Estate Administration and Probate Resources

FAQs about Estate Administration/Probate

What is Probate?

Probate is the legal process by which property owned by someone who has died without a trust in place effects the legal title and transfer of assets to their heirs. In other words, probate is simply determining who gets what assets when someone passes away, either by looking at the will, or if no will exists, then the laws of intestacy–laws that determine the hierarchy of heirs. Probate law is a complex field and, practically speaking, requires an attorney’s guidance.

In conjunction with my complete step by step guide on how to probate an estate, here is a convenient checklist of the 6 steps involved in settling an estate.

Step 1 of Estate Settlement - Inventory the Decedent's Documents and Assets

Before being appointed to serve as Personal Representative/Executor, the first step in the estate settlement process is to locate all of the decedent's estate planning documents and other important papers. Estate planning documents may include a Last Will and Testament, burial and/or memorial instructions, and/or a Revocable Living Trust. Other documents that should be located include bank and brokerage statements, stock and bond certificates, life insurance policies, corporate records, car and boat titles, deeds, and the decedent's prior three years of income tax returns.

Step 2 of Estate Settlement - Open the Probate Estate

The next step in the estate settlement process is to meet with an estate lawyer to officially open the probate estate with the probate court. Refer to my Step by Step Guide to Opening a Probate Estate for a detailed guide on how to open a probate estate with the probate court.

Step 3 of Estate Settlement - Value the Decedent's Assets

The next step in the estate settlement process is to establish date of death values for all of the decedent's assets. All financial institutions where the decedent's assets are located must be contacted to obtain the date of death values. For assets including real estate, personal effects including jewelry, art work and collectibles, and closely held businesses, they'll need to be appraised by a professional appraiser. If the decedent's estate will be taxable for federal and/or state estate tax purposes, then in addition to the probate assets date of death values for all of the decedent's non probate assets will need to be established.

Step 4 of Estate Settlement - Pay the Decedent's Final Bills and Estate Expenses

The next step in the estate settlement process is to pay the decedent's final bills and ongoing expenses of administering the estate. It's the Personal Representative's job to figure out what bills the decedent owed at the time of death, determine if the bills are legitimate, and then pay the bills. The Personal Representative will also be responsible for paying the ongoing expenses of administering the estate, including legal fees, accounting fees, utilities, insurance premiums, and mortgage payments.

Step 5 of Estate Settlement - Pay the Decedent's Income Taxes and Estate Taxes

The next step in the estate settlement process is to pay any income taxes and estate taxes that may be due. This includes preparing and filing the decedent's final federal and/or state income tax returns; preparing and filing all required federal estate income tax returns (IRS Form 1041) as well as any required state estate income tax returns if the estate earns income during the course of setlement; and, if the decedent's estate is taxable for federal and/or state estate tax purposes, then preparing and filing a federal estate tax return (IRS Form 706) and/or a state estate tax and/or inheritance tax return.

Step 6 of Estate Settlement - Distribute the Balance to the Estate Beneficiaries

Usually the first question that the estate beneficiaries will ask the Personal Representative/Executor is "When can I expect to receive my inheritance?" But unfortunately for the beneficiaries, making distributions of the estate assets to the estate beneficiaries is the very last step in the estate settlement process.

 

 

Step by Step Guide - How to Probate an Estate

By , About.com Guide

Most people have little experience dealing with what happens after their loved one dies and they get appointed as Personal Representative/Executor to settle the estate. The purpose of this guide is to provide a general overview of the 6 steps required to probate an estate.

Before being appointed to serve as Personal Representative/Executor, the first step in probating an estate is to locate all of the decedent's estate planning documents and other important papers.

The decedent's estate planning documents may include a Last Will and Testament, funeral, cremation, burial or memorial instructions, and/or a Revocable Living Trust. The original documents should be stored in a safe place until they can be given to the estate attorney.

The decedent's important papers will include information about the decedent's assets, including bank and brokerage statements, stock and bond certificates, life insurance policies, corporate records, car and boat titles, and deeds; and information about the decedent's debts, including utility bills, credit card bills, mortgages, personal loans, medical bills and the funeral bill. Refer to What Documents Are Needed After Someone Dies? for a detailed list of the specific documents that will need to be located. From these documents a list should be made of what the decedent owned and owed, how each asset is titled, and, for assets and debts that have a statement, the value of the asset or debt as listed on the statement and the date of the statement. In addition, the decedent's prior three years of income tax returns should be set aside.

Once the decedent's important documents have been sorted through, the next is to meet with an estate lawyer to open the estate with the probate court.

