Probate and Executors
Author | Jeffrey Wilson |
Pages | 719-722 |
Page 719
Probate is a legal proceeding by which a deceased person's property is distributed to the rightful heirs and/or beneficiaries. Probate proceedings are governed by the law of the state where the deceased person resided at the time of death and by the probate laws of any other state where the property was owned. The main purpose of probate is transferring title of the decedent's property to the heirs and/or beneficiaries. If the decedent had no assets, there is typically no need for probate. Probate also allows for collection of taxes due and payment of outstanding debts. The term "probate" refers to a "proving" of the existence of a valid Will or determining and "proving" who one's legal heirs are if there is no Will.
All property of a decedent may not be subject to the probate process. Life insurance, retirement accounts, real estate held as joint tenants with right of survivorship and other joint tenancy property can pass directly to the appropriate beneficiary automatically. The involvement of the court to transfer such property is not required. Property held in the trust is not subject to probate. A bank account or motor vehicle title may also specify a death beneficiary and thus be exempt from the probate process.
An Executor or Personal Representative (sometimes referred to as "The PR") is the person or institution named in a will and appointed by a court to carry out the will's instructions and to handle all of the matters of probate. Duties of the Personal Representative include making an inventory and appraisal of all property and appropriately distributing the estate.
The Personal Representative (also called the "executor" or "executrix" if there is a Will or the "administrator" or "administratix" if there is no Will) is appointed as part of the probate proceeding. The Personal Representative can either be an entity, one individual, or two or more individuals (although this arrangement can become extremely complicated).
The Personal Representative has the responsibility for managing the estate in accordance with estab-
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lished probate rules and procedures of the jurisdiction where the probate takes place. Responsibilities of a Personal Representative include:
Locating, inventorying, and obtaining an appraisal of the assets of the decedent
Receiving payments owed to the estate, including unpaid salary, vacation pay, or other benefits due the decedent
Opening a checking account for the estate
Determining how property is distributed
Noticing potential creditors
Investigating the validity of claims against the estate
Paying bills, debts, valid claims and expenses of administrating the estate
Discontinuing utilities and credit cards, closing accounts and notifying appropriate private and governmental agencies of the death
Filing and paying income and estate taxes
Closing the probate
Personal Representatives are generally compensated about 2% of the probate estate for their work. This varies moderately from state to state and generally decreases as a percentage as the size of the estate increases. All fees and reimbursed expenses are subject to court approval. Additional fees may be allowed if permitted by the court in certain circumstances. However, if a Personal Representative is incompetent or does not perform as required, the court may deny compensation, and the Personal Representative may be held personally responsible for any damages caused. Liability may arise from improperly managing the assets of the estate, failing to collect claims and moneys due the estate, overpaying claimants, selling an asset without authority or at an inappropriate price, neglecting to file tax returns promptly, or distributing property incorrectly to beneficiaries.
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