Probate is a legal process where a decedent’s Will deceased validated by the probate court before its instructions on asset distribution can be carried out. There are several steps to probating a Last Will. An executor or estate administrator is charged with overseeing all process involved. From initiating probate proceedings in court to distributing assets to named beneficiaries, the executor plays a vital role. One of these highly important duties includes; dealing with debts, bill, mortgages, paying creditors and lastly assets distribution.
Keep creditors and probate proceedings away
With all you have heard about probate, you may not wish for your loved ones to go through such stress while dealing with the grief of your loss.
You can avoid probate simply by eliminating all your probate assets. If there is no probate asset in your estate, then probate will not be conducted. Simply hold all your valuable assets in trusts. You can create different trust for each beneficiary, or create a pool of trust for all your loved ones. It is advisable to get an estate planning attorney to go over your options with you.
Since your real estate is highly valuable, funding it into a trust is not always worth it. It is better to change the ownership and hold in by joint tenancy with whomever you want it to go to.
If the sum total of all that’s left in your estate falls below your state’s threshold, then you have just successfully avoided probate.
Creditors can’t lay claims to Non-Probate assets
Creditors do generally get called to probate proceeding to make claims of whatever debts owed by the decedent. However, this doesn’t hold for non-probate assets. Non-probate assets are assets that do not bare only your name, or have designated beneficiaries. Non-probate assets include:
- Assets held in trust
- Assets held jointly with rights of survivorship
- Retirement account
- Bank account with transferrable-on-death clause
- Life insurance policy.
These assets pass outside of probate.
How do these assets pass outside of probate?
Trusts avoid probate by the fact that any asset funded into the trust takes up the name of the trust rather than that of the individual. Hence, such an asset will pass directly to the beneficiary named in the trust.
Assets held jointly with rights of survivorship, such as real property, will pass directly to the joint tenant outside probate. Obviously, the surviving joint owner or tenant will take claim of the property when you pass away. It goes without saying that the beneficiary is already known and valid so there is no need for probate.
In your life insurance, 401k, and ToD accounts, you already designated a beneficiary when creating them. So these assets will pass down to the designated beneficiary immediately you pass away, whether you write a will or not.
Executors attend to creditors demands during probate.
Once probate is opened, the estate’s executor also known as personal representative of the estate will be charged with paying administrative expenses and settling the decedent’s final bills. This will include determining which debts or mortgages are valid and to what extent, then assessing which, if any, of the decedent’s assets, should be liquidated or sold to pay ongoing estate expenses and final bills.
Other duties of an executor include:
Identifying, inventorying, and valuating all assets
One important role of the executor is to identify all assets owned by the testator (only probate assets, leaving non-probate assets out). He can get this by going through all the deceased’s documents, checking for deeds, financial statements, and anything that pertains to ownership. The executor should list each asset out and calculate the overall value. This value is the worth of the estate.
The executor will have several costs to settle during probate, all of which must be done with estate funds. Hence, he has to open a checking account with the estate, dedicated to footing probate expenses.
Distributing the estate
After all financial obligations have been settled, the executor can now proceed to the final stage: disbursing the estate to the beneficiaries. However, he must first submit to the court an accounting record of all his transactions during probate. Only after approval can he proceed to disbursement.