Probate Administration Explained
Over the course of a person’s life they accumulate a lot of possessions. When they die those possessions, known as assets, become part of their estate.
Probate Administration is the process through which those assets are discovered, collected and distributed to heirs or beneficiaries. Each state has its own probate laws.
Notifications
One of the first tasks in probate administration is to notify the heirs-at-law and beneficiaries. Heirs-at-law and beneficiaries are people who will inherit from the estate under the terms of the Will, and they should be formally notified (notified officially by mail) that probate is starting. Beneficiaries who are set to receive property under state law also must be notified that probate is happening.
This notification will include the name of the person who died, how much time creditors have to file a claim, and contact information for the executor of the estate. It is important to publish this notice in a newspaper of general circulation so that the creditors can see it and be aware of their rights. Creditors can try to take advantage of a dead person’s estate by filing fake claims, and this is why the executor must be diligent to prevent fraudulent activities.
Once the heirs and creditors have been formally notified that probate is happening, they will be given the opportunity to object to the proceedings. This is a process known as formal administration, and it takes longer than summary administration. This is because the court must hold a hearing on each petition that is filed, which can take a significant amount of time.
To avoid probate, a deceased person can put assets into trust. This is usually done by designating a beneficiary on a bank or investment account. It’s called a TOD (transfer on death), ITF (in trust for), or POD (payable on death) designation. Beneficiary designations are a simple way to avoid probate, and they should be reviewed regularly by the heirs to make sure that they are accurate.
If a person dies without a Will, then an application must be made to the Surrogate’s Court for Letters of Administration. This is done by Probate Attorneys Los Angeles whom will be handling. The application must be accompanied by affidavits and renunciations from everyone who has an interest in the estate.
Sometimes a bond must be posted by the administrator to guarantee that all debts will be paid and that the assets will be distributed in accordance with state law. This is typically done if the estate has more than a certain amount of value, and it is a cost associated with the administration of the estate.
Inventory and Appraisal
When an individual passes away, they may leave behind a will with instructions for transferring ownership of their estate to heirs. The process of authenticating the will and settling the estate’s debts is called probate. Probate Attorneys Los Angeles oversees the proceedings and ensures that the deceased person’s wishes are carried out as intended.
One of the key tasks an executor must complete is preparing and filing an inventory of estate assets with the court. A well-prepared inventory can significantly simplify the probate process. It can also reduce costs because if the estate has sufficient assets to pay creditors, they will not need to file claims with the court.
The inventory includes a list of all estate property, including real and personal property such as homes, cars and other vehicles; financial investments such as stocks and bonds; tangible personal property such as furniture and household items; and other property such as partnership interests and business interest in corporations. It also lists each item’s legal description and an appraiser’s value. The court will review the completed inventory and appraisement before approving it. The personal representative must file the final inventory and appraisal within four months of receiving Letters of Administration from the court.
It is important that the personal representative be very thorough when compiling the inventory and appraisal. If he or she is not, it can be very difficult to determine what was truly owned by the estate at the time of death. In addition, if there are new estate assets discovered after the filing of a Final Inventory and Appraisal, a supplemental inventory and appraisal must be filed.
In addition to determining the estate’s assets, the executor is tasked with locating all legal heirs and ensuring that they receive their inheritance in accordance with state law. He or she must also assess whether the estate needs to sell any assets and, if so, at what price.
For many people, probate can be a lengthy and complicated process. However, implementing estate avoidance tools such as pour-over wills, revocable living trusts and Ladybird deeds can help minimize or even eliminate the need for probate.
Taxes
A major component of probate administration involves identifying and claiming all estate assets, paying debts and estate/income taxes, and ultimately transferring the net assets to beneficiaries. Individuals should consider working with a qualified estate planning attorney to help them put their affairs in order before death. This can include establishing trusts and/or executing a valid will. It also may include minimizing taxes and avoiding unnecessary probate complexities.
The Internal Revenue Service assesses a tax on the value of an estate that is passed down to beneficiaries. This is known as an estate tax or inheritance tax. The amount is based on the total gross value of all probate and non-probate property. To arrive at the gross value, the IRS subtracts certain deductions, such as mortgages and other debts, expenses of the estate, gifts to charity, and life-time taxable gifts. The value of the taxable estate is then multiplied by a federal rate to determine the tax.
State taxes are also owed on the taxable estate, although they tend to be lower than federal rates. These taxes are based on the state’s laws and will vary by jurisdiction. A knowledgeable probate lawyer can assist a deceased person’s loved ones in understanding these taxes and how to reduce them as much as possible.
In addition to these taxes, executors must pay various fees for their services during probate administration. These are often based on a percentage of the gross value of the taxable estate, plus some other fixed amounts. These fees can add up quickly, so a beneficiary should be prepared to cover them.
During the course of probate, creditors have a limited time to make claims against the estate for money that is owed. This process can delay the distribution of assets to beneficiaries. The executor must review each claim and determine whether it is legitimate.
The most efficient way to avoid probate is to use non-probate assets. These include joint accounts with rights of survivorship and assets that have a beneficiary designation such as life insurance, 401(k)s, and IRAs. Taking these steps can allow such assets to pass immediately to designated inheritors upon death and avoid the probate process entirely.
Distribution
The final step in the probate process is to distribute the deceased person’s assets. An executor, if there is one, or administrator, if no will exists, must collect the estate’s assets in order to pay any remaining debts on the estate and then transfer ownership of the assets to beneficiaries. This can take a long time, especially if the estate has many assets titled in the deceased’s name alone.
If the deceased individual has a will, a probate judge must authenticate it and approve the executor named to administer the estate. This process ensures that the contents of the will are carried out as intended. If the deceased individual dies without a will, heirs are determined according to state intestacy laws.
During the course of probate, creditors are notified of the death and given a short window of time to file claims against the estate for any money that is owed to them. The executor must also pay off any outstanding tax liabilities on the estate. During this process, it is important that the executor or administrator follow strict deadlines and adhere to all legal procedures.
Once all debts have been paid and the estate’s assets are distributed, the executor or administrator will receive their compensation for their work. This is typically a percentage of the value of the estate. During this process, it’s also important to communicate with the beneficiaries and other interested parties as needed. This includes providing necessary documents, answering questions, and resolving any disputes that may arise.
The Probate Attorneys Los Angeles oversees the probate process for estates of deceased persons. Probate Attorneys Los Angeles who has experienced in this area of law can help ensure that the process is completed efficiently and accurately. Koestner & Shahon works hard to make sure that the process goes smoothly for their clients and their loved ones. She will help you to determine the most efficient and effective way to handle a deceased person’s affairs and make sure that their wishes are carried out in a timely manner. Contact us today to schedule a consultation.
Over the course of a person’s life they accumulate a lot of possessions. When they die those possessions, known as assets, become part of their estate. Probate Administration is the process through which those assets are discovered, collected and distributed to heirs or beneficiaries. Each state has its own probate laws. Notifications One of the…