Probate is the legal process of administering the estate of a deceased person by resolving all claims and distributing the deceased person’s property under the valid will. A surrogate court decides the validity of a testator’s will. A probate interprets the instructions of the deceased, decides the executor as the personal representative of the estate, and adjudicates the interests of heirs and other parties who may have claims against the estate.
Probate is a process by which a will of a deceased person is proved to be valid, such that their property can in due course be retitled (US terminology) or transferred to beneficiaries of the will. As with any legal proceeding, there are technical aspects to probate administration:
- Creditors need to be notified and legal notices published.
- Executors of the Will need to be guided in how and when to distribute assets and how to take creditors’ rights into account.
- A Petition to appoint a personal representative may need to be filed and Letters of Administration obtained.
- Homestead property, which follows its own set of unique rules in states like Florida, must be dealt with separately from other assets. In many common law jurisdictions such as Canada, parts of the US, the UK, Australia and India, jointly owned property will pass automatically to the surviving joint owner separately from any will, unless the equitable title is held as tenants in common.
- There are time factors involved in filing and objecting to claims against the estate.
- There may be a lawsuit pending over the decedent’s death or there may have been pending suits that are now continuing. There may be separate procedures required in contentious probate cases.
- Real estate or other property may need to be sold to effect correct distribution of assets pursuant to the will or merely to pay debts.
- Estate taxes, gift taxes or inheritance taxes must be considered if the estate exceeds certain thresholds.
- Costs of the administration including ordinary taxation such as income tax on interest and property taxation will be deducted from assets in the estate before distribution by the executors of the will.
- Other assets may simply need to be transferred from the deceased to his or her beneficiaries.
The etymology of “probate” stems from Latin, old French, and old English words with somewhat different meanings. The earliest definition, dated to 1463, means the “official proving of a will,” and originates from the Classical Latin word probatus, meaning “proven” or “a thing proven.” This is the past participle of probāre, which means “to try, test, prove” or “prove to be worthy”. It also traces its roots to the old French wordprouwe, dated circa 1175, or prover, and is related to the English word “prove”, and the Welsh word “profi” (to test). The term “probative,” used in the law of evidence, comes from the same Latin root but has a different English usage.
In any jurisdictions in the U.S. that recognize a married couple’s property as tenancy by the entireties, if a person dies intestate, the portion of his/her estate so titled passes to a surviving spouse without a probate.
If the estate is not automatically devised to the surviving spouse in this manner or through a joint tenancy, and is not held within a trust, it is necessa ry to “probate the estate”, whether or not the decedent had a validwill. A court having jurisdiction of the decedent’s estate (a probate court) supervises probate, to administer the disposition of the decedent’s property according to the law of the jurisdiction and the decedent’s intent as manifested in his testamentary instrument. In order to dispose of certain assets in the estate, it is necessary to sell the illiquid assets including real estate. There are exceptions for smaller estates. If the decedent died without a will, known as intestacy, the estate will be distributed according to the laws of the state where the decedent resided or held by the court. If the decedent died with a will, the will usually names an executor (personal representative), a person tasked with carrying out the instructions laid out in the will. The executor marshals the decedent’s assets. If there is no will, or if the will does not name an executor, the probate court can appoint one. Traditionally, the representative of an intestate estate is called an administrator. If the decedent died with a will, but only a copy of the will can be located, many states will allow the copy to be probated, subject to the rebuttable presumption that the testator destroyed the will before death.
In some cases, where the person named as executor cannot administer the probate, or wishes to have someone else do so, another person will be named as administrator. An executor or an administrator may receive compensation for his service.
The probate court may require that the executor provide a fidelity bond, an insurance policy in favor of the estate to protect against possible abuse by the executor.
The representative of a testate estate who is someone other than the executor named in the will is an administrator with the will annexed, or administrator c.t.a. (from the Latin cum testamento annexo.) The generic term for executors or administrators ispersonal representative.
Steps of probate
Some of the decedent’s property may never enter probate because it passes to another person contractually, such as the death proceeds of an insurance policy insuring the decedent or bank or retirement account that names a beneficiary or is owned as “payable on death”, and property (sometimes a bank or brokerage account) legally held as “jointly owned with right of survivorship”.
Property held in a revocable or irrevocable trust created during the grantor’s lifetime also avoids probate. In these cases in the U.S. no court action is involved and the property is distributed privately, subject to estate taxes.
After opening the probate case with the court, the personal representative inventories and collects the decedent’s property. Next, he pays any debts and taxes, including estate tax in the United States, if the estate is taxable at the federal or state level, or the Pennsylvania inheritance tax. Finally, he distributes the remaining property to the beneficiaries, either as instructed in the will, or under the intestacy laws of the state.
A party may challenge any aspect of the probate administration, such as a direct challenge to the validity of the will, known as a will contest, a challenge to the status of the person serving as personal representative, a challenge as to the identity of the heirs, and a challenge to whether the personal representative is properly administering the estate. Issues of paternity can be disputed among the potential heirs in intestate estates, especially with the advent of inexpensive DNA profiling techniques. In some situations, however, even biological heirs can be denied their inheritance rights, while non-biological heirs can be granted inheritance rights.
The personal representative must understand and abide by the fiduciary duties, such as a duty to keep money in interest bearing account and to treat all beneficiaries equally. Not complying with the fiduciary duties may allow interested persons to petition for the removal of the personal representative and hold the personal representative liable for any harm to the estate.
Probate generally lasts several months, and often over a year before all the property is distributed, and can incur substantial court and attorney costs in large estates. One of the many ways used in the US to avoid probate is to execute a living trust. Alternatively property can be passed outside probate by setting up P.O.D (paid on death) designations on bank accounts and T.O.D (transfer on death) on brokerage accounts, 401ks and IRAs that pass automatically to designated beneficiaries, or placing property in joint tenancies with the right of survivorship. As for real estate, a testator may add a named beneficiary to a deed by executing a life estate deed. The property can be passed several generations. The cost of such measures to avoid probate should be weighed against probate court fees, as the administration of a living trust or other arrangement will also incur legal and administrative charges, and as with all trusts is ultimately subject to the supervision of the court.
Avoiding probate does not eliminate estate taxes. Under the federal estate tax law as modified, included in the definition of a taxable estate are property held in a living trust, life insurance, payable on death or transfer on death financial instruments, and other property a party receives upon decease of the decedent.