Many of us have heard the word “probate”, but the average person (like me) has never taken the time to learn about it. I am going to go out on a limb and say it is because anything revolving around death is a topic that makes most very uncomfortable. Due to the passing of a loved one a few months ago, I have learned more about the process than I ever thought I would. The main reason is because I became the Administrator cta after the named executor renounced his position.
There is a lot about probate I still don’t know, but these are some of the things I have learned as I have been going through the process of probate for the will of a family member.
What could possibly by good about anything regarding probate? I asked myself the same question as I started this article. However, there are a few things that may seem bad but can be good if you are faced with probate.
Every state has a detailed probate system
Every state has specific legal steps to make sure probate is carried out properly. At first I thought it was bad, but for some people it is probably good. It is amazing what the death of a family member, and a will, can do to what seems to be a cooperative, loving family. The probate laws are there to make sure every family member and beneficiary is honestly, and fully, represented. It makes sure the last wishes of the deceased are carried out.
This is not to say the probate process is easy, because it is not at all easy. However, the laws are there to protect the deceased’s estate, which is a good thing. If you want to know what your state laws are regarding probate, you can most likely find them by searching “probate + [your state].” Some states call it surrogate rather than probate.
There are a lot of probate attorneys
If you do not have a probate, legal background a probate attorney is a must if you want to make sure your role as executor or administrator, or your interests as a beneficiary, are attended to properly. A quick search online will give you a list of more attorneys than you will ever have time to call. Since there are so many, it is a little competitive, too. This means that you will find varying fee rates and methods of billing; flat fee, after probate, up front retainer and by the hour. Those are just a few of the possibilities. They also have different personalities and ways of dealing with clients. In other words, contact more than one and find one that fits your needs, budget, and way of thinking and communicating. Do keep in mind your budget and the size of the estate. We used AVVO to find our attorney.
Administrative expenses come out of the estate
Probate can be expensive. A lot rides on the length of the will, for example the number of people named as beneficiaries, the number of next of kin that must be notified of the death, how long it takes for the next of kin to respond to court documents that let the will be entered into probate, and if anyone contests the will. The only plus to the expense of all the legal and administrative costs (such as postage, travel to the deceased’s estate, fees from attorneys, CPAs and estate appraisers) is that it all comes out of the estate. Of course, the fees must be approved by the court, which is why you must keep very detailed accountings of everything that is spent to resolve the estate. The accounting is turned into the courts and it is public record.
Unfortunately, the good of an estate can also be bad. And, there are not so great things about probate that make it seem like the process will never end.
It can be expensive and it all comes out of the estate
Above I mentioned that the expense of taking care of an estate can come out of the estate. If the estate is large it may not hurt the estate too much, but if the estate is small it can quickly dilute any funds that were supposed to go to those named in the will. Probate is not always expensive, but in most cases the costs add up quickly. In our case, we had to put down a $10,000 retainer and that was used up after about 40 hours of work by the attorney and court fees. Include in that the family issue where next of kin took their time returning documents, or completely ignoring documents because they were not listed in the will, and you have more hours and potentially a public attorney getting appointed to represent those that did not respond. All that expense that adds up quickly. This is all before any letters are issued to allow the administrator to start securing the estate. A small estate can easily be dwindled before it is even officially in probate.
It can take months (or years) to complete
Small estates can be resolved in a matter of months, with the most drawn out portion being paying the creditors and making sure final taxes are paid. However, small estate guidelines are different for each state and range from $30,000 to $75,000. After that an estate is consider a full estate and must go through the entire, lengthy probate process.
Our relative lived and died in New York, one of the states known for its long, drawn out, convoluted probate (surrogate) system. If an estate there does not have any issues, and paperwork goes smoothly, the estate must still remain open in probate for seven months from the date the will is accepted at court and officially put into probate. A will is not officially in probate until all required documents are in from next of kin and the court officially appoints the executor or administrator by issuing full letters.
Sometimes the probate court will issue papers called “Temporary Letters” that will let the executor, or petitioned administrator cta, secure assets so they don’t get diluted. In our case, it took nearly three months for all the paperwork to be in and the estate to get on the court’s docket. So, we were issued temporary letters that gave us permission to notify banks and go into the home to begin inventory of the personal assets.
A friend I have has been waiting two years for her inheritance. The father had a will but died leaving everything to the stepmom. Then she passed and the family can’t find the will. Now the probate court is having a publicly appointed attorney locate all the assets and determine what the deceased “most likely would have done” to split the assets. It is turning into a very long and expensive process for them.
Every step takes time, a lot of time
Have you ever known someone who was supposed to inherit from a relative but it took forever (as in months and months) before they received it? It was most likely due to probate. Probate at a minimum takes a full year, and that is for an estate without issues or contests. The executor or administrator cannot distribute any assets listed in the will until probate is complete.
We are in the beginning stages of probate. It has been three months since the deceased passed.
The timeline has been something like this:
First month: Speak to executor named in will and find they are not good at communicating. Hire probate attorney to represent beneficiaries and get information on progress. Named executor renounces.
Second month: Hired probate attorney begins paperwork for identified family member to be petitioned Administrator cta. Family member and attorney research next of kin and beneficiary contact information as all must be notified. Waivers sent to next of kin. Documentation submitted to court to get estate on surrogate court docket.
