Probate

 

Probate is a legal process, administered through the court system, that occurs after a person dies. It ensures appropriate distribution of a deceased person's estate and ensures that all debts and taxes owed are paid prior to distribution.

 

What It Does

  • makes sure that any will is valid
  • identifies and inventories the property of the deceased
  • has the property appraised
  • pays bills and taxes owed by the deceased
  • distributes the deceased's property per the will or per state law if there is no will

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How It Works

The executor of the will is the person identified in the will as the person chosen to ensure that the will is executed as written and to make sure all remaining financial affairs - taxes, bills, property sales, etc. - are handled in accordance with state law.

A person chosen as the executor should be trusted by the "owner" of the will. The executor may hire attorneys, accountants, or others to help him or her complete the responsibilities. The executor should be someone who would be willing to do the job and this person cannot be a minor, a convicted felon, or someone who is not a U.S. citizen.

Typical tasks of the executor are:

  • the executor of the will - or an administrator appointed by the judge if there is no will - files papers and presents the deceased person's will in probate court; this person is paid out of funds from the estate; an executor is usually chosen when a will is drawn up
  • the executor provides evidence of the validity of the will (usually, wills are notarized and signed by two individuals)
  • the executor presents the court with a list of property, debts owed, and who is set to inherit the remaining property after debts and fees are paid
  • relatives and creditors are officially notified of the death by the court
  • during the probate process which varies in time from a few days to a year or more, the executor must manage any assets and must make decisions that arise related to the estate
  • eventually, the court allows the executor to pay the debts and taxes and then to distribute the remaining assets to the specified heirs

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How Will My Executor Know What To Do?

Most of the probate process is clerical unless someone contests the will or there is an unusual problem. There are a lot of forms to fill out and file and deadlines to meet. There may be routine court appearances that are needed but some states allow the process to be done by mail.

If your executor is an attorney that you designated in your will, the attorney will file the paperwork and make all the arrangements or he or she will have a paralegal perform the work. There are attorneys that specialize in probate law.

If you named a friend or family member to be your executor, that person could hire an attorney to do the work. The funds to pay the attorney would come out of the estate before it is disbursed to the heirs. Or, the family member or friend could get a book from the library or a bookstore that would identify the steps to be taken. If this is the choice, be sure the book is specific to the laws in your state.

If the estate has many types of property, significant tax liability or potential disputes among inheritors, an executor may want to get some professional help. This could be hiring a probate attorney, arranging to consult with a probate attorney (i.e. have the attorney perform only certain services or check to make sure nothing is overlooked or to make sure state law is considered), or help from a paralegal who has probate experience.

To find a probate paralegal, an executor can look online or in the Yellow Pages under "Legal Document Preparation" or "Attorney Services." The executor should hire someone only if that person has substantial experience in this field and provides good references.

Additionally, the clerk of court may be willing to answer basic questions. Some courts have staff attorneys who look over probate documents and check for errors in the paperwork. They then would explain how to fix the problem.

If there is a lot of property and, consequently a lot of tax issues, a CPA or appraiser may be a good choice to perform certain services instead of an attorney. The cost of their services may be lower than that of an attorney.

If there is no will, an administrator will be named by the court to perform the paperwork and other related duties. Payment for this service will come from the estate before it is disbursed to the heirs.

Another option is to try to arrange to have an attorney agree to perform the tasks related to probate for you at a reduced fee. However, the law grants the selection of an attorney for probate only to the executor. Consequently, any agreement would not be binding unless the executor arranged it ahead of time. This can get complicated if your executor dies before you or you decide to change executors for whatever reason. It is better to avoid probate altogether, if possible.

More information (from Nolo):

 

 

NCIn North Carolina:

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Avoiding Probate

Probate is rarely in the best interests of beneficiaries. Most states allow a set amount of assets to be exempt from probate. It varies from state to state. It is possible, with pre-planning, to avoid probate on amounts higher than the exempt assets amount.

NOLO is a company that provides self-help legal books, software, and web-based information and tools. The business was established in 1971 by two legal aid attorneys to help people handle their own everyday legal matters - or learn enough about them to make working with a lawyer a more satisfying experience. Their website states:

"Everybody knows that lawyers charge too much and explain too little about what they're doing. What many people don't know (although they may suspect it) is that in many instances, lawyers are simply unnecessary. We believe the legal system is in serious need of repairs to make it simpler, fairer and more accessible to ordinary people, and we're working toward those ends. But as long as the system is more attuned to the lawyers than the public, Nolo will keep guiding people through it."

Every article is reviewed at least once a year to verify that the content is the most up-to-date available. There is a wealth of free legal information online and, for those who wish to have additional insight or help, they do have books and software for sale.

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How Is Probate Paid For?

All fees for any attorneys and appraisers, court costs, and for the executor must be paid from the estate before distribution. Executors can decline to charge for their services.

The court must ensure that debts and taxes are paid before the estate is distributed to the beneficiaries or heirs. Consequently, the court may "freeze" the deceased person's assets such as bank accounts and safe deposit boxes. To ensure that survivors are not unduly penalized, the court may extend an "allowance" so survivors will have money during the probate process. Any distributed "allowance(s)" come from the assets of the estate.

If you hire an attorney:
Most attorneys charge by the hour. That could easily run between $150-$200 per hour. With a per hour charge, you won't know the total charge until probate is concluded. An online search should provide you with customary hourly rates for your area.

Some states have a law that authorizes an attorney to take a certain percentage of the gross value of the deceased person's estate unless the executor negotiates a written agreement calling for less. Find out if your state falls in this category and, as executor and the person authorized to hire an attorney for probate, try to negotiate a lower rate.

If you hire a paralegal:
To find a paralegal who handles probate work, look in the Yellow Pages under "Legal Document Preparation" or "Attorney Services" or online. Make sure the person has substantial experience in this field and get references. Then, be sure to actually check the references.

The paralegal cannot give legal advice but he or she can fill out the paperwork and ensure that deadlines are met. The fee for a paralegal should be considerably less than that for an attorney. Attorneys, by the way, often hand over probate paperwork to a staff paralegal. Any fees charged would come out of the estate before disbursement to the heirs. You may be able to find the going rate for paralegal services in your area with an online search.

If you hire a CPA or appraiser:
Again, these professionals are listed in the "Yellow Pages" and online. Be sure to clearly identify the exact service(s) you wish to have performed and negotiate a rate. An online search should provide you with customary rates in your area.

Another option:
If, as executor, you are considering hiring a college student or other person without probate experience to handle the paperwork and keep up with deadlines, please be cautious. If the paperwork is done incorrectly, it could end up costing you what you saved and maybe even more. Make sure you trust the person and consider reviewing the work. This might be the type situation where you then, as a backup, hired a paralegal or attorney review the work done.

 

 

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