Probate is a Process: But Benefits are Immediate

Over my 38-year career as an Estate Planning and Probate Lawyer I have heard way too many times about the “evils of Probate”. Since I can remember, many Estate Planning Lawyers have preached the “evils” in order to push a Revocable Living Trust. Although a Trust can eliminate the process of a Probate, that doesn’t necessarily mean that Probate is “evil” in and of itself. This Article will help you understand what Probate is, when it becomes necessary, how long it lasts and the benefits of the end result.

To start with, we will legally represent you as the Executor and our job is to make sure you are adequately compensated for your time and that all expenses of the administration come out of the assets of the Estate and not your pocket. And, when the Probate is concluded we will make sure that all beneficiaries sign a Release of Liability and cannot sue you after the fact.

What is Probate? In its simplest form it is a Court supervised process to carry out the wishes of the Decedent and distribute his or her assets to the intended beneficiaries and recipients. The most important function of Probate is to make sure that the Will that has been presented to the Court is in fact the “Last Will and Testament” of the Decedent’. In fact, the legal definition of Probate is “to prove a Will”. But, before the Probate Court authorizes the distribution of the assets according to the Will, there are many steps that need to be completed in the Probate process.

First, the Will is submitted to the Probate Court by the Executor, or the Personal Representative by way of a Petition. Once admitted by the Probate Court, then Probate is “opened” and the process can begin.

As part of the “process” of “proving the Will”, any disputes over the validity of the Will or the lack of mental capacity by the Decedent must be settled. Sometimes a disinherited beneficiary may contest the Will on the grounds that some other beneficiary exercised “undue influence” over the Decedent in procuring the Will. All of these possible contests over the Will must be presented in a timely manner and ultimately the Court will make a ruling or determination that the Will is valid, and that the Decedent had the capacity to execute the Will and was under no undue influence. In most cases there isn’t a dispute at all over the validity of the Will and the following steps can begin immediately.

The next major step is to collect the assets and prepare an inventory of all of the Decedent’s holdings. Once an Executor is appointed the Executor, he or she now has immediate power to collect all of the assets and obtain all of the financial information concerning the Decedent. It has been said that having a Power of being an Executor for an Estate is like having a Power of Attorney for a Decedent. Also, the Executor or Personal Representative (means the same thing) must protect the assets and make sure they are adequately insured and protect them from unscrupulous neighbors, other family members, etc. In some cases, it is somewhat of a mystery or puzzle as to what assets the Decedent owned and where they are located. There are many different ways a good Probate Lawyer can help find the assets and put together the Inventory of the Estate. A few of such techniques include looking at the last few years Income Tax Returns, redirecting the Decedent’s mail to look for Bank Statements or other Financial Statements, checking in the Safe Deposit Box, searching County records and talking to neighbors and family members.

During this process of preparing the Inventory of the Estate, the Executor must determine any outstanding creditors, debts or other obligations of the Decedent. The Executor must determine which debts are valid and enforceable against the Estate and which debts are not. Before any assets are distributed to the heirs or other beneficiaries the Probate Court must ensure that all of these debts and obligations have been paid. This is actually one of the advantages of Probate. It forces would be creditors and debtors to come forward within a certain period of time and present their claims. If the claim is not presented in a timely manner, then those claims are “cut off” and cannot be presented in the future. This is why you often see in the “Legal Notices” section of a newspaper the published notice that someone has died, and where claims against the Estate can be presented. Generally, any creditor that doesn’t present a claim within four (4) months of this published notice, or receipt of actual notice in the mail, is cut off from presenting them in the future.

The next step in the “process” is to make sure that all Federal and State Income Taxes have been paid. This usually entails filing the “Last Tax Return” for the Decedent with the IRS and the State and asking for notice of any outstanding Taxes owed. In some cases, the Decedent may actually be entitled to a refund. Sometimes there are issues with the IRS over Payroll Taxes, or other Taxes that need to be paid and settled. And, for the wealthiest of individuals in this Country there may be “Federal or State Death Taxes” to be paid.

The last step before the assets are finally distributed to the family or other intended beneficiaries is making sure that you, as the Executor, have been adequately compensated for your time in serving as the Executor. There are several factors to consider in determining what is “adequate compensation”. But, in most cases, an hourly rate between $75 per hour to $125 per hour has been approved. It depends on what education and experience that you have in finance or business. Many banks or other financial institutions will charge 3% or more of the value of the total Estate. We will help you determine what is fair and adequate compensation. The Probate Court wants to make sure that the Probate Attorney and CPA have been paid. Also, all of the expenses of the administration of the Probate Process will be paid by the Estate, such as the cost for Appraisals, Court Filing Fees, Publication Fees in the Newspaper, etc. The main point is that all of the costs and expenses and compensation attributed to the Probate are paid out of the Probate assets and not from your own pocket.

Next, before the assets are finally distributed we want to make sure that we obtain a release of liability from all of the beneficiaries before we turn any money over to them. In other words, we don’t want to give a disgruntled beneficiary an inheritance that they could use to hire an Attorney to file a claim against you for some perceived misappropriate behavior. Remember, that as the Probate Lawyer, we represent you as the Executor and our job is to make sure that you are adequately compensated for your time and that all beneficiaries release you from any liability in administering your fiduciary duties.

Now, after all of those processes above are completed, the Court will authorize the distribution of all of those assets to the beneficiaries and the Estate is finally closed. How long does the process take? Well, it varies from state to state. But, in Arizona, it usually takes a minimum of six (6) to eight (8) months and is generally wrapped up in most cases in one (1) year to 15 months. So, we are back to where we started. Probate is a process. But the benefits are immediate as described above.