Tuesday, July 3, 2012
Probate Administration: How It Works
Probate administration is something that many people fail to fully grasp. This is compounded by the difficult times in which such administrative action is necessary, usually after a person has passed on and their last will and testament is acted upon. It is important to understand the basics of probate administration because families often find it difficult to come to agreement about money, property, or other inheritances after a loved one has passed away. The administrator is responsible for the smooth transfer of assets or pieces of the deceased person's estate to their beneficiaries. There are a few basics that are crucial to understanding the process and you don't have to be an attorney or probate administer to see the complexity of such a position.
The first basic tenet of probate administration is the fact that it costs money. This may seem like a simplistic statement, but many families are caught unaware of the potential costs of having their loved one's assets divided up in court. If at all possible, the hiring of a probate administrator is something that should be agreed upon before the deceased person passes away. This ensures that the deceased person's wishes are honored and the family is treated fairly and properly by the administrator. It is not uncommon for administrators to charge fees which can be later deduced from the value of the estate or assets. These costs are usually deducted before the assets are split between the family members and beneficiaries. The executor of the will, or the person who is officially tasked with carrying out the actions described in the will, will work closely with the administrator and the family to make sure the last wishes of the deceased are honored and respected. In many instances, if the estate owes money and has to go to probate court, the executor is required to provide a fidelity bond which acts as a sort of deposit against the possibility that the executor will abuse their power to distribute the deceased's assets.
Another important concept to keep in mind is that there is usually a strict time limitation for the beneficiaries to receive the assets or portions of the estate. Probate administration planning should be incorporated into he last will and testament of the deceased whenever possible. If one is not selected before the time of death, a petition can be filed by the family members that will help to resolve the administration issue and nominate one to take care of such duties. On a related note, real estate or personal taxes as well as lawsuits and settlements can also be levied during the first few weeks or months after a person passes on. These are also time-sensitive judgements or actions and will most often come out of the estate or assets before family even gets to divide them up.
Such an administrator also helps to notify creditors that the deceased person has passed and acts as a middleman of sorts for the family. The administrator will likely help the family notify these creditors and help them to publish or post legally-necessary notices. This allows each creditor to clear out any remaining accounts or settle them with the deceased's assets prior to the distribution to the named beneficiaries. This can be a long, complex process, especially if the person who passed away had lots of credit card debt or loans with banks and other creditors. Just like with taxes or lawsuits levied against the deceased, the beneficiaries are second in line to receive their loved one's assets and estate.
Each state handles probate differently and it is certainly worth your time to research and learn more about the details of the transfer of assets to beneficiaries after a loved one passes. The best way to be prepared and reduce the need for probate administration or even the potential for inter-family legal struggles is to have a conversation with your loved ones about such issues. Make sure their decisions are in writing and hold up to legal scrutiny. Once a person is gone, family members often scramble to be first in line for any benefits or inheritances. It is amazing that when money is on the line, the family's social dynamic can change almost overnight.
If a person passes on without a last will and testament, the spouse or next of kin is usually awarded the estate or assets associated with the estate. Again, these assets are handed over after the Federal and state governments make sure no back taxes or liens are owed and after creditors give their input according to the legal contracts entered by the now deceased. An excellent way to avoid all the probate headaches is to create a trust that allows for a probate-free transfer of money to the family of the loved one who has passed.
Article Source: http://EzineArticles.com/7084586
Posted by Rene at 11:57 AM