The Last will and testament of a deceased person are generally placed in probate for a period, while the process of authenticating it is supervised by the courts. During this period, all assets are located, and the value of those assets is determined. From there, the court will pay all final bills and any taxes owed by the deceased. Any remaining estate is then distributed to the beneficiaries as stated in the will.
Is The Probate Process A Requirement?
The laws of probate vary from state to state, each having their specific laws to determine when probate is required. In Colorado there are 3 levels of probate:
- Small Estates: When the deceased’s estate (those with or without wills) is worth $64,000 or less and owns no real property (house or land), then the heirs may collect assets by signing a Small Estate affidavit, allowing them to avoid probate court all together.
- Informal Probate: Generally if an estate is worth more than $64,000 it will go through the informal probate proceedings. This is the case when there is a clear, authenticated will, no contest over the will and a personal representative has already been clearly identified. During the infromal probate process in Colorado, forms are filed and approved by the court, but there is no court supervision over the distribution of the estate.
- Formal Probate: In Colorado and many other states formal probate is a court proceeding; a judge must approve actions taken by the personal representative such as distributing assets or selling real estate. This process is most common when there are disputes over the will.
The probate codes within these laws also include what is required when there is not a Last will and testament, referred to as “intestate succession”.
Even when there is not any will, the deceased’s final bills are still due and payable by way of probate and distribution of the estate. While the governing probate laws vary within each state, the process is similar.
Authentication of the Last Will and Testament
There are laws set in Colorado and most states requiring the person in possession of the deceased’s last will to file it with the state’s probate court as soon as possible. At this time, that person can file a petition for the probate to be opened, which may require the death certificate be presented along with last will. While this process sounds intimidating, most state courts have forms that make it easy.
If a will was left by the deceased, a court hearing is typically held wherein a judge will confirm the validity of it. A formal notice is issued to the beneficiaries within the will regarding the date and time of the hearing, including any heirs of the deceased that would benefit under the law if there were no will.
Every person that could have interest in said will have the opportunity during the hearing to state any objection to the will and what is being admitted for probate. This could be due to improper drafting of the will or a more recent will has been found. Object to the appointed executor could be cause for objection too.
How Does The Court Determine A Will Is Valid?
Many courts include “self-proving affidavits” which is established that witnesses signed an affidavit simultaneously with the deceased of the will being signed and that signature was witnessed. This provides the courts with enough evidence the will is valid.
Without this affidavit, a sworn statement by any of the witnesses could be required by the court as well as provide testimony they were witness to the deceased signature of the exact will in question.
Appointment of the Executor
An executor, administrator, or personal representative will be appointed by the judge. That person will be tasked with overseeing the probate process and settling the deceased’s estate.
In most wills, the decedent has chosen an executor, which is stated within the document. If no will is in place, the judge will appoint a next of kin, which could be a surviving spouse or a child of legal age. There is no obligation for an individual to accept this appointment, in which case, the judge will appoint another person to execute the will.
The court will issue “letters testamentary” “letters of administration”, or “letters of authority” to the person appointed that advises all interested parties they are legally allowed to handle all transactions of the decease’s estate.
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Note: The decedent’s choice for an executor is typically included in her will, but the court will appoint next of kin if she didn’t leave a will, typically her surviving spouse or an adult child. This individual isn’t obligated to serve—he can decline and the court will then appoint someone else.
A Bond May Be Required
The executor may be required in some cases to post a bond prior to issuance of this formal letter. In many cases, the will states a bond isn’t necessary. The bond is akin to an insurance policy that estate will be reimbursed in case of any grievous error by the executor – intentionally or unintentionally. This includes any financial damages the estate and its beneficiaries.
In some states, rejection by the beneficiaries is possible, whereas other states, the rule is ironclad, principally if the executor isn’t the original person stated in the will, or if the individual that is listed as executor resides in another state.
Tracing the Deceased’s Assets
The first task the estate’s executor has is tracing and gaining possession of the deceased’s assets and keep them while probate is in process. This includes reviewing documentation such as insurance policies, real estate deeds and tax returns. Often, deeper investigating may be required for hidden assets that may not have been included in their last will and is unknown by any family member. Some of the most common items people forget to put in their will include information about personal property, digital assets, rental properties, and pet arrangements among other things.
There is no requirement for the executor to move into any house owned by the deceased, but they are required to maintain financial responsibilities. This includes paying any mortgage, insurance, taxes, or lien payments. Often times these added financial burdens are more than the executor wants to take on and they choose to sell the Colorado probate property instead.
The other possessions, however, the executor can and may take possession of the other assets like collectibles, vehicles, etc. The executor will usually take over all documentation such as financial accounts, including any stocks and bonds.
Determining Values Upon Death
The decease’s assets value must be determined at the time of their death. This is typically done by way of house appraisals and financial statements. Each state has different laws and procedures, with some assigning the appraisers and others allowing the executor to choose an appraiser.
Depending on the law, a state may require a written report be submitted to the court by the executor. That report should list everything owned by the decedent and the value of each item and how the value was determined.
Creditors are Identified and Notified
The executor is then required to notify all creditors of the decease’s passing. In Colorado and many other states, it may be required for the executor to publish a notice in the local newspaper, which may alert unknown creditors. Those creditors have a limited time to make any claim against the decease’s estate. That time frame will vary in each state.
Any of these claims can be rejected by the executor if there is any reason to feel a claim is invalid. A petition can then be filed by the creditor requesting the probate judge rule that any payment should be made.
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Important: The executor can reject claims if she has reason to believe they’re not valid. The creditor might then petition the court to have a probate judge decide whether the claim should be paid.
The Decease’s Debts Are Paid
The next step is for the executor to pay all creditor claims and outstanding debts. This includes all final bills accumulated prior to the deceased’s passing.
The Deceased’s Tax Returns
The executor is responsible to file the final tax return on behalf of the deceased and pay any estate taxes from the estate funds. This often requires assets of the deceased to be liquidated such as land, investment properties or primary residences. Each state will have a time limit this is to be completed, usually a 9-month period. Estate taxes needing to be paid are another reason people choose to sell a home during the probate process.
Distribution of the Estate
Once all of the above has been completed, the executor will file a petition with the court asking for permission to distribute any remaining assets as dictated by the deceased. The court may require the executor to show proof that all financial obligations have been met by way of an official accounting process.
Some states will allow the beneficiaries to waive that requirement if it is agreed by all that it isn’t necessary. If not, the executor will be required to explain all expenses that were paid from the estate. A form is available in some states that make this process easier.
Any minors that are listed in the decease’s will, the executor is responsible to establish a trust in their name. That trust will accept possession of all bequests for the minor until they are of legal age. In some instances, any adult beneficiaries, deeds or other transfer documents are required to created and filed as appropriate with county and/or state officials for finalization.
Any “Intestate” Estates
If the deceased did not leave a will that can be validated, it is referred to as an “intestate” estate. This can also be declared by the probate court if it is believed any will presented is not valid or if there any heir contested the presented will. The most substantial difference of having a valid will or not having one at all is the decease’s assets and wishes will not be honored.