Wednesday, April 23, 2014

Understanding the Role of Probate Court

Many people are confused about the role of probate court and the types of cases handled. One of the primary roles of this court is to oversee settlement proceedings of decedents estates. However, other important cases are handled here including elder law, legal name changes, guardianship, and adoption. 

When a person passes away their estate is settled under the guidance of probate court. Two types of probate exist, including testate and intestate. Testate estates refer to estates where decedents prepared a last will and testament to bequeath assets to heirs. Intestate estates refer to cases where a Will was not prepared and no directives for asset distribution are provided.

If a Will is recorded through the court all estate assets are suspended until probate proceedings are completed. If a Will is not provided, additional steps are needed to validate rightful heirs.

Probate proceedings vary depending on decedent's circumstances. However, settlement involves reconciling outstanding debts and taxes; transferring property deeds to beneficiaries; and distributing assets and personal belongings to heirs.  

Most people find it helpful to retain services from an estate lawyer. Probate proceedings can be complicated and require substantial paperwork. The process can become overwhelming if individuals file a claim against the estate or if heirs contest the last Will.

The average duration of testate probate is six months, as long as no claims are made against the estate. Intestate probate generally takes two to three months longer to reconcile.

With testate estates, the designated Administrator can commence with duties upon recording the Will with the court. With intestate probate, a judge has to confirm an Administrator prior to starting proceedings. It is illegal for anyone to take action of any sort without court confirmation.

One major disadvantage of having estates settled through probate court is that assets oftentimes depreciate in value. Beneficiaries may have to pay inheritance tax based on the date of death value rather than the actual value at the time of estate reconciliation.

Another problem heirs face is they might not receive any inheritance at all if the decedent has substantial amount of outstanding debt. All creditor debts, personal, business, and estate taxes must be reconciled before assets can be distributed to beneficiaries.

Rather than endure probate proceedings, people can setup trusts to transfer ownership of property. There are several benefits associated with trusts. First and foremost, they substantially simplify estate settlement and allow for ease of property transfer to beneficiaries.

Secondly, property held in trusts is exempt from probate so there is no need for lengthy court proceedings.

Third, trusts offer privacy that is not available with probate estates. Since Wills are recorded through court they are a matter of public record and can be accessed by anyone who wants to view the contents. Trusts remain private and only Trustees and beneficiaries are privy to what is written in the Will.

It is advisable to work with an estate planning law firm when establishing trusts. Experts can advise of the different types of trusts and the pros and cons of each. Much depends on personal circumstances and lifetime goals. A few of the more popular include children's trust funds, living trusts, revocable and irrevocable trusts, and family trusts.

Taking time to develop an estate plan will provide peace of mind while you're alive and relieve some of the burden from loved ones when you're gone. Even if relatives have to endure probate court, writing a Will can lessen the amount of time needed to reconcile the estate.