Most people assume that Probate is reserved for the estates of those individuals who never created a will. While it’s true that many cases of probate originate this way, it is not always the case. In today’s blog, we’ll explore the process of Probating a will, and discuss when you need the advice of a professional.
Let’s explore a case study based on the following example. Bob and Sally have been married for 25 years. They have two children: Susan, who just turned 21, and John who just turned 14. Unfortunately, Bob recently passed away unexpectedly. Together, Bob and Sally owned a house that they bought a few years ago, a couple of cars and they have joint bank accounts, retirement accounts, life insurance and the stuff in their house. Bob and Sally also each have a bank account in their own name that they used for their “goofing off” money. Bob never got around to naming Sally as a beneficiary on that account. Bob and Sally completed wills a few years back, so Sally knows there is a plan of action that she needs to take to be able to have control of their assets. Sally is named as executor and the only beneficiary of Bob’s Will.
What is Sally’s first step? She should gather as much information about their assets as possible and then meet with a Probate Attorney in her area. Together, they will put the assets into two categories. The first category is what we will call “Probate Assets”. Probate Assets are the assets that we will have to go through the exercise of “Probating the Will” in order for Sally to access and or have full control over. The second category Is what we will call “Non-Probate Assets”. These assets will have a beneficiary designation or other method that will allow Sally to access them without court involvement. Based on the assets above, here is how the two categories will fill out:
3. Stuff in the house
4. The Separate “Goofing Off” Bank Account (the one with no beneficiary)
1. Life Insurance
2. Joint Bank Accounts
3. Retirement Accounts
Now that we have split everything into these two categories, the attorney will likely tell Sally that she can contact the Life Insurance company, the retirement investment managers and the Bank holding the Joint Bank Accounts immediately. Once they receive a copy of Bob’s death certificate, she will have no problem accessing those funds.
The attorney will then help Sally start the Probate Process on the “probate assets”.
So, What is the Probate Process? This is the process of clearing title to assets and getting them to the beneficiaries. Sally will need to have Bob’s name taken off of the house, cars, and the separate bank account so that she can either decide to sell in the future, take a home equity loan or otherwise deal with the assets. So, the attorney will help Sally file an Application to Probate the Will. The court will post a notice that a will has been offered to probate. (This notice gives others the notice that if there is a later will or they don’t believe the will is valid they can contest it, before it is admitted to probate.) After the notice has been posted for ten days, the court can hold a hearing where the will is admitted to probate, the executor is appointed officially by the court and the executor takes an oath swearing to complete the tasks of an executor. Since Sally is named in the will as executor, she will likely be appointed by the court assuming she doesn’t have anything that disqualifies her, such as a criminal background. After the hearing, Sally can start dealing with the property. She would normally notify beneficiaries (however, as the only beneficiary, she has no one to notify). Next, with the help of her attorney, she will prepare an inventory of the estate. This is basically a list of the property above in the “probate assets” category, plus any other property she learns of through the process. Her attorney will also help her publish a notice to creditors. Once she is satisfied that there are no debts to satisfy, she can distribute the bank account to herself, deed Bob’s interest in the home to herself, and have Bob’s interest in the cars transferred to herself.
The Probate Process can usually be handled with a single court hearing and often can be finished in a matter of a couple of months. This of course assumes that the will is validly executed, and no one contests its validity.
Do I need an attorney to Probate a Will? While the law does not require it, many courts will require an executor to be represented by an attorney. This is because an executor has a fiduciary responsibility to the beneficiaries. Courts want executors to understand the responsibility given to them. They must treat all beneficiaries with care and handle the estate always keeping the beneficiaries best interest in mind. Even if your local court does not require an executor to be represented by an attorney, it is good practice to do so. An executor can be held personally liable if they mishandle creditors or the assets going to the beneficiaries. Beyond that, dealing with probate matters can be daunting. The process detailed above is a relatively simple situation, but can be fraught with problems if you don’t know which items are going to be appropriate on the inventory. There are important timelines and deadlines to be aware of.
Can I avoid probate or does everyone have to go through it? Yes, probate can be avoided if you plan ahead. There are a multitude of avenues out there to avoid the process. They include the use of Revocable Living Trusts, Transfer of Death Deeds, Joint Bank Accounts, Deeds with Life Estates, etc. Once a person has passed away, it is often too late to avoid the probate process, but a Probate Attorney can help you navigate the process smoothly.