What is Probate

PROBATE, WHAT IS IT AND WHAT DOES IT MEAN?

If you’ve been reading about Wills or Trusts you have most likely come across the term probate. Clearly, this is a central issue in estate planning, but what exactly is probate?

Today the probate process is a court-supervised process that is designed to facilitate the transfer of a Decedent’s property at the time of his or her death. Property subject to the probate process is that property which is owned by a person in his or her name alone at the time of death.  Property which passes to others by beneficiary designation or by title or joint ownership (i.e. life insurance policies and "transfer on death" bank accounts) pass outside of probate, but may, nevertheless, still be subject to Pennsylvania inheritance tax.

A common expression which you may have heard is "probating a will." This describes the process by which a person shows the court that the Decedent (the person who died) followed all legal formalities in drafting his or her will. What is often taught about the probate process is how to avoid it. The movement to avoid probate is primarily motivated by the desire to avoid probate fees. It is, in fact, quite possible to avoid the probate process completely. There are three primary ways to avoid probate and its formalities: joint ownership with the right of survivorship, gifts, and revocable trusts. The probate system, however, exists for the protection of all the parties involved and the focus of this article is what occurs in probate.

What Happens in Probate?

The probate process may be contested or uncontested.  Most contested issues generally arise because a disgruntled heir is seeking a larger share of the Decedent's property than that he or she was actually left.  Arguments often raised include: that the Decedent may have been unduly influenced in making gifts or that the Decedent lack sufficient mental capacity to make same at the time the Will was executed.  However, the vast majority of probated estates are uncontested. The basic process of probating an estate includes:

·   Collecting all probate property of the Decedent;

·   Paying all debts, claims and taxes owed by the estate;

·   Collecting all rights to income, dividends, etc.;

·   Settling any disputes; and

·   Distributing or transferring the remaining property to the Decedent’s heirs.

Usually, the Decedent will appoint a person as Executor or Personal Representative of their Will.  That person will be in charge of taking over the management of the Decedent’s affairs at the time of his or her death. If the decedent fails to name an executor, the court will appoint a Personal Representative or Administrator to settle the estate.

Typically, people may leave property in their Will to any individual or organization that they may wish. However, in certain situations, depending on the relationship to the Decedent and the laws of the state in which he or she dies, that individual’s wishes may be overridden by the court. For example, in most states, a spouse is entitled to a certain amount of property and cannot be disinherited entirely. Furthermore, creditors may have a claim on the property of the estate. Each jurisdiction usually prescribes how long an estate must be open to give creditors an adequate time frame in which to present claims to the estate. The more complex and sizable the estate, the longer and more time-consuming the probate process can be.  The probate process also carries with it a number of costs that are usually paid out of estate assets. These costs may include, but are not limited to, Personal Representative, Executor or Administrator commissions, Attorneys' fees and probate costs and expenses.