What is probate?
Probate is the legal process through which property and other assets pass from you to your beneficiaries after you die.
If you do not have a Will, an intestate probate would be initiated by one of your heirs.
If you do have a Will, a testate probate would be initiated by the person identified in your Will as your personal representative or Executor/Executrix.
Probate proceedings are intended to provide a mechanism for the orderly transfer of a decedent's property while protecting those who might have an interest in the property, including heirs, beneficiaries, creditor, and taxing authorities.
The probate process is necessary to:
- Collect and protect the decedent's property.
- Identify the beneficiaries, estate creditors, and any other individuals or entities that may be entitled to assets of the estate or have claims against the estate.
- Pay all debts, expenses, valid claims, and taxes.
- Distribute the property of the estate properly.
In either an intestate or testate situation, we can assist in identifying possible issues and initiating the process.
Is probate necessary?
Probate proceedings are not necessary for all estates. Various factors, including the value, nature, and titling of assets, will determine whether or not probate is required and what type of probate proceeding is necessary.
In some cases, after an individual dies, informal methods may be used to transfer property without court proceedings. An affidavit procedure, for example, provides swift and informal transfer of certain "small estates" (as defined by state law). Proceeds of life insurance policies and certain retirement benefits may be paid directly to beneficiaries, thereby avoiding probate. If assets are owned with another individual as joint tenants with right of survivorship, the surviving joint tenant may take sole title to the assets without probate proceedings.
When an individual dies owning assets that do not pass by contract (such as a community property agreement, a trust agreement, or a beneficiary designation on an insurance policy or individual retirement account) or automatically by law (such as through joint tenancy with right of survivorship), those assets are subject to formal probate proceedings.
An individual in possession of a decedent's will must either file the will with the appropriate court or deliver the will to the decedent's personal representative or lawyer within 30 days of being notified of the death. If the person named as personal representative has custody of the will, he or she should give it to the lawyer during the initial consultation.
How long does the probate process take?
In the State of Washington, a probate takes a minimum of four months from the date of publication of the Notice to Creditors before an estate can be closed. This is the time required by law to allow any possible creditors to make claims to the estate. Once the four months has passed, if there are no other pending issues, an estate can be distributed to the heirs and the court file closed.
Taxes
Estates may be subject to both income and estate taxes, depending on the type and value of assets includible in the decedent's "gross estate." The gross estate generally includes both probate and non-probate assets; many people don't realize that avoiding probate will not affect whether or not income or estate taxes will be due.
In Washington, two types of estate taxes may apply: federal estate taxes and Washington state estate taxes. The amount of tax payable is based on the value of assets in the gross estate and is calculated using graduated rates. This graduated tax is levied on the net taxable estate after allowing certain deductions and exemptions.
An estate is a separate tax-paying entity. In addition to filing estate tax returns, it may be necessary to file a federal fiduciary income tax return to report estate income and pay federal income taxes due. The tax is applied on income and expenses generated from assets of the estate; it is similar to the federal personal income tax.
Fees and Costs
Probate costs can vary, ranging from a few hundred to several thousand dollars or more. Fees and expenses are influenced by the complexity of an estate's administration, including such factors as the type of assets, claims by creditors, and the need to file tax returns.
Both the personal representative and the estate?s lawyer are entitled to reasonable compensation for their services. In some cases; their fees may require approval of the probate court. Many personal representatives elect not to be compensated for services rendered in the administration of the estate especially when the personal representative is also a beneficiary. This issue should be discussed by the personal representative and the attorney at the initiation of the estate administration.
Making a Will
A carefully considered, well-drafted will can reduce expenses and simplify probate proceedings. Unconventional provisions in a will, complicated instructions, will contests, or other circumstances could cause the probate of a will to be more expensive.
A valid will controls the distribution of a decedent's property according to that person's wishes. It enables the decedent to appoint a personal representative who can then settle the estate efficiently and cost effectively. Without a valid will, the probate estate needs greater court supervision and will be distributed according to an explicit formula under the Washington state laws of descent and distribution ("intestate succession").
Alternatives to Probate
Alternative planning strategies may be used to reduce the number of assets subject to probate or to completely avoid probate. These alternatives include gifting property prior to death, owning property jointly with another, community property agreements, or, creating trusts.
Revocable living trusts may provide an alternative to probate.
Transfer outside of probate should be used cautiously since the mere transfer of ownership into joint names may cause gift-tax consequences or there may be estate tax complications upon the death of one of the owners.
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