If you are an executor probating a will for the first time, you may be wondering how probate works. What is probate? What responsibilities do you have if you are the executor of a will?
The informational guide below on probate will give you answers to some of the questions you have. As an executor understanding probate is a process you need to take one step at a time.
What Is Probate?
By definition, probate is the process a deceased’s estate is distributed to heirs and beneficiaries. Probate also involves paying off any debt left by the deceased. The result of probate is property and assets are distributed to the deceased’s wishes in their will.
How Long Is the Probate Process?
If the deceased left no will, the deceased’s property and assets are left to the heirs as determined by state law. As an executor, the probate process takes about six-nine months from the time the paperwork is filed with the probate court.
Executors of Probate
Most of the time, the deceased names the executor of their will. When the probate paperwork is filed with the probate court, the Judge will grant authorization of the executor most of the time. Sometimes there is no executor named for a deceased’s estate and that’s when a Judge will appoint someone.
State statutes define which relatives can qualify as an executor. The Judge grants the appointed executor authorization to act on behalf of the deceased’s estate. The Judge does this through what’s called, letters of testamentary.
The letters of testamentary can be provided to insurance companies, financial companies, real estate brokers, safe deposit boxes, and more. Once you have the legal authority to act on behalf of the deceased’s estate you can start the asset inventory process.
Probate Inventory Process
Once you have the authority to begin the inventory of the deceased’s estate. You may be interviewing family members, meeting with insurance brokers, tracking down bank accounts, and more. Sometimes, the assets will be listed in the deceased’s will.
If you don’t have a will to go by tracking down all the deceased assets and debts can be intensive work. Once you get all the inventory processed and identified you must maintain them with the estate’s money while you continue your probate duties. As an executor you can’t get behind in paying any mortgages, car notes or any other deceased account.
Many times paying the deceased’s debts require setting up an estate bank account which you also record with the probate court. The estate’s bank account’s only responsibility is to pay any accounts owed. The bank account is also what you use to pay out what the beneficiaries receive at the end of the probate process.
Paying the Deceased’s Debts as Executor
As executor you must notify all the deceased’s account holders about their death. Since you have already set up the estate’s bank account, you can now pay the deceased’s debts you feel are legitimate. You can also decide not to pay certain debt claims.
It’s important to remember most of the time, family members and beneficiaries are not liable for the debts of the deceased. There are states which make you run an obituary notice in the paper to make sure the deceased’s creditors are notified of their death. Creditors can make claims against the estate.
As an executor, you get to decide if their claim is legitimate or not. If you decide the claim doesn’t need to be paid, the creditor has the right to petition the court to get the estate to pay. At that time, you may need to go to court to defend your decision.
Probate Estate Taxes
Estate taxes involved in probate is where you will have the most exposure to bogus claims and even some scams. Make sure you are wary of anyone who claims they can help you avoid probate or wants money upfront. Most of them are scams where people prey on people who are going through an emotional time.
Perpetrators know they can target you when you are at your weakest. You need to stick to proceeding through the probate process in a step-by-step manner. One of your first official executor duties is to know the value of the estate so you determine how much estate taxes may be needed.
You can do this two ways:
- You can use the date of death value of the deceased’s assets.
- You can use another date to value the deceased’s assets.
The Internal Revenue Code’s rules state if you use the alternate date, you can only use it for assets unsold or assets the heirs and beneficiaries didn’t want. The heirs and beneficiaries have to decide if they want the asset or not within six months.
If you use the alternate date option, the property is valued on the date you distributed the assets.
The End of the Probate Process
After all valuations are done on the estate’s assets, and taxes owed you can give the court your estimation of the financial transactions needed. If the judge approves you can begin to distribute the estate’s properties and funds.
It is at this time you want to include your bill. How much you get paid depends on the state the will is being probated. Probate courts always know how much to pay you out of the estate’s account.
Always remember no two estates are probated exactly the same way. The probate process is never the same because no two people have identical estates or beneficiaries.
The Probate Process Always Changes
It’s important to remember, the executor services you give is taxable income. But if you are left a cash inheritance by the deceased those are not federally taxed. An estate has to be quite large to be liable for taxes. In 2018, only estates of more than $11.18 million were subject to estate taxes.
Any estate exemptions are marginally adjusted upward in 2019. There are a few states where the exemption can be less than the $11.18 million. Always check with your deceased’s estate location to determine if any taxes are owed.
The question of what is probate has been answered above. Probate is all about the deceased’s estate and executor. As an executor, you will implement your job with a high degree of organization.
Record everything, take nothing for granted as being done, and remember to implement the probate process one step at a time.
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