Probate is the process by which a person's property and assets are sorted out and distributed upon his or her death. Typically, probate follows the pre-determined wishes of the decedent as described in an enforceable will.
The purpose of probate is to distribute the decedent's property and assets to the estate beneficiaries, but there are several steps that must take place before that can happen.
Here are the basic steps that occur during probate:
- Collect all of the property owned by the decedent and subject to probate. This does not include property that passes to others automatically such as life insurance policies and "payable on death" bank accounts.
- Pay off all of the debts, claims and taxes owed by the decedent's estate. The liabilities of the estate must be paid before beneficiaries can take their share.
- Determine all rights to income, dividends, etc. from the estate. This can be a fairly easy or very difficult step depending on the size and complexity of the estate.
- Settle any disputes that may have arisen during the probate process. Disputes typically arise as a result of disgruntled beneficiaries.
- Transfer the remaining property to the heirs. This is the step most people think of when they hear the term "probate," but as you can see, there are many other steps that come first.
There are also fees associated with the probate process itself, which is why many people choose estate planning strategies to avoid or shorten probate, including joint ownership with the right of survivorship, gifts and revocable trusts, but that's whole separate topic entirely.
Oftentimes, the decedent's will names a person to serve as the executor of the estate, or the person who oversees the probate process on behalf of the estate. If the decedent did not select an executor, the court will appoint a personal representative or administrator.
This is just a brief overview of the probate process. For more information, talk to an experienced estate planning attorney in your area.
Source: Findlaw.com, "The Probate Basics," last accessed Jan. 13, 2014