Probate - Explained
What is Probate?
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What is Probate?
A probate refers to a lawful procedure in which steps are taken to review the validity and authenticity. It is about the management of the will of a person who has recently died. The jury is responsible for appointing an executor mentioned in the will for following the procedure of assets collection of the expired person, paying off liabilities if any, and allocating the remaining assets to dependents mentioned in the will. In case, there are no dependents mentioned, the executor will determine them. And in case, there is no will, the duties of executor will be replaced by the administrator.
How Does Probate Work?
A probate refers to the preliminary step associated with the administration of the property of an expired person and allocating his or her assets to the dependents. After the death of the estate owner, his or her beneficiaries that are mentioned in the will receives assets. Sometimes, the expired person doesn't create a will mentioning on how to allocate assets or estate after he or she dies. Depending on the presence of a will, the assets of the expired person might have to undergo the process of probate.
Probate of a Will
After the death of the person, it is the responsibility of the custodian to either give the will to the executor listed therein, or probate court within a time duration of 30 days of his or her death. The probate process ensures the authenticity of the will and is verified so as to make sure that it was the last testament of the person who has expired. The executor is the person who receives official right from the court to represent the deceased person, and his or her name is mentioned in the will. The person who acts as the executor has the power of identifying and administering the assets of the deceased. The executor can ascertain the worth of the property either by considering the date of death value or the other valuation date, as mentioned in the Internal Revenue Code. Assets which are suitable for probate are administered by the probate court that is situated where the deceased person was present at the time of death. However, for real estate matters, you should choose the country where the real estate is present. In case the deceased had to pay any taxes or loans to the required parties, it becomes the duty of an executor to pay them off using his or her assets. After the person dies, the creditors need to file claims for their money that the deceased party owed to them in a specific period of time. In case, the executor disapproves the claims presented, they can further appeal to probate judge who decides the authenticity of the claim. The executor also holds the responsibility of paying any personal taxes on behalf of the expired person. Remaining property taxes will be due in a time period of 9 months from the time when the person died. After paying off the taxes, debts, etc. from the assets of the deceased, the executor can allocate the remaining assets to the dependents.
Probate without a Will
A person who expires without making a will is considered to have died intestate. An intestate estate can also be concluded as the one that is not authentic in the eyes of law. In case of an intestate estate, the process involves allocating assets as per the provincial policies. An administrator is appointed by the probate court for examining the deceased persons estate. In this case, the administrator works as an executor, and obtains all legit claims against the property, and pays off outstanding loans, or debts like outstanding bills. Further, it is the duty of the administrator to find out the eligible beneficiaries of the deceased who may include spouse, parents, and children. Also, the probate court will ascertain the extent of assets that need to be allocated among the beneficiaries. In most of the provinces, probate laws allocate estate of the deceased among their spouse and children. For instance, a person residing in California who died without having an authentic will, may have his estate allocated as per the community estate laws in the province. These laws also consider both spouses as joint property owners. The allocation process commences with the spouse. In case, the person who died is single or has no surviving spouse, then his or her assets will be allocated among his or her children. In case, children are not present, then relatives will be considered for the allocation process. In the absence of next of kin, the state will have the right over the assets of the deceased. For intestate estates, friends close to the deceased wont be considered as beneficiaries as per the probate laws of a province. In case, the deceased had created a joint account with somebody, the rights of the joint assets will get transferred to the partner who is alive.
Is probate always required?
People are concerned if it is mandatory to have a probate after the person dies. It can be time-consuming to settle a probate. In case, the estate is complicated in nature, it will involve more time for allocating the assets. And, the more time it takes, the costlier it will be. If an estate is probated in the absence of a will, it will prove to be more expensive than the one that is probated with an authentic will. However, the costs and time involved in both processes will be more. There are public records maintained for proceedings carried out by the probate court. And in the absence of probate, private settlement will be conducted in a private manner. Different provinces have varied laws regarding probate. Also, it may vary if a certain state requires a probate following the death of a person. One can avoid probate if the worth of the deceased persons estate becomes lower than a specific amount. However, this amount may differ from one state to another. For instance, probate policies in Texas allow to skip probate in case the estates value is lower than $50,000. In case, the value of the estate is that small that one could skip the whole probate procedure, then the asset related to the estate can be obtained with the help of an affidavit that bears the signature of a beneficiary. There are some assets that don't require probate, and can be directly allocated to dependents. For example, life insurance income, pension plans, health or medical savings account, individual retirement plans, 401(k) plans, etc. Also, assets that have joint ownership and have a right of survivorship and estate held in a trust don't require probate as well. Since the probate requires huge costs with the further involvement of lawyers who charge fees from the decedents estate, there are people who tend to lower down the related costs. The probate process can involve a lot of lawful and tax complications, and thats why, it is advised to have a will, and talk to a finance expert or lawyer, and making things easier for your dear ones. After all, nobody would like to face these issues related to asset allocation after the death of their loved ones.
- Succession Planning
- Chartered Trust and Estate Planner
- Cy Pres Doctrine
- Exordium Clause
- Non-Contestability (No Contest) Clause
- Per Stirpes
- Elective Share
Qualified Domestic Relations Order (QDRO)
- Declaration of Trust
- Uniform Gifts for Minors Act
- Acceptance of Office by Trustee
- Beneficial Interest
- Asset Protection Trust
- Bare Trust
- Blind Trust
- Charitable Lead Trust
- Credit Shelter Trust
- Discretionary Trust
- Generation Skipping Trust
- Grantor Trust Rules
- Living Trust
- Inter Vivos Trust
- Qualified Domestic Trust (QDOT)
- Qualified Terminal Interest Protection Trust (QTIP)
- ABLE Account
- Accumulated Income Payments (Canada)
- Charitable Split-Dollar Insurance Plan
- Coverdell Education Savings Account