Executor

Probate and Estate Settlement: What You Need to Know

Probate is the legal process through which a deceased person’s estate pays debts and distributes assets to heirs. It is often the most complicated and stressful aspect of being an executor. The complexity of the probate process depends in large part on the types of assets held by the estate, types of property ownership and the intricacies of applicable state laws.

What does the probate process look like?

Generally, the probate process involves the following steps:

  1. Appointment of an executor of the estate. A will nominates the executor or personal representative of the estate. If there is no will, an executor or personal representative is appointed according to state law.
  2. Proving the validity of the will. The court verifies whether a last will and testament is valid. State law governs this process, so check your state’s statutes and requirements to make sure your will is valid.
  3. Inventory of assets. Identification and inventory of the deceased’s assets must take place before the distribution of assets.
  4. Appraisal of property (if needed). If the estate has non-cash assets such as real estate, artwork or jewelry, an appraisal may need to take place to determine the cash value of these assets.
  5. Payment of estate debts. The estate typically pays any debts or taxes owed. In some cases, the executor may need to sell assets from the estate to pay the debts and expenses.
  6. Estate accounting. The executor is responsible for preparing and filling an estate accounting with the court that shows the receipts and income of the estate, the payment of expenses, debts, taxes, etc., the balance of assets on hand.
  7. Distribution of assets. After the payment of outstanding debts, final income taxes and any estate tax required approvals are received, and the like, the distribution of assets to heirs can usually take place. If there is a will, this distribution of assets follows the process outlined in the will. Without a will, the distribution follows state law.
  8. Closing the estate. After the distribution of assets, the executor files any remaining paperwork with the court in order to be released from their duties as executor and officially close the estate.

How long is the probate process?

The length of the probate process varies depending on the size and complexity of the estate as well as the deceased’s state of residence. In some states, the probate process takes months; others may take several years. Some states provide estates an expedited probate process if the estate is under a certain value. Check with your attorney to find out probate requirements for your state.

Can any of my assets avoid probate?

Certain assets do not have to go through the probate process. Accounts that have designated beneficiaries, as well as life insurance, pension plans and IRAs which name a beneficiary other than an estate do not need to go through probate. Funds from these assets are generally paid directly to the beneficiary designated by the donor. However, it is important to know that if beneficiaries are not listed on these assets often times the default beneficiary is the estate of the donor. Jointly owned real estate can also avoid probate. Joint tenancy with right of survivorship allows property ownership to transfer to the surviving owner(s) without having to go through probate. You can also consider setting up a trust to pass property to your beneficiaries while avoiding probate.

Probate, although a relatively standard process, can be complicated, lengthy and expensive, but with proper estate planning, the probate process does not have to be a daunting one. For more information about estate settlement, contact a Fifth Third Bank specialist.

 

 

Fifth Third Bank does not provide tax or legal advice. Please consult your tax adviser or attorney before making any decisions or taking any action based on this information. This information is provided for educational purposes only and does not constitute the rendering of tax or legal advice.

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