Probate is a legal procedure through which an estate is determined and the proceeds divided amongst the heirs, following the death of the last heir. Probate involves three parties: the executor of the will, the executrix of the will and the court, which certify the will has been executed. The executor is often an individual, corporation, partnership or joint-venturer; the executrix is often a person or institution, such as a bank or trust company; and the court is a group of professionals who administer the probate function, including state probate courts throughout the United States.
In short, the executor is responsible for managing the assets after a person dies, and the court is responsible for deciding what should happen with those assets after the executor has died. If the last heir to a deceased person’s estate does not have sufficient funds to pay off debts and costs (such as taxes, probate fees, and the cost of an estate settlement) then the remaining assets are distributed to the remaining beneficiaries of the decedent’s estate.
There are three different probate procedures available to the beneficiaries. One involves supervised formal probate, wherein an appointed probate court sits as an entity separate from the state government. The probate court, which must be established in the applicable state, is empowered by law to hear and determine the disposition of the decedent’s property and estate. If the court approves the will, the probate procedure is complete and the beneficiaries are paid their share of inheritance proceeds.
Another probate method available for smaller estates is Small Estate Probate, also referred to as Small Estate Real Estate Probate. This probate method allows for lesser estates to be probated, saving the estate from further probate costs. This is because Small Estate Probate does not allow the court to supervise the transaction because it is a less formal process. Also, it allows for the transfer of smaller assets without being required to go through probate. Because it allows for a faster distribution of assets, this is one method that many use when they need cash flow for their businesses or for debt repayment purposes.
The third option, known as Trustee Survival, is a way that people use to bypass probate and get away with paying probate fees without having to pay tax on the inheritance that they received. By using a “trustee deed,” or trust deed, a beneficiary can transfer assets without having to obtain a legal title to them, thereby avoiding probate. In some states, however, a trust deed is only valid for a certain amount of time and may be revoked before it expires, thereby creating a potential conflict of interest for the beneficiary and the estate. Trustees may also face possible lawsuits once the deed is revoked, depending on the state probate laws.
After the above options have been explored, the person who wants to pay off the debts and/or distribute the assets presents their case in probate court. The judge will make a final decision on the distribution of the assets and, if all of the heirs agree, then they will divide the money. If one heir is younger than the others, then the judge may choose to order a posthumous trust, which is a way that the deceased family members can be paid upon their passing and the property they left for the heir(s) to take care of. If the judgment is against the estate, then the probate court will enter a temporary conservatorship over the estate, which means that all property will be distributed to the heirs according to what the judge deems appropriate.
The last and most common method of dealing with probate is to make an offer to the decedent. If the judge agrees, he will issue an order allowing one of the heirs to purchase the probated estate for an offering price. The proceeds from the offer can be used to pay off debts, buy back the home, settle inheritance taxes or other debts that the decedent may have. This offer is not as legally binding as the choice of a trust, but it is still used frequently. The best thing to do if one has a loved one dying is to make an arrangement to ensure that they are properly cared for after their passing. It is always better to be sure of this than to leave your loved one unpaid or to put his or her assets in the hands of someone else who will never take care of them.