Probate is a legal process for transferring property when an owner dies. This court-supervised procedure is used to validate a will and determine ownership of a deceased person's ("decedent's") estate.
When a property owner dies, assets which do not pass directly to others through a community property agreement, right of survivorship, under some form of trusts, or as insurance proceeds are subject to formal probate proceedings. Certain "small estates," as defined by state law, may qualify for a simplified method of transferring property.
Probate proceedings are intended to provide an orderly transfer of property while protecting those who might have an interest in the property, including beneficiaries, heirs, creditors, and taxing authorities. The process is necessary to:
For some estates, probate proceedings are not required. The need for probate depends on circumstances and is not determined just by an estate's size. Various factors, including the value and nature of assets and the relationship of the survivors to the deceased, will determine whether probate is appropriate.
If a person wishes to plan his or her estate in order to reduce the assets subject to probate or to completely avoid future probate, a number of steps may be taken. These include giving away property, forming joint ownerships, and creating trusts. Property may, for example, be directly transferred to survivors if it is owned in joint tenancy. Under this arrangement, the surviving joint tenant or tenants acquire ownership without undergoing a probate process.
Property held jointly with another, as with husband and wife, will be transferred to the surviving individual without the asset being probated.
After a person dies, informal methods may be used in some cases to transfer property without court proceedings. An affidavit procedure, for example, provides swift and informal transfer of certain "small estates." Proceeds of life insurance and retirement benefits may also be paid directly to beneficiaries without a probate proceeding.
It is important that informed decisions be made by individuals who wish to use alternative "non-probate" methods of transferring property. Various factors will determine whether probate is appropriate. Consultation with a lawyer may assist in understanding alternatives and making decisions.
In the state of New York, most probate proceedings are relatively simple, requiring little direct court involvement. The process requires the preparation and filing of legal documents and may require the holding of one or more court hearings.
The procedure usually begins with the appointment of an individual as a personal representative to collect, manage and settle a decedent's estate.
A decedent who has a will dies "testate," and distribution of that person's probate estate is made according to the will. The will usually designates a personal representative (sometimes called the "executor") to manage the estate assets.
If no valid will exists, the decedent dies "intestate," and the court will appoint a personal representative, or "administrator."
The personal representative, often with the guidance of a lawyer, is responsible for the proper handling and settlement of the decedent's estate. Typically, the representative is required to:
All probate proceedings are subject to the jurisdiction and supervision of the Surrogate Court. The selection of a specific Surrogate Court for probate is generally determined by the decedent's county of residence.
The day-to-day work of the personal representative, such as paying bills, settling uncontested claims, selling estate assets where appropriate, preparing tax returns and paying taxes, is generally accomplished without intervention by the court. When disputes arise or uncertainty exists as to the proper meaning of a document or the identity of a person entitled to share in the estate, the court will hear testimony and enter appropriate orders.
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Because each situation is unique, it is difficult to precisely predict the time required to settle an estate.
The initial step of petitioning for admission of the will to probate usually occurs immediately following a death. The personal representative then notifies creditors, the beneficiaries named in the will, and other heirs of the death.
Filing of state and federal death tax returns may be required, and any taxes must usually be paid no later than nine months after the date of death.
Although partial distribution of assets may be made before the estate is formally closed, final distribution occurs after the end of the creditors' claim period. (Creditors are required to file claims against an estate within four months from the date of the first published Notice to Creditors.) Tax requirements or the need to sell and distribute funds to beneficiaries or claimants may complicate and prolong final settlement.
Every estate may be subject to two types of death taxes, depending on the value of assets included in the "taxable estate." The taxable estate may include both probate and non-probate assets.
One type of tax, imposed by the federal government, is the federal estate or "unified transfer" tax. Based on the value of assets in the taxable estate, this graduated tax is levied on the net estate after allowing certain deductions and exemptions.
A second tax is the New York estate tax, which will soon be equal to the state death tax credit allowed on the federal tax return. It is important, however, to verify and meet all the filing requirements. Consultation with a legal or tax adviser may be appropriate to determine what filings are necessary.
Because the estate is a separate tax-paying entity, another tax, the federal fiduciary income tax, may be due. It is based on income and expenses generated from probate estate assets, and is similar to the federal personal income tax.
The obligation to prepare and file tax returns and pay appropriate tax liabilities may exist even if none of a decedent's estate passes through probate. Non-probate assets, such as property owned with a right of survivorship, life insurance proceeds and certain types of transfers prior to death, may be subject to both state and federal death taxation.
Because a large body of law has evolved with regard to the taxes described above, extreme care should be exercised by a personal representative when computing taxes and preparing returns.
Probate costs can vary, ranging from a few hundred to several thousand dollars or more. Fees and expenses are influenced by an estate's complexity, including such factors as the type of assets, claims by creditors, and the need to file tax returns.
Both the personal representative and the lawyer for the estate are entitled to reasonable compensation for their services, and their fees may require approval of the probate court. Fees may not be based solely on a percentage of the estate's value; common considerations in determining fees are an estate's complexity and the type and amount of work involved.
A carefully considered, well-drawn will can reduce expenses and simplify matters. Unconventional provisions in a will, complicated instructions or other circumstances may, however, cause the probate of a will to be more expensive than usual. A lawyer can explain options.
A 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 with the least possible emotional turmoil. Without a valid will, the probate estate will be distributed according to a formula under New York state laws of descent and distribution (or "intestate succession"), which explicitly details property disposition.
Property held as joint tenants with right of survivorship is a form of co-ownership of property between two or more persons. On the death of one party, the ownership of the property normally passes automatically to the surviving joint tenants. This type of ownership should be used cautiously since the mere transfer into joint names may cause gift-tax consequences, or there may be estate-tax complications upon the death of one of the owners.
If someone close to you has died, do not disturb any of the decedent's property unless necessary for its safekeeping.
A lawyer should be contacted by the surviving spouse or a close relative. The lawyer will provide advice, determine if probate is required, and explain any necessary procedures.
An individual in possession of the decedent's will must either file it with the appropriate court or deliver it to the decedent's personal representative or lawyer within 30 days after being notified of the death. If the person named as personal representative possesses the will, he or she should give it to the lawyer during the initial consultation.
Attending to the details of a probate proceeding may be a complex, time-consuming task, and it may be necessary for relatives or others to face this task during a time of grief and trauma. A lawyer can help shoulder this burden by providing timely professional advice and professional assistance in handling probate proceedings.