What is Probate?<\/h2>\n
Simply put, probate<\/a> is the legal, court-supervised process that ensures the proper people are granted the right to and responsibility for the decedent\u2019s estate.<\/p>\n Unless the deceased took steps to avoid probate prior to death\u2014such as a living trust<\/a> or a transfer-on-death deed<\/a>\u2014in most cases, if the estate includes property it must go through probate.<\/p>\n The probate process can be lengthy, confusing and overwhelming for a grieving family. Minimize distress during the proceedings by getting educated on what\u2019s going to happen.<\/p>\n While probate law varies from state to state<\/a>, the overall probate process remains the same.<\/p>\n Would you ever guess that cleaning your parents\u2019 house might be illegal? Well, if your deceased parents\u2019 estate is headed for probate<\/a>, it is.<\/p>\n Sacramento-based probate attorney John Palley<\/a>, who has been awarded Martindale-Hubbell\u2019s prestigious \u201cAV\u201d peer review rating, says:<\/p>\n \u201cGenerally speaking, you have no legal authority until the court has named you as the personal representative. So in most cases you really can\u2019t do anything. You can\u2019t clean the house, you can\u2019t discard stuff, you can\u2019t have a garage sale, you can\u2019t even list that house for sale until you\u2019ve been named by the court.\u201d<\/p>\n Also referred to as executor or administrator of the estate, the personal representative<\/a> is the court-appointed person responsible for maintaining and distributing all of the decedent\u2019s assets.<\/p>\n However, even if the decedent\u2019s will names you as the executor, you have no legal authority to access, alter or administer the estate until permission is granted by the probate court. For that to happen, you need to file a petition.<\/p>\n In order to file a petition to open probate on the decedent\u2019s estate you\u2019ll need the death certificate, the will (if there is one) and a good probate attorney.<\/p>\n Hiring a lawyer who specializes in probate is a must. Only an experienced probate attorney will know the specific documentation and procedures that your state probate court requires.<\/p>\n Once you have all the proper paperwork<\/a>, your attorney will file the probate petition and your court date will be set. Unfortunately, that date may be weeks or months in the future.<\/p>\n According to Palley, \u201cThat\u2019s why I\u2019m a big proponent of getting probates filed as quickly as possible. That starting point triggers many other things during the probate process, so the sooner you start, the sooner you\u2019re in control, and then the sooner you finish.\u201d<\/p>\n While you are waiting for that court date, you cannot legally take any action with the decedent\u2019s estate\u2014like making repairs to the house or handing out heirlooms as directed by the will\u2014but you may take steps to safeguard the estate.<\/p>\n Actions that protect the estate\u2019s assets\u2014like collecting the decedent\u2019s mail so that it doesn\u2019t pile up or wrapping water pipes in winter so that they don\u2019t freeze\u2014are acceptable in most cases. However, when in doubt, check with your probate attorney.<\/p>\n If you intend to sell the decedent\u2019s house as part of the probate proceedings, you\u2019ll need a real estate agent with probate experience<\/a>. While you cannot legally sign a listing agreement until you\u2019ve been named as the personal representative, you may interview realtors and show them the house to jumpstart the real estate sale.<\/p>\n When that first court date arrives, Palley says, \u201cAssuming that everything has been filed correctly, the court will sign a court order that says that you are now the personal representative of the estate and the court clerk will issue what are called Letters of Administration if there\u2019s no will, or Letters Testamentary if there is a will.\u201d<\/p>\n Those letters grant you the right to transact business for the estate. Your next step is to give notice to the appropriate parties.<\/p>\n All interested parties must be given notice<\/a> that the estate is being dissolved via probate. For family members who are legal heirs to the estate and other beneficiaries named in the will, this is called Notice of Probate.<\/p>\n Every heir and beneficiary must be formally informed of probate via a written letter or a process server<\/a>. If you don\u2019t have their contact information, you must post a public Notice of Probate for a designated period of time.<\/p>\n This action is required to allow all interested parties<\/a> the opportunity to make inheritance claims on the estate or, in rare cases, contest the will. In essence, Notice of Probate creates a paper trail for the court as proof that the appropriate steps were taken to notify all interested parties of the probate proceedings.<\/p>\n Along with notifying heirs and beneficiaries, the personal representative must contact the financial organizations to which the estate owes a debt, such as credit card companies and the mortgage bank. For this, a Notice to Creditors is required.<\/p>\n The Notice to Creditors<\/a> must be done at the beginning of the process to allow ample time for the creditors to submit a claim for debts owed, which the executor will then pay out of the balance of the estate.<\/p>\n In order to pay these debts, the personal representative must first do an<\/p>\n inventory of the estate<\/a>. This includes real and personal property (real estate, jewelry, cars, heirlooms and other valuables), plus financial assets (cash, bank accounts, insurance policies and stocks).<\/p>\n While you are compiling the inventory, you\u2019ll also need to obtain the date of death value<\/a> of all assets. This information plays an important role as you administer the estate.<\/p>\n Administering an estate so that it may be dissolved and closed is the most complex and often overwhelming part of the entire probate process.<\/p>\n You\u2019ll need to close out retirement accounts, submit policy claims, sell off assets, settle debts, pay taxes, sort through and distribute (or dispose of) every single possession owned by the decedent\u2014the list of responsibilities can feel overwhelming.<\/p>\n The best way forward is to tackle one thing at a time, starting with the biggest.