Probate: Who? What? When? And How?
Immediately after the death of a person, it is necessary to pass his or her property to the heirs at law or other designated beneficiaries. Property is passed by a valid will or pursuant to other arrangements, such as an agreement, title with survivorship rights, or beneficiary designations. If the total value of the deceased person's personal property is under a certain value as provided by applicable state law ($100,000 in Washington), the statutory procedures for small estates may be used to transfer title of the deceased person's property. Otherwise, a court procedure called "probate" is used to transfer title, whether or not the deceased person has executed a valid will.
Probate involves the filing of a petition to the court having jurisdiction over the deceased person. The court appoints a "Personal Representative" (also known as an "Executor" or "Administrator") to be responsible for the administration of the property of the deceased person. The Personal Representative is authorized to transfer and distribute the deceased person's property to the rightful heir or beneficiary. The Personal Representative is required by law to notify all heirs (whether they are getting property or not) of the appointment and the beginning of the probate proceeding. In addition, the Personal Representative usually sends notices to creditors of the deceased person to inform them of the death and explain the procedure required to file any claims. Within 90 days of appointment (Washington), the Personal Representative prepares an inventory of the deceased person's assets. Personal Representatives have legal obligations to prepare appropriate income and as applicable, estate tax returns for the United States Internal Revenue Service and comparable revenue agencies in the deceased person's state of residence.
Certain informal procedures are available to transfer ownership of the deceased person's property without going through probate. For example, community property agreements are often used to transfer property between spouses in community property states such as Washington and California. Revocable living trusts also avoid the necessity of probate, but may not be necessary or ideal for everyone. Bank accounts or real estate held as joint tenants with right of survivorship become the property of the surviving joint owner at the moment of death of the other. However, holding title as joint tenants with right of survivorship may not be preferable in all circumstances and may have certain negative effects on the ability of a couple to maximize their tax savings.
Bank accounts and stocks held pursuant to "payable on death" or "transferable on death" arrangements also avoid probate. Such accounts can be transferred to the designated beneficiary owner once a death certificate has been accepted by the financial institution and an appropriate affidavit has been completed. However, holding title in a manner which does not require the administration by a Personal Representative may have undesirable tax effects and other consequences and therefore should be used only as part of a well thought-out estate plan.
The administration and transfer of property from the deceased person to his or her loved ones present many issues that must be handled within legally set timeframes. A Personal Representative may be personally liable for the failure to act within the requirements.
Copyright Vivien K. Chang, Attorney at Law, Chang Law Group PC. Chang Law Group PC provides legal services for estate planning (wills & trusts), probate, guardianship, business law, and tax law .
Vivien K. Chang is a certified specialist in Estate Planning, Trust and Probate Law. Ms. Chang's practice focuses primarily on estate planning, probate, and small business law. She has extensive experience working with a wide range of clients from complex and high net-worth individuals, to young families with emphasis on protection of children and anticipated growth of family assets. She assists clients in the set-up of family trusts, credit shelter trusts, family limited partnerships/limited liability companies, foundations, charitable remainder trusts, family business succession planning, community property agreements, wills, powers of attorney, and healthcare directives. Her probate experience includes working with judicial and non-judicial administration of estates of small to large taxable estates, post-mortem tax planning, tax filings, and funding of testamentary trusts.
Ms. Chang also practices in the areas of corporate and business law, including incorporation, buy/sell of businesses, and corporate maintenance.
Ms. Chang is a frequent speaker for financial institutions and for continuing education courses on the topics of estate planning, business succession, and complex trust set-up and administrations.