Once the decedent's legal documents and other important papers have been sorted through, the next step in probating the estate is to meet with an estate attorney to officially open the probate estate with the probate court. Refer to Step by Step Guide to Opening a Probate Estate for a detailed guide on how to open a probate estate.

Once the estate lawyer has received enough information to draft the court documents required to open the probate estate, the person named to serve as Personal Representative/Executor in the decedent's Last Will and the beneficiaries named in the Will, or, if there isn't a Last Will, then the decedent's heirs at law, will be required to review and sign the documents required to open the probate estate. While these documents will vary from state to state, or even from county to county within the same state, they'll generally include the following:

Petition for Probate Administration

Oath and Acceptance of Personal Representative/Executor

Appointment of Resident Agent

Joinders, Waivers and Consents

Petition to Waive Bond

Order Admitting Will to Probate

Order Appointing Personal Representative/Executor

Order Waiving Bond

Letters of Administration/Letters Testamentary

Once the probate estate has been opened with the probate court, the next step is to establish date of death values for all of the decedent's assets.

Once the probate estate has been opened with the probate court, the next step in probating the estate is to establish date of death values for all of the decedent's assets. This step is important because most states require that an inventory of the decedent's probate assets along with their date of death values be filed with the probate court within 30-90 days of the date the probate estate was opened with the probate court.

All financial institutions where the decedent's assets are located must be contacted to obtain the date of death values. For assets including real estate, personal effects including jewelry, art work and collectibles, and closely held businesses, they'll need to be appraised by a professional appraiser.

While the probate court will only require date of death values for the decedent's probate assets to be listed on the estate inventory, if the decedent's estate is taxable for federal and/or state estate tax purposes then date of death values will also need to be established for the decedent's non probate assets including life insurance, retirement accounts including IRAs and 401(k)s, and annuities. Refer to What Are Non Probate Assets and Are They Included in Your Estate? to determine what, if any, non probate assets the decedent owned.

Once the date of death values have been determined for the decedent's assets, the next step is to pay the decedent's final bills and ongoing expenses of administering the estate.

Once the date of death values have been determined for the decedent's assets, the next step in probating the estate is to pay the decedent's final bills and ongoing expenses of administering the estate.

It's the Personal Representative's job to figure out what bills the decedent owed at the time of death, determine if the bills are legitimate, and then pay the bills. The Personal Representative will also be responsible for paying the ongoing expenses of administering the estate, including legal fees, accounting fees, utilities, insurance premiums, and mortgage payments.

Once the Personal Representative/Executor has paid the decedent's final bills and has the estate expenses under control, the next step is to pay any income taxes and estate taxes that may be due.

Once the Personal Representative/Executor has paid the final bills and has the estate expenses under control, the next step in probating the estate is to pay any income taxes and estate taxes that may be due.

The Personal Representative/Executor will need to prepare and file the decedent's final federal and/or state income tax returns and pay any taxes that may be due in a timely manner. The final federal income tax return will be due on April 15 of the year after the decedent's year of death.

Aside from filing the decedent's final income tax return, if the estate earns income during the course of administration, then the Personal Representative/Executor will need to prepare and file all required federal estate income tax returns (IRS Form 1041) as well as any required state estate income tax returns.

If the decedent's estate is taxable for federal and/or state estate tax purposes, then the Personal Representative/Executor will be responsible for preparing and filing the federal estate tax return (IRS Form 706) and/or a state estate tax and/or inheritance return, and paying the tax bills.

Note that some estates may be required to file a federal estate tax return even though no estate tax will be due. Refer to When is a Federal Estate Tax Return Required to Be Filed? to determine if Form 706 will be required to be filed for the decedent's estate.

Once all of the income tax and estate tax issues have been resolved, the final step to settling the estate is to make distributions of what's left to the estate beneficiaries.

Usually the first question that the estate beneficiaries will ask the Personal Representative/Executor is "When can I expect to receive my inheritance?" But unfortunately for the beneficiaries, making distributions of the estate assets to the estate beneficiaries is the very last step in settling the estate.

Prior to making any distributions to the estate beneficiaries, the Personal Representative/Executor must be certain that every single expense of administering the estate and all taxes have been paid or that enough assets have been set aside to pay the final bills and taxes. Otherwise, if the Personal Representative/Executor chooses to make distributions to the estate beneficiaries but expenses come up later, then the Personal Representative/Executor will have to pay these expenses out of his or her own personal assets.

If administration of the estate is expected to take more than a year, then the Personal Representative/Executor should work closely with the estate lawyer and accountant to plan for setting aside enough assets to pay the ongoing estate expenses and making distributions to the estate beneficiaries in multiple stages.

 

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