<\/p>\n \u201cWe usually want to deal with the biggest and most important things first, which typically is going to be the house,\u201d says Palley. \u00a0\u201cDealing with real estate is at the forefront because it\u2019s incurring costs while it sits there. We\u2019re paying a mortgage, utility bills, taxes and insurance. We\u2019re doing all of these things that are costing money.\u201d<\/p>\n Not only is the home an ongoing expense, disposing of this asset is going to take the longest amount of time.<\/p>\n For starters, even in the hottest housing markets it\u2019ll take an average of three weeks<\/a> to receive and accept an offer for the home. Then you\u2019ve got an average<\/p>\n 47-day escrow period<\/a> during which any number of complications<\/a> may arise that might extend the timetable.<\/p>\n While a probate home sale is similar to a traditional sale in most ways, there are a few subtle differences that may extend the transaction timeline.<\/p>\n The similarity between a traditional sale and one that involves a probate home is dependent upon whether the court has granted independent or dependent administration. If the court has granted independent administration, then there are only a few subtle differences.<\/p>\n However, in the event of a dependent administration the difference can be immense. That\u2019s why it\u2019s important to have a real estate agent with probate experience on your side.<\/p>\n One major difference is that both federal and state law require an appraisal<\/a> on the probate property. Often done by an estate tax appraiser, this appraisal determines the date of death value<\/a> of the property for both estate tax purposes<\/a> and to establish the cash value of the estate for the probate court.<\/p>\n It will take time to schedule and complete this appraisal\u2014which must be done prior to listing the home for sale.<\/p>\n If you\u2019ve been granted the right of independent administration<\/a> by the probate court, once you\u2019ve had the appraisal done, you can proceed with the home sale immediately. Why? Because you\u2019ve been given permission to transact business for the estate without first seeking court approval.<\/p>\n Laws governing independent or unsupervised administration<\/a> vary from state to state\u2014as do the requirements to be granted this authority. However, this is by far the best option if you want to get through the probate process quickly.<\/p>\n Luckily, most states have taken steps to make it easier to obtain independent administration status. For example, California enacted the Independent Administration of Estates Act (IAEA) in 1987.<\/p>\n Other states have adopted the American Bar Association-approved Uniform Probate Code<\/a>. Drafted by the National Conference of Commissioners on Uniform State Laws, the code is designed to simplify most aspects of probate law, including the granting of independent administration.<\/p>\n Unless you are the sole beneficiary of the estate, you will need to obtain a waiver of process and consent to probate<\/a> form from every beneficiary to include with your petition for independent administration.<\/p>\n If you cannot obtain consent, or if state law requires court oversight, the probate court will rule that the decedent\u2019s estate must have dependent administration<\/a>.<\/p>\n Under dependent administration, the court becomes involved in all of the transactions of the estate\u2014including the home sale, which will require court confirmation<\/a>.<\/p>\n In a court confirmation situation, the home is listed, an offer is accepted and then the sale heads to court. This court date will likely be scheduled for several weeks or months after the filing.<\/p>\n At the hearing, the court will initiate the overbid process<\/a> which functions much like an auction. The buyer\u2019s offer is presented, and then the court will start the bidding at an amount above that offer by a percentage that varies by state.<\/p>\n Overbidders must come with a Realtor, a cashier\u2019s check to cover the deposit and a probate purchase agreement contract ready to be signed that cannot contain any contingencies. The sale will then be confirmed at this hearing, whether your original buyer or another offer from an overbid buyer is accepted by the court.<\/p>\n When the home is sold and the check has cleared, the personal representative will use these funds to pay the decedent\u2019s remaining bills, the estate taxes, and any other debts against the estate.<\/p>\n Once all of the assets are ready to be distributed, the probate process proceeds to the final step.<\/p>\n After the home is sold, the debts are paid and the financial assets are ready to distributed, it\u2019s time to for your probate attorney to file the final petition.<\/p>\n \u201cThe final petition is going to lay out everything that happened during the probate period in a fifteen or twenty-page document,\u201d says Palley. \u201cIt\u2019s going to list the assets at the beginning of the estate, include a copy of the final closing statement from the real estate sale, list the taxes paid, the attorney\u2019s fees and court costs\u2014all of that is laid out. Then it says here\u2019s what\u2019s left and who the money should be given to.\u201d<\/p>\n While you may want to wrap things up as quickly as possible, it\u2019s important to not rush into closing the probate process. As the personal representative, you can be held personally liable<\/a> if a debt claim is made against the estate and you\u2019ve distributed funds to the beneficiaries too early.<\/p>\n However, if you\u2019ve made a good-faith effort to identify all potential creditors and allowed a sufficient amount of time for creditors to make a claim, you\u2019re safe to proceed with the final petition which will dissolve the estate and close probate.<\/p>\n According to Palley, \u201cAssuming that all has gone according to plan, the judge will sign off, the petitioner or the personal representative will write the checks and that\u2019s pretty much it. We close the case.\u201d<\/p>\nThe 4 Steps of Probate<\/h2>\n
Step 1: Filing the Petition to Probate<\/h2>\n
Step 2: Give Notice and Inventory the Estate<\/h2>\n
Step 3: Administering the Estate<\/h2>\n
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<\/a>Step 4: Closing the Estate<\/h2>\n