Probate estate refers to real estate, financial accounts and personal belongings of a person who has recently passed away. Probate is required within the United States to validate decedents’ Wills and settle their estate according to directives. The exception to this rule is when decedents protect inheritance assets through a trust.
Many factors are involved when transferring probate estate assets to heirs. The duration of probate depends on the court caseload, complexity and value of the estate. On average the probate process extends between six and nine months.
When decedents execute an ironclad Will, their estate can pass through probate fairly quickly. If decedents die intestate (without a Will) or if heirs contest its validity, probate can be suspended for a year or longer. This can bankrupt estates with real estate holdings because the estate must pay associated expenses such as mortgage payments, property insurance and taxes.
A probate executor is designated within the Last Will and Testament. Executors are responsible for a wide range of duties including obtaining appraisals for valuable assets including real estate, antiques, art, jewelry or collectibles. Executors must pay outstanding debts or negotiate to have balances reduced. In most cases, executors work with a probate attorney to ensure they are taking appropriate measures for handling estate matters.
When designated probate administrators are unable or unwilling to manage the estate they must submit a written request to be removed from their duties to either their probate attorney or the court. Estate planning experts recommend naming two individuals within the Will. If the primary executor is unable to fulfill duties, the second executor can quickly assume the role.
When a person dies intestate an estate executor must be appointed by the court. Most often the surviving spouse or adult children will assume duties. If no spouse or children exist, the next selection is direct lineage relatives. However, administrators do not have to be family members. Probate executors can be a lawyer, estate planner, or personal friend.
Probate laws vary by state. Many states require a formal petition be submitted to the court providing evidence the estate has been settled properly. Others extend court confirmation and allow executors to manage the estate without interference.
Options exist to keep inheritance property out of probate. The most common is to establish a trust. Trusts are generally used by individuals who own assets valued over $100k. Individuals whose estate value is below this amount can keep inheritance assets out of probate by designating beneficiaries to financial accounts, real estate holdings and titled property.
Beneficiaries can be assigned to receive proceeds from checking, savings, retirement, and investment accounts. Titled property such as real estate and motor vehicles can be jointly titled to include the intended beneficiary. Properties assigned through joint titles are exempt from probate.
Managing a probate estate requires time and effort. Estate administrators should be capable of handling finances and possess the ability to multi-task and mediate with family members should any disputes arise.
Probate executors are compensated for their duties. The compensation rate is usually disclosed within the Will. Administrative fees can be paid at an hourly rate, flat fee or percentage of estate value. Fees must be paid according to state probate laws.