Probate is a court process overseeing the administration of a decedent’s estate, and can occur when a person has a will, or when someone dies without a will.
A decedent who leaves no will has an intestate estate. In this event, a probate could be necessary to nominate an executor, the person responsible for administering the estate, and for determining who the rightful beneficiaries are.
When someone dies without a will, beneficiaries are determined by law, and will generally be the next of kin. However, what many don’t realize is that certain intestate property could be subject to distribution to the issue of a predeceased spouse. Moreover, as the executor can be any person legally able to serve, any competent adult could petition the court to serve as executor, including persons whom the decedent would never have chosen to serve. Drafting a will, then, is critical if you wish to direct who is to benefit from your estate and who is to administer your estate.
A probate can also occur with a properly drafted will. While the will nominates the executor of the estate, this individual derives their powers through appointment by the court. This occurs when the nominated executor petitions the court for letters testamentary. These letters are the court order naming the executor, and empowering this individual to accomplish one of the most important functions of the probate: marshaling a decedent’s assets and ensuring that assets are distributed to the decedent’s named beneficiaries.
Letters testamentary are issued by the court, naming an executor and identifying the powers the executor will have in administering the estate. These powers can be expansive, permitting the executor to conduct many responsibilities independent of the court, or they could be narrowly drawn, requiring court approval before many actions can be taken.
When considering who is best suited to serve as executor of a will, a person may consider a trusted friend or relative. In many cases, such an executor could be in the best position to know the family dynamics as well as understand the decedent’s intent, enabling the executor to faithfully administer the estate. And since it is often a good idea to choose an executor who is younger, since the executor will serve after a decedent’s death, many individuals will simply nominate one or more of their children to serve. Again, while the child may understand the testator’s intent as well as family circumstances, it may not always be prudent to name a child as executor.
Given the difficulties that friends or family members may encounter when serving as executor following a loved-one’s death, an individual preparing a will should also consider alternatives, including professional fiduciaries. While a professional fiduciary must be paid, the experience of the fiduciary may make this a worthwhile investment in order to maximize benefit to the beneficiaries of the will and maintain family harmony. Moreover, even a family member or friend serving as executor may be entitled to compensation, meaning the cost of employing a professional fiduciary is not necessarily greater.
Before a probate can close, the liabilities of the decedent and the estate must be addressed. The decedent’s liabilities can include, among other things, a mortgage or a loan, credit card debt, expenses of a last illness, and taxes.
At the inception of a probate, an executor will publish the probate filing to allow creditors to file their claims with the estate. It is the responsibility of the executor to ensure that all known, legitimate debts of the decedent are paid to the extent possible. An executor can negotiate these debts with creditors. While the executor is not responsible for paying the decedent’s debts with the executor’s own assets, willfully failing to address known claims could potentially subject the executor to personal liability. Additionally, negligently administering a decedent’s estate could expose the estate to liability.
A decedent’s child is in need of funds to purchase a house, start a business, pay off a credit card, or has some other urgent need for funds, and has asked you, as executor, to distribute part of his inheritance early. Can you accommodate this beneficiary?
The answer is maybe. First, however, you should discuss the situation with your probate attorney to determine the necessity for a court order. While this is a common situation, the advantage of a probate is to minimize the potential liability of an executor who might otherwise improperly administer an estate. The practice of when in doubt, asking the court, can provide the executor with judicial oversight to ensure that the administration of the estate is within the law and per the terms of the will.
The funeral is an occasion when many friends and family members travel to the decedent’s town. Often, close family or friends may ask the executor to stay at the decedent’s house or borrow the decedent’s car in order to minimize the travel expense, and an executor may be tempted to accommodate these requests.
However, this probably is not a good idea. While the family may be well-meaning, and perhaps stretched financially by travel expense, opening a decedent’s house or car to others exposes the estate to potential liability. A car accident, a house fire, or other damage to the property causes expense to the estate. It is the duty of the executor to preserve and protect the assets so that they ultimately may be distributed to beneficiaries. Damage to these assets could represent a breach of the executor’s fiduciary duty and could expose the executor to personal liability.
Once (1) all the assets have been identified, (2) expenses and taxes of the estate have been addressed, and (3) beneficiaries identified, the executor will submit a plan of distribution to the court.
This plan could include an accounting of the estate – a formal recitation of the assets at the beginning of the probate, the expenses paid, anticipated expenses to be paid, including executor fees, and any income earned. The court will review this documentation, and if appropriate, order the distribution of the assets as stated. The executor is then charged with distributing assets and transferring title.
A probate can be an efficient means of ensuring a decedent’s estate is distributed, but it can be complicated and fraught with liability for the inexperienced, and therefore, it is prudent to consult early with experienced probate counsel.