What does "probate" mean?

What does “probate” mean?
By Steve & Kiley Stuchlik, Attorneys at Law
 
            Probate is the legal (court) process for the general administration of an individual’s estate, with or without a will (i.e., payment of decedent’s debts and distribution of a decedent’s asset as directed in the decedent’s will or as directed by the state’s intestate succession laws in the case of a decedent who passed without a last will). 
          It’s important to note that there may be more than one process available for the distribution of the assets of a decedent, which will be dictated by the laws of the state of administration (where the decedent was domiciled or owned real property). Idaho and Oregon, the two states we practice in, for example, vary quite a bit in their options; but, both states do have a more expedient “small estate” process available for estates where the value of the decedent’s assets is under certain amounts. Idaho also has a proceeding available for a surviving spouse where an estate consists solely of community property.
           Depending on the nature of the decedent’s assets, the assets may be “non-probate assets,” meaning assets will pass outside of probate such as by a beneficiary designation or payable on death designation; thus, unless the decedent also has assets that are subject to probate administration, no court probate proceeding will need to be initiated.
           If you have been nominated to be in charge of an estate or you are a potential heir to the estate of a relative who passed away without a will, it is important to discuss the decedent’s situation with an attorney experienced in probate administration to determine if probate is necessary and if so, the most appropriate proceeding.
            With the caveat in mind that the type of procedure required will vary depending on the state of administration and the nature and value of a decedent’s assets, a typical, non-small estate probate would proceed as follows: 
 

• A person, typically the closest relative (in the case of a decedent who died without a will) or the person nominated in the decedent’s will to serve as the Personal Representative “PR” (aka “executor”), applies to the court to be appointed as the PR of the estate.  
• The proposed PR submits the alleged last will of the decedent with the application and asks the court to declare it as the valid and last testamentary instrument of the decedent or, the PR alleges that the decedent died without a will and administration of the estate should proceed under the intestate laws of succession.
• Once the person is appointed PR and the will (if any)  is admitted through a court order, the PR will receive letters of administration (intestate estate) or letters testamentary (testate estate), which is a document signed by the judge that states that the person has authority to act as the PR. The “letters” essentially act as the PR’s badge of authority and can be presented to allow the PR to carry out his or her tasks, such as opening a bank account for the estate, deeding real property, etc.
• The PR provides notice of his or her appointment to the spouse, children, heirs, and devisees of the decedent and to the state of domicile (when required).
• Notice to unknown creditors is published in the paper in the county where the decedent was domiciled and notice is sent to known creditors so that the PR can determine which debts of the decedent are valid and should be paid before assets are distributed to the heirs (intestate) or devisees (testate).  Claims must be presented within certain time frames or they will be barred. 
• The PR prepares an inventory of the estate’s assets, makes an accounting of the debts and expenses of administration, pays valid debts, takes care of any tax filings and tax liability, and distributes property to the heirs or devisees. To distribute, the PR takes actions such as issuing checks from the estate account, signing deeds to transfer a decedent’s interest in real property, signing vehicle titles, and other actions that are necessary to actually transfer possession and confirm title in the rightful recipient of the property.
• Once all of the above tasks have been completed and the minimum amount of time has passed as required by applicable state law, the PR can submit documents to close the estate with the court. In Idaho, the earliest a PR can close an estate is six months from the date the PR was appointed. 

 
The following are circumstances under which probate will be avoided:
 

• The decedent did not own any real property in the decedent’s name and the decedent’s personal property was of insufficient value to warrant a probate proceeding under the laws of the state of the decedent’s domicile;
• The decedent did not own any real or personal property in the decedent’s name at the time of death because the decedent deeded and otherwise transferred all of the decedent’s property to the trustee of his or her revocable living trust, which trust was created during the decedent’s lifetime; or
• All of the decedent’s assets pass by beneficiary designations or payable on death designations. 

 
         The last two categories are examples of what are referred to as “non-probate assets,” which will not need to be transferred pursuant to a court probate proceeding. Nonetheless, non-probate assets will be subject to the legitimate debts of the decedent. In the case of assets transferred to a trustee, there will need to be a trust administration, which procedure is similar to a probate proceeding. 
        You might be wondering whether you should employ a planning strategy to avoid probate. And likely, you’ve heard a horror story about a probate that took years and cost thousands of dollars in court costs and attorney’s fees. The truth is that in some states the probate process is more involved, meaning an increase in attorney time, and the courts require higher costs throughout the process. On the other hand, there are other states, such as Idaho, where court costs are relatively low and there is minimal court involvement, meaning lower attorney’s fees. Frankly, an estate that drags on for years or gets horribly expensive is mostly likely due to fighting among the heirs and devisees, rather than the process itself. 
       In order to definitively advise you as to whether you should endeavor to avoid probate, we need to know your state of domicile, information about the nature of your assets (type, value, location) and what is important to you and your legacy. Next month, we’ll explain some circumstances under which one would want to avoid probate and the pros and cons of creating a revocable living trust as a planning tool.