When a will is reviewed to determine its validity, it goes through a process known as probate. In other terms, probate can also be referred to as the administration of a deceased person’s estate who died without a will.
When a person dies, the court will assign an executor of the will (either named by the will or picked by the court). This person is responsible for collecting and taking inventory of the assets of the deceased. The executor must then pay the liabilities of the estate and distribute the assets to the heirs as outlined in the will.
The probate process is quite lengthy. It often lasts one year or longer, and it is costly (averaging anywhere from three to seven percent of the total value of the estate). It’s important that you consult with an experienced attorney from Edwin Cook Law about your will so that your family can avoid the difficult process of probate upon your death.
There are specific circumstances where probate will be required after the death of a family member. These include the following:
- There is no valid will
- The existing will has presented problems
- The decedent does not have any beneficiaries
- When a valid will requires probate to deal with creditors
The common frame of thinking when it comes to estate planning is that when there is no valid will, the estate will always wind up in probate. While this is the case, having a will does not automatically help you avoid the probate process either.
A will can wind up in probate when any of the following problems arise:
- The will was never notarized by the decedent
- The will was never signed by the decedent
- A self-proving affidavit was not attached
- The decedent moved to a new state and the current will does not match the new state’s laws
- The beneficiaries of the will contest its terms
- There are multiple wills
As mentioned earlier, probate is a very lengthy process. If an estate is required to enter into probate it means that the executor cannot simply begin handing out assets to the beneficiaries named in the will. Instead, a specific process must be followed:
- File a petition to open probate
- Executor sends notices to interested parties (beneficiaries) and creditors
- The executor takes inventory of the estate’s assets
- The executor distributes the estate’s assets
- File a petition to close the estate
One of the best ways to avoid going through the probate process is to have a trust in place prior to your death. Trusts are legal documents that protect assets and other financial interests from probate. You can add just about any asset of your choosing to a trust so that it is not divided by the court or awarded to someone who you wish not to receive it. Other ways in which you can avoid probate include the following:
- Give away as much property as possible prior to your death
- Create joint ownership for real estate property (community property for married couples, joint tenancy with rights of survivorship, and tenancy by the entireties)
- Set up pay-on-death financial accounts
- Joint ownership for other property
- Transfer on death for vehicles
- Transfer on death for securities
- Transfer on death for real estate
- Take advantage of estate provisions found in your state’s laws
Finally, create a will. A will does not necessarily mean you will be able to avoid probate but it can help reduce the cost of the process for your family. The will can help protect assets that are unable to avoid probate.
Trust administration is a process that many people are thrown into after the death of a spouse or parent who was responsible for creating the trust prior to their death. The trust administration process is lengthy and challenging.
It’s not easy to serve as the administrator of a trust, which is why it’s in your best interest to work with an estate planning attorney from Edwin Cook Law. Estate tax law is difficult and has many nuances that impact how you value assets and distribute them to beneficiaries.
The Stages of Trust Administration
There are defined stages of trust administration that trust administrators must follow. A trust administrator is a person named to handle the trust and distribute the assets upon the death of the person who created it.
Take Inventory of the Assets
The first part of the administration process is to take inventory of the assets held in the trust. This includes determining who the owner is of all the assets. The trust administration attorney working with you will obtain a date-of-death valuation of every single asset. This is an important step because the value of the assets can have implications on any estate and income taxes.
Determine the Estate Tax
A person is permitted to pass $5 million without incurring federal estate taxes. This amount has been doubled temporarily between the years 2018 and 2025. Despite this, there are states that have much lower limits for their estate taxes.
An attorney from the office of Edwin Cook Law can help determine the following:
- Which assets are held in the trust
- Which assets are outside of the trust
- Which assets are required to go through the probate process
- Which assets will be subjected to the estate tax
An estate tax is required to be paid within nine months of the date your family member died. The payment is to be submitted with the estate tax return, using Form 706.
Divide the Trust Assets
When a married couple opts for incorporating tax and estate planning into a Living Trust, they are in possession of an A-B or A-B-C Trust. This type of trust makes sure that the assets of the deceased spouse can be used by the surviving spouse, but are still held in the trust. When these assets are held in the trust, they are shielded from possible estate tax when the surviving spouse dies.
File IRS Form 706
IRS regulations require that Form 706 be filed within nine months of the recorded date of death. This form must be filed in addition to Form 1040 for the year in which your family member died and Form 1041 for every year the trust existed following the trustor’s death.
Distribute Assets to Beneficiaries
The trustee, or the person placed in charge of the trust, must follow the instructions laid out by the trustor. This means he or she must distribute the assets of the trust to the named beneficiaries following the instructions and not how they see fit. Prior to distributing the assets to beneficiaries, the trustee must ensure that all creditors are paid and that all tax payments are made to the IRS and the state.
Trust Administration or Probate?
Probate is a legal process that requires court supervision when dealing with a trust or an estate. It is much longer than trust administration and will wind up costing more in the long run. Probate can take 12 months or longer to complete and the trustee is not permitted to distribute any assets without the permission of the court. The probate process is public, which means there will be a record of it with the court for anyone to read.
Contact a Probate and Trust Administration Attorney Today
The compassionate and skilled team at Edwin Cook Law can answer all of your questions surrounding probate, wills, and trust administration. Protect your family from going through this long and stressful process by putting together a solid estate plan now. Contact the office of Edwin Cook Law today to schedule a consultation with an experienced member of our team.