Probate is the court-supervised process of collecting a decedent’s property and assets and distributing them to their beneficiaries. Unless there are family members fighting over the assets, there’s very little actual court time involved. Probate is mostly paperwork.
If probate does move to court, however, the process is a little bit different. Find out how probate court works and what to expect.
Probate Without a Will
When someone dies without a will or a revocable living trust, the assets need to be distributed to the heirs, which is detailed in the state’s probate law. The order in which the assets are distributed among the heirs is stated by the law of intestate succession.
The surviving spouse is entitled to a portion of the decedent’s property, but then the law designates which assets the children, grandchildren, parents, siblings or other family members inherit. The order and details of intestate succession vary by state.
Probate With a Will
When someone dies with a will in place, the assets are distributed to the beneficiaries and organizations listed in the document.
The court needs to determine that the will is valid. If the validity of the will is challenged, such as by a family member, the court must verify it.
In all states, regardless of whether there’s a valid will, the surviving spouse is entitled to a portion of the decedent’s assets. This is known as the spouse’s elective share, and how much they receive can vary by state.
In states with community property, one-half of the shared property owned by the couple during the time of the marriage is given to the surviving spouse. The will also dictates how the decedent’s portion of the community property and separately owned property are divided among heirs.
The Probate Process
The probate process starts with filing a petition for probate in the court. This is typically completed by a person named in the will.
A copy of the will should be filed with the court, unless it was already filed in a different state, and there are official probate court forms that should be filled out.
The court will issue an order to appoint an executor of the will. This person will handle the estate. If there’s no will, this person is known as an administrator.
The executor or administrator is tasked with handling the distribution of assets in the state, as well as other administrative tasks. The executor must open an estate bank account, arrange the legal notices in the newspaper, send notices to heirs, sell assets and handle validity claims from creditors and settle the debts. They must also file a tax return for the decedent and transfer the assets to the heirs. In many cases, the executor will enlist the help of a probate lawyer.
How Long Does Probate Court Take?
The probate process can take several months or years to finish, depending on the size of the estate. On average, the probate process takes between six months and two years.
The longer the probate process is, the more money it will cost. If any beneficiaries contest the will, the process becomes more expensive and time-consuming.
Probate also makes the decedent’s financial circumstances public record, which includes the type of assets, the value of the assets, the existing debts and the beneficiaries. For this reason, many people with large estates or privacy concerns will avoid probate by using a revocable living trust rather than a will.
If a person doesn’t have an estate plan or missed funding for a revocable living trust, then the surviving family members will need to enter into probate for some or all of the assets.
The cost of probate varies as well, depending on the type and value of the assets. Generally, the higher the probate property value, the more it will ultimately cost.
Probate Court Fees
Probate court involves locating various individuals to whom assets and property must be distributed, so it’s far more expensive without a will or irrevocable trust. Here are some common fees associated with probate court:
- Personal representative fees: These probate fees are often required by state law. This is referred to as a “reasonable fee” in many states, but it could also be a percentage of the total assets in probate. The executor can ask for extraordinary fees as compensation for services that go above the basic probate services as well.
- Attorney’s fees: These probate fees are also required by law and are calculated similarly to the personal representative fees. Like the executor, the attorney can ask for extraordinary fees as compensation for services that are above the basic probate services.
- Accounting fees: These probate fees vary according to the value of the estate and the kind of assets included. For example, a small estate with numerous stocks and bonds will likely have greater accounting fees than a large estate with only a solitary property and a few bank accounts. If the estate has private investments that are difficult to determine the value of, there are additional fees. Accounting fees may also include the preparation and filing of state or federal taxes.
- Appraisal fees: These probate fees are necessary to determine the true value of the assets at the time of death. This includes business interests, antiques, jewelry, artwork, vehicles and more. The valuation of a business may take more time and effort than other assets, since the goal is to have it valued as low as possible.
- Bond fees: If a person dies without a will that waives the posting of the bond before the executor is appointed, then the executor needs to pay for and post a bond. This amount is determined by the probate court judge.
- Miscellaneous fees: These probate fees can range from postage on the mail correspondence to the bill for the notary. These fees are typically smaller, but they can add up.
In total, the cost of probate court is roughly 3 to 8 percent of assets. If the estate value is greater than the estate tax exemption for the year, then estate and income taxes are owed as well. This taxation rate is fairly high.
Plan for the Future
Now that you’re aware of how pricey and complicated probate court can be and the stress it can cause for your surviving family members, you understand the importance of estate planning. At Tanko Law, we’re proud to offer a range of estate planning, wills and trusts, and probate services to our clients in Montana. Contact us today to learn more about our estate planning services and get started!