Understanding the Probate Process Can Help You Pick Your Executor

By your will, you decide how your worldly goods are going to be divided, select a guardian for your minor children, and generally settle your affairs. But to make all that happen, you have to have an executor, someone whoíll act for you and carry out your willís provisions.

That person will see your will through probate, the court-supervised legal procedure that determines the validity of your will. "Probate" also describes the process of estate administration, by which assets are gathered, applied to pay debts, taxes and expenses of administration, and then distributed to those designated as beneficiaries in the will.

The details of probate vary by state. Ask your lawyer about the steps involved in probate in your state. The answers will help you determine what sort of person you should choose to be your executor.

Supervised or Unsupervised? Although this is not the case in New Hampshire, there are now essentially two kinds of estate administration in many states: supervised administration and independent or unsupervised administration. A supervised administration requires court approval for some of the major steps in settling the estate. Independent or unsupervised administration allows the executor to take most of those steps without court permission. A third possibility small estate administration, is available in some state for estates under a certain dollar amount.

Supervised administration is the more formal method. The court plays an active role in approving each transaction. In states where itís optional, supervised administration is used when an estate is contested, when an interested party requests it, or when the executorís ability is questioned.

Independent administration is a simpler method in which the number of duties and procedures is reduced and the courtís role is diminished or eliminated. In some states itís used for estates that exceed the asset limit for small estate administration but donít require heavy court supervision. It often requires consent of all beneficiaries, unless the will specifically requests unsupervised administration.

In some states, independent administration is available irrespective of the size of the estate. It requires one court appearance on admission of a will to probate and issuance of letters of office and- unless a contest develops over the will, a claim against the estate, or the accounting of the representative Ė a final report and the discharging of the representative.

Some states allow independent administration if requested in the will. If your state is one and you trust your executor, be sure to provide for it in our will. The threshold for unsupervised administration in states that allow it varies. In some states, it is available to estates of all sizes, in others as long as the executor is the only beneficiary. But some states have a tight dollar limit.

Small-estate administration is the simplest and fastest method. It involves the use of a small-estate affidavit for estates ranging from $1,000 to $100,000, depending on state law. This approach is particularly advantageous where the bulk of the estate is in a trust and only an automobile or small bank account is in the name of the decedent at the time of death. No court administration is required.

The Executorís Role. The first task is to appear before the probate court to report the death (a death certificate may be required), present the will (if not already on file with the court), and begin the process of deciding the validity of the will. In the absence of a challenge, this is usually a routine matter.

Once the will is determined to be valid by the probate court, the executor may be required to file accountings and inventories on a regular basis with the court. The necessity and frequency of such filings will be determined by the facts and circumstances of each case and by state law.

The executor may begin to pay taxes and other claims against the estate during this period, and some assets may be distributed to the beneficiaries, but the executor should be very careful until the estate is formally closed.

The last step in the probate process for the executor is to finalize the estate by filing papers with the probate court. This may involve providing the court with copies of notices to concerned parties, tax returns and bills paid. The executor may also have to provide evidence of distribution of the remaining assets, such as signed receipts from the beneficiaries. When the court recognizes the completion of the probate process and assets have been distributed to beneficiaries, the executor is released from further responsibilities.

Choosing the Executor . Who will be the person or institution responsible for administering your estate through probate? The most important thing is that you pick someone who is financially responsible, stable and trustworthy.

The executor has the following duties, along with others that may be specified in the will. He or she is responsible for collecting the assets of the estate, protecting the estate property, preparing an inventory of the property, paying valid claims against the estate (including taxes), representing the estate in claims against others, and, finally, distributing the estate property to the beneficiaries. These last two functions may require liquidating assets; that is, selling items like stocks, bonds, even furniture or a car to have enough cash to pay taxes, creditors or beneficiaries. The will can impose additional duties not required by law on the executor: choosing beneficiaries or distributing personal property, investing funds, even running your business.

You can choose more than one person to fulfill these duties: co-executors. This is a way to ensure that at least one person has legal or financial expertise and one is close to the family. If you choose this course, be sure to pick people or entities that can work together. You must also choose a successor in case your first choice dies or is unable to serve.

Ten Factors That Reduce the Cost of Probate

The more of these questions answered yes, the less probate should cost.

  1. Have you planned your estate with your lawyer?
  2. Is the will up-to-date, self-proving, and properly prepared, with bequests made in a clear, simple, predictable manner?
  3. Have you prepared an Inventory of all your assets for your executor?
  4. Is the fair market value of all the probate assets below $675,000, the figure at which federal taxes kick in as of January 1, 2000?
  5. Is there only one beneficiary of the will?
  6. If there is a surviving spouse, are all the children also the children of the surviving spouse?
  7. If your state has simplified (small estate or independent) probate procedures, does the fair market value of the estate fall below the ceiling for those procedures?
  8. Is the probate estate free of real estate holdings in another state or a family business?
  9. Was the estate plan discussed with the family and other beneficiaries before death?
  10. Can the estate debts and taxes be resolved without delay or controversy?

If You Donít Have a Will

You canít avoid probate by not having a will. Even if you donít write a will (i.e., if you die intestate), youíll still have one Ė the one the state writes for you, which assumes youíd want so much to go to your spouse, to your children, etc. The court will appoint a personal representative to serve as the administrator. This is usually a close relative or heir. The administratorís job is essentially the same as the executorís; the only difference is that he or she is appointed by the court instead of being selected by you in your will, and the administrator will probably be required to give a surety bond (a safeguard should the administrator fail). Probate will take place, but may cost more and take more time because you didnít leave instructions.

What if your will is found to be invalid? Then the probate court will order that creditors and taxes be paid. The remainder of the estate will be distributed in accordance with state laws.