When choosing the right estate plan for you and your family, it is important to consider what the probate process entails. Once you understand probate, you can find ways to make the process easier for your loved ones.
The first step of probate is appointing an executor. The court will look to the choice you made in your Last Will and Testament. If you do not have a Will or if your Will is deemed invalid, a judge will select a personal representative. With the help of an attorney, your representative will navigate your estate through probate.
Locate Assets and Debts
First, your executor must identify all of your assets and debts. Assets may be found by perusing your Will, searching for statements from financial institutions as well as contacting family members. As a practical matter most of your assets will not be listed in your Will so it will help your executor if you keep a current list of your assets and update it each time you purchase or sell property. Debts are located by viewing your financial statements. Advise your executor in advance as to where these statements may be found. As a safety measure for your heirs, whether all creditors are local or not, a notice to creditors will be published in the local newspaper.
Once assets are located, they must be appraised for the date of death value. To determine debts, your personal representative will contact all creditors. You can make this process easier by having all of your debts listed with contact information.
Pay Decedent’s Bills
After assets and debts have been organized, your executor will pay all final bills. If your estate is insolvent, which means you owe more than your assets are worth, your executor will have to work with an attorney to determine which debts will be paid first and which may be left unpaid. Your loved ones do not have to pay your debts if your estate cannot.
Next, taxes must be assessed and paid. Your executor will file your final income tax return as well as estate and inheritance tax returns if those taxes are due. Filing and paying taxes can often be the part of estate settlement that takes the longest, assuming the location of assets and debts is straight-forward. If you have a taxable estate it will take some months to receive a release from the IRS.
Distribute What Remains to Heirs
The final step in the probate process is the dissemination of inheritances to all chosen beneficiaries. Your estate executor cannot begin to distribute assets until all debts and taxes have been paid. If your executor does, then the burden of any debts left unpaid will be his or her responsibility.
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