Probate

     Probate is a system in which, after a person dies, all of their assets are collected then used to pay creditors, resolve conflicts among beneficiaries, then distribute remaining assets to the appropriate persons or institutions. The rules, policies, and procedures that govern probate systems vary from state to state, therefore the laws of state must be reviewed before deciding on a course of action.  This is important because these laws will provide which state law governs – the law were the person who died resided, where asset(s) are located, where a dispute arises, and other issues.

Probate is necessary when a spouse’s death does not give ownership of assets to the surviving spouse; when there is a potential title problem and one spouse’s death does not give ownership of an asset to a surviving spouse.

Sometimes property, property interests, or wealth is not subject to probate and therefore will not go through the probate system such as: (i) property held jointly with another owner; (ii) property that has two or more ownership interests; (iii) life insurance on the deceased individual; (iv) retirement accounts; (v) property in a trust; (vi) and property covered by a contract.  Examples include, property held by married persons; property held by business partners; whole or term life insurance policies; and employer sponsored pension, 401k, Individual Retirement Account (IRA), and other similar accounts.

Administration

Generally, probate comes into play when a person dies without a written agreement, such as a will or trust, that states how the person’s assets are to be identified, collected, then dispersed.  Probate can also come into play to prove or disprove a written agreement.

After a person dies, a family member can file a petition in court where the deceased person was domiciled.  If the deceased person owned property in more than one state, an ancillary probate may have to be opened and a personal representative appointed in the other state(s).  Once a personal representative is appointed, the court will issue the appropriate documents to the family member which can be used (along with the death certificate) to contact banks, creditors, stock transfer agents, and others.  The personal representative should also file an Inventory and notify creditors of that the person has died.  After the Inventory is filed, administration of the decedent’s estate will enter a holding period so that appraisals can be made, tax returns, filed, and property can be sold to pay creditors or if no one wants it.  The persona representative should close the

Disputes

     If an interested person can contest a will they believe should not be enforced.  Disputes that can arise because (i) of disputes of interpretation of a will’s meaning; an interested person believes a rule has been violated; the will maker lacked mental capacity, was subject to undue influence, or there was a failure to follow technical rules.  The personal representative should close the estate and distribute assets after the decedent’s assets have been assembled, creditors paid, and disputes resolved.