Third month: Court assigns court date for estate. Certified letters and citations go out to next of kin. Wait for next of kin to reply. Temporary letters distributed mid-month. Court loses letters. Attorney takes time in sending found letters and instructions to Administrator cta. Final return receipt received from family only days before court date.
At the time of this writing, the administrator has yet to go into the deceased’s domicile as it is 3000 miles away. Full letters will make the trip more productive, as many banks won’t let you secure any assets with temporary letters. Since the estate must remain in probate for a minimum of seven months, the beneficiaries named in the will not be able to receive the items until sometime in the spring or summer of 2016.
Creditors and financial Institutions can be difficult
After a person dies the banks and creditors want to protect themselves from scammers. This is completely understandable. Some will go to extreme lengths and there is a good chance at least one will make you angry. Some creditors will gladly mail the final statement/bill to the address you provide. Others will send it to the address of the decease and assume it will be forwarded to you.
As for financial institutions, I experienced both nice and rude. Be prepared that if you do not have full letters of administration some of the financial institutions will not give you any information, even if you are attempting to put together an inventory of assets for the courts. (I had temporary letters which gave me authority to secure assets, but that did not count at one the major financial management businesses.)
Also expect that they will assume you want to open the estate fund at their bank. You DO NOT have to open it there. If the funds can be transferred, you can complete a Letter of Authorization so that the funds can be moved to an estate fund at any bank you choose as long as it is in the same state where the deceased’s legal domicile was located. I chose the bank that also had many branches in my home state so I did not have to drive and fly extensively to handle financial matters.
The “Say What!?”
Probate is an ugly process and there are rules that make it all that more difficult for the grieving family. The rules are in place for a reason but it doesn’t mean that one will like them.
Personal assets of the deceased can’t be touched by anyone
When someone passes their assets immediately become “wards of the state” until the executor, or administrator, is given official authority to being inventorying the estate. That means if one even takes a spoon from dear Aunt Anne’s home they are stealing and breaking the law. It means that one can’t go into their parents’ home and take the beloved picture of mom and dad sitting on the mantle.
All assets are off limits until the executor is given the authority by the courts.
Only the executor (or administrator) is allowed to secure the assets
If you are worried about the condition of the assets, only the officially appointed person can secure them. The courts will issue the executor, or administrator, a certificate that tells banks and landlords that person can legally take care of the assets. So, even after the will is officially in probate, you still can’t go into Aunt Anne’s home until all assets are accounted for and the probate process is finishing.
The executor gets a percentage of the estate for payment
If the expense of attorneys, court fees, appraisers, and CPAs comes as a surprise, keep in mind the executor gets payment for their services. Sometimes it is stated in the will what the fee will be and sometimes the fee is regulated by the state. In NYC the executor gets a percentage of the estate as payment. The percentage is based on the size of the estate. If a family member is the executor they sometimes refuse payment, especially if they are also a beneficiary, because the payment is taxable income.
Executors do not always communicate with the family
Executors do not have to communicate with family. One would think it would be a legal obligation but it is not. For our deceased’s estate we had to hire our own attorney to get information from the executor. In our case, the executor named in the will chose to renounce his position. We can only assume it was because he realized the family meant business in making sure he did his job properly.
Guides and websites that explain the role of an executor state it is in the executor’s best interest to keep the family, and beneficiaries, informed but just because it is recommended does not mean it will happen.
I have had emails and phone calls and have decided it is best to keep them informed. I created an email address specifically for the estate and opened a PO Box. Once full letters are issued I will periodically send out an update to all next of kin and beneficiaries.
Complications arise where you least expect them
Probate for a will requires a lot of specific legal steps. Complications can arise at any step, especially since the process involves next of kin and businesses that do not always have procedures in place and instructions that all employees understand. Just a few of the complications that we have faced to date:
- Next of kin choosing to take their time in returning documents the court requires to know that family members are OK with the will be submitted into probate.
- Creditors not knowing what to do or refusing to send documents directly to you so you can write up a known debts list for the courts.
- Financial institutions not understanding that temporary letters do give them permission to talk to you about the accounts. This then delays the inventory of assets required by the courts.
- Delayed court date for probate due to delay in document preparation and receipt.
One would think that at least financial institutions would know what can and cannot be done when presented with legal documents for probate, but they do not.
The estate fund must be set up in the state where the deceased had their legal, permanent domicile address
After a person dies an estate fund is created that is a combined sum of all the financial assets that were held by that person (except for stocks and retirement accounts, etc.). So, if they had multiple checking and savings accounts all those funds will be combined into one fund called an estate fund. This estate fund must be set up in the state where the deceased’s legal residence was located. Thus, if the deceased lived in Florida, and the administrator/executor lives in another state, the estate fund must be opened in Florida. This is a safety measure for the estate. It tries to ensure that the administrator or executor does not run off with the money to a place unknown.
Probate is a long, frustrating, emotional process. It can be complicated and it requires a lot of legal expertise. The rules don’t always make sense at first but most are there to protect the estate. Executors and administrators must keep the good of the estate at the forefront. If an executor is not talking to the family and keeping them informed then hire an attorney to “keep an eye on the executor.” Banks and creditors will not always have full instructions and understanding of documents and the probate process.