Archive for September 2nd, 2010
Overview of Probate Process and Estate Administration Duties
Probate process refers to the amount of time required to settle a decedent’s estate. The timeframe will vary depending on the type of estate planning strategies decedents implemented prior to death, as well as the estate value and type of inheritance property.
The probate process will take longer when decedents die intestate (without leaving a Will) or if heirs fight over inheritance property or contest the validity of the Will. Probate is required within every U.S. state. The only way to avoid the process altogether is to protect inheritance by transferring assets to a trust.
Probate begins when the decedent’s last will is submitted to the court. Intestate estates are opened by submitting the decedent’s death certificate. Once the Will or death certificate is presented, information pertaining to the estate becomes a matter of public record. With trusts, estate information remains confidential and the only people allowed to view the Will are heirs and beneficiaries entitled to inheritance assets.
The second step of probate involves confirming or appointing an estate administrator. The administrator is designated within the last Will. Some states require court confirmation, while others allow Administrators to manage the estate without court interference.
When no Will exists, a judge must appoint an executor to settle the estate. Most often this is the surviving spouse or direct lineage relative. However, estate executors can be a family friend, estate planner, or probate lawyer.
Estate administration duties can encompass everything from making funeral arrangements to selling inheritance property to pay outstanding debts. At minimum, probate administrators must inventory inheritance assets and obtain property appraisals; pay creditor and tax debts; oversee distribution of inheritance property; and prepare a final tax return on behalf of the decedent.
When decedents hold financial portfolios, retirement accounts, or checking and savings accounts, probate executors must obtain date-of-death values from the financial institution where funds are held. The values are submitted to the county tax assessor office. As long as decedents are current on taxes, the forms are stamped and returned to the bank. Funds are distributed to beneficiaries within 5 to 7 business days after receipt of stamped tax forms.
In the case of intestate estates, the Administrator is responsible for locating missing heirs. State probate laws generally give inheritance to direct lineage heirs including mother, father, siblings, or children. If the heir is believed to be alive, but cannot be found, inheritance property is placed in escheat until the period of redemption expires. If heirs do not claim their inheritance it can be transferred to the state.
Estate executors are responsible for contacting creditors and paying outstanding debts owed by the decedent. If the estate is financially incapable of paying debts, the Administrator can enter into negotiations or hire a lawyer to negotiate on behalf of the estate. Legal fees are the responsibility of the decedent’s estate.
A final tax return must be prepared and submitted to the Internal Revenue Service within nine months from the date of death. The decedent’s estate is responsible for paying outstanding taxes. Full payment must be submitted at the time the return is filed. Otherwise, the IRS will assess late fees, penalties, and interest. Taxes must be paid in full before inheritance property can be distributed.
The final phase of the probate process involves distributing inheritance property. Heirs and beneficiaries must sign a statement regarding the assets received. Once inheritance statements are presented to the court, the estate executor is relieved of estate management duties.
Read more: http://www.articlesbase.com/national-state-local-articles/overview-of-probate-process-and-estate-administration-duties-3187174.html#ixzz0yPlFAAsN
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