If no will exists, the proceeding is referred to as intestate. Testate probate generally requires less time and money to complete. Intestate proceedings require court appointment of a probate executor to manage the estate.
The first step of probate involves submitting the decedent's Will to the court, along with a petition requesting acceptance of the Will as valid. When decedents die without a will, a petition is used to appoint and confirm an estate administrator.
After the estate executor is confirmed, all creditors, heirs and beneficiaries are notified the estate has been opened for probate. The probate administrator is provided with letters testamentary, showing evidence they are authorized to manage the estate.
Probate laws vary by state but most require administrators to open an estate bank account to record income and expenses, or make monetary distributions to heirs. Administrators are required to perform a variety of duties including securing inheritance assets, obtaining appraisals for valuable items such as jewelry, collectibles or real estate, pay outstanding debts and estate management expenses, and distribute inheritance assets according to the Will or intestate probate laws.
The probate personal representative is also responsible for preparing and filing final tax returns and gift tax returns. Most estate administrators enlist the services of an accountant or tax preparation company to ensure final returns are correctly filled out and filed by the deadline. The IRS requires final tax returns to be submitted within nine months from the date of death; regardless of whether the probated estate is settled or not.
The final step of probate procedures is to distribute remaining assets to heirs and beneficiaries. Once distribution occurs a report is filed through probate court outlining income and expenses of the estate and all acts taken by the probate administrator. A copy of the report is provided to all heirs and beneficiaries.
As long as no one objects to distribution or the manner in which the estate was settled, the court will approve closing the estate. Beneficiaries are required to sign receipts verifying they received inheritance distribution. The estate administrator provides these receipts to the court and the court discharges the executor from their duties.
In some instances, probate can be prevented. The most common way to avoid probate is to transfer assets into a trust. Trusts are usually reserved for estates valued at $100,000 or more; however, strategies exist to protect smaller estates.
We invite you to browse our probate article library to learn more about probate proceedings, how to avoid probate, establishing trusts, inheritance tax, gifting, estate planning and estate administration.
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