What is probate?

How long does the process take? What does it entail? Who administers the probate process? These crucial questions will all be answered in detail to give a clearer idea of the entire process.

Probate is a procedure that is court-supervised for the sole purpose of transferring ownership of a person’s assets after their death. This process authenticates the Will of the deceased and distributes belongings as the Will directs.

This procedure’s main goal is protecting the rights of all heirs and beneficiaries, and other individuals who may also have a stake in the estate. Probate also determines monies owed to creditors and taxes due from the estate.

Who Administers the Probate Process?

Often, a Will names Personal Representatives who are in charge of overseeing the probate. A Personal Representative (known as an executor in most states) may be a friend, family member, business associate, trust company or financial institution. If there is no Will, the court will appoint one.

The main duties of the personal representatives are to;

  • Identify and gather the deceased’s assets.
  • Manage the assets during the entire probate process.
  • Determine the surviving spouse’s rights under the marital property law.
  • Pay taxes, debts, claims, and probate administrative expenses.
  • Distribute properties to the surviving spouse and dependent children as required under state laws.
  • Distribute the remaining properties to people named in the will.

What’s the Difference Between Informal and Formal Administration?

The probate judge presides in issues of formal administration, but the register of probate of the county supervises informal administration. Usually, you must use the formal administration when the will is being contested. Only a probate judge has the jurisdiction to rule on the disputes. Where contested issues come up during informal proceedings, it would have to be changed to formal administration.

The informal administration costs a lot less than the formal, and, in most cases; you can handle most of the process via mail. Milwaukee County does require a Personal Representative to be present at the hearing.

Should you hire a lawyer to handle probate?

A Personal Representative can decide to hire an attorney for proper legal advice on the probate processes. This Personal Representative is at liberty to hire any lawyer of choice; this needn’t be the attorney who drafted the Will.

In formal probate proceedings, an attorney must represent the personal representative’s estate. Though not required, it is advisable for an attorney to attend the informal administration hearings. The staff of the register of probate can answer simple questions about procedures as well as preparing forms. However, unlike a lawyer, they cannot evaluate your case and offer any legal advice.

Which Properties Can Bypass Probate?

Sometimes, probate is avoidable when the assets solely owned by the deceased totals not more than $50,000 in value. The requirement to transfer such property is simply completing the “transfer by affidavit” form.

Excluded from probate are assets titled in joint ownership, as it automatically passes down to the surviving co-owner.

In addition, various life insurance payments and others in IRA, 401(k), pension, or any other retirement plan sidestep probate – if the deceased has named beneficiaries. Such beneficiaries would get the funds directly. Where the deceased has no beneficiaries, the assets would pass through probate.

How Much Does it Cost to Apply for Probate?

The primary expenses of probate include court costs, as well as costs of placing a probate bond where the bond isn’t waived by the will. It will cover fees paid to the attorney and Personal Representative. The funds to settle these expenses comes from the estate.

The estate’s asset values will determine the court filing fees. The legal fees vary based on the intricacy of the estate.

When an attorney has been given basic information about an estate, he or she would be able to offer you an estimate of the total fees. Ensure that you understand the arrangement before retaining the lawyer.

The Personal Representative also has a right to recompense for expenses that were incurred in handling and settling the estate, as well as for the time spent executing those duties. The court must approve attorney fees and expenses in formal probate proceedings.

Taxes Involved in Probate

The estate has to pay both state and federal income tax on income that the estate earns from the date of death until the completion of probate. Also, there may be some state and federal taxes for estates. The asset value owned by the deceased on his or her death determines the sum of estate taxes.

How long does the probate process take?

Probate can last up to two years or even longer for a big or contested estate. However, the process could last up to six months for a smaller uncomplicated estate.

Why does the probate process take so long?

The time frame allows for creditors to make claims against the estate. Typically, it takes some weeks to inform creditors after death. Immediately after that has occurred, creditors have three months to begin to file their claims against the estate.

In addition, the Personal Representative has to file outstanding income tax returns on behalf of the deceased, as well as the income tax returns of any income received by the estate. If the estate is big enough, the Personal Representative might need to file the estate tax returns (which are due 9 months after the death date). The Personal Representative has to wait to receive the tax closing letters directly from the IRS and Department of Revenue to close the probate.

Hence, the time required for probate relies on such factors as types of assets, estate size, a form of ownership, marital property issues, tax issues, the complexity of creditors’ claims, and whether a firm is involved. The state law requires that the estate is closed within at least 18 months. But several counties have implemented a benchmark for finalizing probate within 12 months. During either period, the court may grant an Extension Petition. If the whole process goes beyond the allotted time, the court can then replace the attorney or Personal Representative for the estate, or even both.

Even while an estate is in probate, beneficiaries might be able to get part of their bequest. Once the claim period of the creditors is passed, the Personal Representative must make sure the deceased’s estate has sufficient funds reserved to cover all taxes and expenses. Then out of outstanding funds, the Personal Representative can make a fractional distribution to the beneficiaries before the probate is complete.

Is it Possible to Avoid Probate?

As stated earlier, some types of assets and estates aren’t subject to probate. Some kinds of estate planning can make probate pointless. For instance, you can place your assets into a revocable living trust or joint ownership.

Still, with this sort of advanced planning, probate might be necessary for a few assets. This may occur, for example, if the owner overlooked some assets when conveying properties to the revocable living trust. Or extra assets, like a personal injury settlement, may be payable to an estate after the death of the owner and so not be added to the trust.

Also, creating a living trust does not remove the requirement to pay taxes. The trust will owe state and federal income taxes on any income the trust receives, and also state, and federal estate taxes where the estate is big enough.