What is Probate?
Probate is a court process that allows the probate court to supervise the collection and distribution of a deceased person assets if they either had a Will or died without a Will. Probate is generally a long and tedious process that requires several different phases requiring specific types of documents completed in a precise manner for each phase of the process.
Marshalling of Assets
During Probate, after the Will has been submitted with the court or if there was no Will created, a petition for administration filed, all assets owned by the deceased must be properly identified and submitted to the court using the proper inventory and Appraisal forms. Notice must be sent to all known creditors and parties of interest.
Upon filing the required documents to the court, a court date will be provided, usually several weeks to several months in advance depending on the county population. At the court date the judge will speak with the executor or proposed administrator and will authorize the executor or proposed administrator to manage assets on behalf of the deceased. If the person seeking appointment has not been named by the owner of the property, there are several requirements that must be met before the court will authorize that person.
Ounce an administrator or executor has been appointed by the court, a court document called “Letters of Testamentary will be issued.” This is the official document that proves to the outside world that the person named in the document has the authorization to handle the assets of the deceased. Shortly after or simultaneously, official notice must be mailed to each creditor, heir or beneficiary.
The Next Step is to create an accurate and complete list of each asset was owned by the decedent. This requires listing each bank account, each investment account and each individual stock or mutual fund, held in each account, in a precise way. Incorrect completion of these forms causes further delay. The value, ticker symbol and location of each asset must be listed in a Final Inventory and Appraisal then submitted to the Probate Court as well as a Court appointed appraiser.
The court appointed appraiser will determine the value of each asset that is not cash or a cash equivalent and return the Inventory and Appraisal document to the Administrator. A fee is paid to the court appointed appraiser based on the value of the combined assets listed on the inventory and appraisal documents.
During this time all assets must either be transferred to a bank account that is under the name of the decedents Estate and must never be used for any other purpose but to collect assets, pay estate expenses and disburse the same assets when the court authorizes.
Every situation is different depending on the types of assets and how disbursements are intended to be made. While it is not always necessary to sell real-estate, if the property is to be disbursed to several people who do not all agree on the use of the real-estate, the sale is usually the best option.