Unless they’ve experienced it, most people don’t know what happens after the funeral and mourners return to their lives. A recent San Francisco Bay Times article, “Probate in a Nutshell,” explains how the probate process works.
Probate is the legal process of administering the estate of a deceased person. It includes transferring the decedent’s assets to their heirs, beneficiaries, or creditors. Probate is court-supervised and can be a long, complex, and often stressful experience, depending in part on the complexity of the estate and the jurisdiction.
Probate starts with filing the last will and testament in court and the appointment of an executor. The court appoints an administrator to handle the estate if there is no will. The executor or administrator gathers the assets, pays debts and taxes, and distributes the remaining assets according to the terms of the will. If there is no will, Texas law determines, by kinship, how the assets distribute.
The probate process can take months or years to complete. During this time, the executor or administrator must keep careful records of all transactions. They must also file tax returns for the last year of the person’s life and diligently track all expenses and income of the estate.
Once the probate process is completed, the executor or administrator must file a final report with the court. This report must include all financial transactions. The probate court then reviews the report and determines whether or not it approves all transactions. Only then can assets be distributed to beneficiaries.
Why is probate so complex and time-consuming? First, it takes time to complete an inventory of someone’s property, including real estate, bank accounts, investment accounts, artwork, vehicles, jewelry, and tangible assets. The asset list also includes life insurance policies, pensions, annuities, and other assets the person owned.
A professional appraiser may be needed to determine the value of assets. The executor must also gather proof of ownership for all these assets, such as deeds or titles.
Any debts or liabilities must also be identified, including credit cards, loans, mortgages, liens, and outstanding debts. Finally, taxes must be reviewed: income tax, property tax, estate tax, or gift tax.
Finally, a complete list of all estate beneficiaries must be prepared, including family members, friends, or others who may be named in the will. Contact information will be required for all.
Many complications can arise during probate. This is why many people take the time to have an experienced estate planning attorney create an estate plan to remove assets from the probate estate through trusts, gifts, and other estate planning strategies. Of course, estate administration still needs to take place after someone dies. However, having an estate plan can minimize the court’s involvement, reduce delays, and avoid unnecessary expenses.
Reference: San Francisco Bay Times (April 4, 2023) “Probate in a Nutshell”
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