Everyone should have at least a basic idea of what occurs during the probate process. Why? There are several reasons why, starting with the fact that there is a good chance you will be involved in the probate of an estate at some point in your life. This might happen because you are appointed to be the Executer of an estate or because you are a beneficiary or creditor of the estate. Even if you manage to avoid being directly involved in the probate of the Will of another, you still need to understand the probate process because knowledge of the process will help you to create a better estate plan for yourself.
Common Steps in the Probate of the Will
Just as no two estate plans are exactly the same, neither are any two probate processes exactly the same. With that being said, there are some common steps that typically occur during the probate of just about any estate, including
- Opening Probate — if the Executor has an original copy of the Will he/she is required by law to present the Will to the appropriate court and initiate the probate process.
- Identifying, Locating, and Valuing Assets – the Executor must identify all the estate assets and then figure out which ones are probate assets. Estate assets include all real and personal property as well as all tangible and intangible assets. Because not all assets are required to go through the probate process, an Executor must figure out which assets are non-probate assets and which are not. Once all probate assets have been identified and located the Executor must determine a Date of Death (DoD) value for each asset. The court may also require the Executor to prepare an inventory of all estate assets along with the DoD values.
- Notifying Creditors — the Executor is also required to notify all creditors of the estate that the probate process is underway. Known creditors are notified personally while unknown creditors must be notified by publishing notice of the probate in a local newspaper. Creditors of the estate then have a statutory period of time within which they must file a claims against the estate. Those claims are then reviewed by the Executor and approved or denied and approved claims are paid out of estate assets. If insufficient liquid assets exist to pay approved claims the Executor must sell estate assets in order to raise the necessary funds.
- Estate Litigation – if someone files a Will contest, the Executor is responsible for defending the Will throughout the ensuing litigation. The entire probate process effectively comes to a halt while the Will contest is litigated because the outcome determines what happens next.
- Filing and Paying Taxes — Before any assets can be distributed to beneficiaries or heirs of the estate, all federal and/or state gift and estate taxes must be paid. Therefore, the Executor of the Will is responsible for preparing and filing all necessary tax forms and paying any tax debt owed to the state or federal government. This may also require the sale of estate assets if sufficient liquid assets are not available. An error in the calculation of tax liabilities, or a failure to file on time, can be extremely detrimental to the estate’s value.
- Transferring Assets to Beneficiaries and/or Heirs – after all taxes have been paid, and a final inventory filed with the court, the Executor of the Will must prepare any documents, or take any steps, necessary to effectuate the legal transfer of the remaining estate assets to the intended beneficiaries or heirs of the estate.
Now that you have a better idea of what is involved in the probate of the Will during the probate process you are in a better position to create your own successful estate plan and you should be better prepared to fulfill the role of Executor if called upon to do so by someone else.
For more information, please join us for an upcoming FREE seminar. If you have additional questions about what happens during the probate of the Will, contact the experienced North Dakota estate planning attorneys at German Law by calling 701-738-0060 to schedule an appointment.