Probate, Administration, Operation Of Law

During the days, weeks and months following someone’s death, funeral arrangements must be made, all outstanding debts have to be paid, and any pending or existing legal matters have to be addressed. People who have some assets remaining must have these assets transferred to the appropriate beneficiaries, and people with more assets may have to pay estate taxes to both the federal and state governments.

Be very clear: Probate and Estate Administration are a distinct and separate process from Estate Planning. The fact that an attorney may be highly regarded in one area does not mean they are equally experienced in the other.

It is extremely important for people to determine who will represent their estate upon their death, and which family members, friends or charities will receive any remaining investments or family heirlooms. When these steps have not been implemented, alternative state-mandated actions must be taken, and additional expenses will be incurred. The simple rule is: “Take care of your legal matters before you pass away, because they have a life that continues after yours”; but if you have not completed all work beforehand these matters must proceed nonetheless.

Operation of Law Assets

The legal process that transfers property the moment of your passing is known as “Operation of Law”, and these assets are sometimes referred to as “Testamentary Substitutes” (because they are substitutes of your Last Will and Testament, and therefore do not pass by your Will). These accounts or assets have a named beneficiary, such as a life insurance policy, retirement plan, or Transfer on Death [“TOD”] account, and they tend to be easy to collect once identified, as all that is required to collect them is the decedent’s Death Certificate. And yet while transferring the assets themselves may seem simple, many potential hazards abound.

How do you identify these assets if the deceased individual was not completely transparent about their existence? What are the tax consequences of distributing an account directly to you or to some other entity? What are tax reporting requirements for these accounts, especially if no one is named as an Executor to administer to taxes under the estate? What about estate creditors? And just because collecting the funds was easy does not mean your affairs are done.

Probate / Administration

Assets that pass under the legal process known as Probate are those that we don’t know where they go the moment you pass away, so we need to look at the Will to ascertain who receives them. If no Will is present the process is called Administration. In both cases you need to place the court on notice, fill in a Petition, inform the next of kin and attain their permission to commence the proceeding in court, disclose the nature of those assets to the court, and many other steps. Probate and Administration are a windfall event for Trust & Estate attorneys, and some collect dearly while administering to the process.

The truth is that most people only have to deal with Probate once or twice in their lives, and thus have no idea how much they are going to be charged. Due to pricing imbalances, many unqualified attorneys are attracted to this area of the law. The mixture of these two ingredients often leads to high fees with long waits to collect estate assets.

In truth, you will need to be prepared to wait for assets passing via Probate and Administration, but the reason for the wait should be fully explained to you, as should the requirements of being an Executor or Administrator. It is okay to not understand WHY the process works the way it does, but it is imperative to work with an attorney who can explain HOW the process takes place and your responsibility as either the fiduciary or the beneficiary.

DISCLAIMER: Attorney Advertising. Please note that prior results do not guarantee a similar outcome. This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent legal counsel for advice on any legal matter.