What Is Probate?
- August 28th, 2013
Probate is the process of administering and settling an estate after a person dies. The exact probate process differs from state to state, but in general, it includes the following steps:
- Filing the will and petition at the probate court in order to be appointed executor or personal representative. In the absence of a will, heirs must petition the court to be appointed "administrator" of the estate.
- Marshaling, or collecting, the assets. This means that you have to find out everything the deceased owned. You need to file a list, known as an "inventory," with the probate court. It's generally best to consolidate all the estate funds to the extent possible. Bills and bequests should be paid from a single checking account, either one you establish or one set up by your attorney, so that you can keep track of all expenditures.
- Paying bills and taxes. If a state or federal estate tax return is needed -- generally if the estate exceeds $1 million in value -- it must be filed within nine months of the date of death. If you miss this deadline and the estate is taxable, severe penalties and interest may apply. If you do not have all the information available in time, you can file for an extension and pay your best estimate of the tax due.
- Filing tax returns. You must also file a final income tax return for the decedent and, if the estate holds any assets and earns interest or dividends, an income tax return for the estate as well. If the estate does earn income during the administration process, it will have to obtain its own tax identification number in order to keep track of such earnings.
- Distributing property to the heirs and legatees. Generally, executors do not pay out all of the estate assets until the period runs out for creditors to make claims, which can be as long as a year after the date of death. But once the executor understands the estate and the likely claims, he or she can distribute most of the assets, retaining a reserve for unanticipated claims and the costs of closing out the estate.
- Filing a final account. The executor must file an account with the probate court listing any income to the estate since the date of death and all expenses and estate distributions. Once the court approves this final account, the executor can distribute whatever is left in the closing reserve, and finish his or her work.
Other articles of interest:Estate Administration
What To Do When a Loved One Passes Away
Who Can Serve as Executor?
What is Required of an Executor?
The Executor's Handbook