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Probate is the legal process of settling the estate of a deceased person, specifically resolving all claims and distributing the decedent’s property.
The etymology of “Probate” stems from Latin, old French and old English words with somewhat different meanings. The earliest definition, dated to 1463, means the “official proving of a will,” and originates from the Classical Latin word probatus, meaning “a thing proved”. This is the past participle of probare, which means “to try, test, prove” or “prove to be worthy”. It also traces its roots to the old french word prouwe, dated circa 1175, or prover, and is related to the English word “prove”. The term “probative,” used in the law of evidence, comes from the same Latin root but has a different English usage.
In England and Wales, Ireland (N. and Eire) and Commonwealth countries, and some U.S. states, Probate (“official proving of a will”) is obtained by executors of a will while Letters of Administration are granted where there are no executors.
In some U.S. states, after a person residing in that state has died without a valid will or trust, his or her property immediately becomes the property of the spouse, if any, without the need for Probate. (This is the case in states that recognize a married couple’s property as community property or as tenancy by the entireties.) However, in cases where the surviving spouse does not automatically succeed to the decedent’s property, then it is usually necessary to “Probate the estate”, whether or not the decedent had a valid will. A court having jurisdiction of the decedent’s estate (often called a “Probate court”) supervises Probate, in order to ensure the decedent’s property is distributed according to the direction of his will and the laws of the state.
The will usually names an executor, a person tasked with carrying out the instructions laid out in the will. The executor’s most common task is the marshalling of the decedent’s assets throughout the Probate process. If there is no will, or if the will does not name an executor, then the Probate or other court having jurisdiction of the decedent’s estate can appoint one. Traditionally, the representative of an intestate estate is called an administrator. In some cases, where the person named as executor cannot or will not be able to handle the work, or wishes to have someone else handle the work, another person will be named as administrator. Generally, an executor is a person named in the will who receives something from the proceeds of the estate in addition to following the instructions in the will, while an administrator is not named in the will to be a recipient of the proceeds of the estate.
The representative of an estate who is someone other than the executor named in the will is an administrator with the will annexed, or administrator c.t.a. (from the Latin cum testamento annexo.) The generic term for executors or administrators is personal representative.
Steps of Probate
Some of the decedent’s property may never enter Probate because it passes to another person contractually, such as the death proceeds of an insurance policy insuring the decedent or bank account that names a beneficiary or is owned as “payable on death”, and property (usually, again, a bank account) legally held as “jointly owned with right of survivorship”. Property held in a living trust also avoidsProbate. In these cases, the personal representative provides documentation to the court, and the property is prevented from entering Probate.
The first task of the personal representative after opening the Probate case with the court is to inventory and collect the decedent’s property.
Next, the personal representative pays any debts and taxes that must be paid.
Finally, the personal representative distributes the remaining property to the decedent’s beneficiaries, either as instructed in the will, or per the intestacy laws of the state.
Throughout this process there may be disputes. Anyone may make a claim on the estate, either by petitioning the personal representative or the court. If the claim is rejected, the claimant may file a lawsuit to attempt to prove the claim and collect money. Any dispute generally causes the court to treat the Probate more formally, and it may reach the point where the court must approve every transfer of every piece of property.
The personal representative must understand and abide by the fiduciary duties (e.g., duty to keep monies in interest bearing account, duty to treat all beneficiaries equally, etc.) placed on him or her. Disregard of the fiduciary duties may allow interested persons to petition for the removal of the personal representative and hold the personal representative liable for any harm to the estate.
Probate generally lasts several months, occasionally over a year before all the property can be distributed, and incur substantial court and attorney costs. One of the many ways to avoid Probate is to execute a living trust. This is a separate entity to which a person transfers ownership of his real property (house, etc.,) from himself to a trust which he controls and can revise at any time (except in the case of an irrevocable trust.) Upon death, the persons named as beneficiaries in the trust acquire ownership of it and, therefore, the property the trust owns. As Probate is a public process, a living trust has the added advantage of preserving the privacy of the deceased and his heirs as well as avoiding some estate tax.
Life insurance, savings accounts, and joint tenancies with the right of survivorship are some of the other ways people use to avoid Probate.
Avoiding Probate does not necessarily mean estate taxes have also been avoided. The laws imposing the federal estate tax have been modified to include within the definition of the person’s taxable estate, property held in a living trust, life insurance, “payable on death” or “transfer on death” financial instruments, and most other property which is transferred from a dead person to a living person in consequence of the death. Inter vivos trusts can reduce estate taxes if they are properly structured, but that is not related to the avoidance of Probate. Generally, to avoid an estate/inheritance tax, a person must give it away irrevocably or leave it to a qualified charity. However the use of credit shelter trusts (also called AB trusts) can allow a married couple to preserve both unified credits, allowing up to twice the total estate to pass to heirs without estate tax. This may reduce or eliminate the total tax the couple would have otherwise paid.
Linda Rich is a licensed attorney practicing in the greater Cleveland area with law offices in Euclid and Lakewood. Contact her for assistance with your probate or other elder law related issues.
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