January 13, 2019
The term probate, as it is used commonly today, refers to the court supervised process of transferring property from a deceased person’s estate to the individual or entity that is legally entitled to receive it. State law governs how the probate process is handled, and the laws can vary greatly from state to state. This article answers some of the questions about probate we hear from our Tennessee clients.
Do all estates need to be probated? Not necessarily. An estate must go through the probate process, whether or not the deceased died with a will, if a person dies owning property in his or her own name. Not all assets are probate assets, however. By law, any asset that is jointly held with another, or any asset that has a beneficiary designation, including a POD (payable on death) or TOD (transfer on death) designation, pass immediately to the surviving joint owner or named beneficiary and are not assets subject to the probate process. These types of assets are said to pass outside of the estate. All other assets of the deceased will pass through the estate, and are subject to probate.
If the deceased person died with a will, also known as testate, the probate process is summarized as follows:
- A determination is made that there are assets that are subject to probate;
- The will is presented to the court to verify its validity;
- An executor, also known as a personal representative, of the estate is appointed and the estate is “opened”;
- The public, creditors and beneficiaries are notified that the estate has been opened;
- The executor collects all of the assets that will pass through the estate;
- After certain procedural requirements are met, any debts of the estate will be paid;
- Assets are distributed to the beneficiaries;
- The estate is closed.
If a person dies without a will, also known as intestate, the steps are the same, with the obvious exception that no will is presented to the court. The beneficiaries are those who inherit according to state law, also known as heirs at law.
Who becomes the executor? The executor, also known as the personal representative, is the person who handles the estate. This may be the person selected by the decedent in the will. The court will name the executor if there is no will or the will did not name an executor, or if the executor named is unavailable. In this case, Tennessee law establishes a priority of who can serve. The spouse is given first preference if the spouse is willing to serve. If spouse is unavailable or unwilling, the preference goes to next of kin, and if there is more than one next of kin wanting to serve, the court will decide who shall serve. If no next of kin, a creditor of the estate who proves the debt under oath may serve.
Where is the estate opened? Determining where the estate is probated depends on the type of assets involved in the estate. In general, estates containing personal property will be opened in the state and county of residence of the decedent. Estates containing real property will be opened in the state and county in which the real property is located. So, for example, if a resident of Williamson County died owning personal property that was subject to probate and a vacation home in Destin, an estate would be opened in Williamson County, Tennessee to handle the personal property and in Okaloosa County, Florida to handle the real property.
Is it best to avoid probate? If assets can be transferred immediately via beneficiary designations it certainly beats having to go through the probate process. There are a few downsides to probate:
- It’s public. The will and all of the court filings become public documents, free to be viewed by all.
- It’s time consuming. The process takes at least six months, usually longer, with nothing being distributed to beneficiaries until the end of the process. And if there are any fights to deal with, it can go on and on.
- It can get expensive. There are court filing fees, and depending on the complexity of the estate and the length of time it takes to settle, the legal and accounting fees can add up.
Is an attorney required to open an estate? If the total value of the assets of the estate do not exceed $25,000.00 and the estate does not include real property, there is a faster and streamlined process known as a Small Estate. In this case, the probate process can be relatively simple and does not require an attorney to open. Also, in many cases the estate will contain only a few assets because most of the assets were handled by beneficiary designation, and the beneficiaries are all friendly. In these types of cases, although an attorney will be needed to open the estate, the probate process is pretty routine.
There are many cases, however, where the make-up of the estate assets is complex, or where the estate involves a family with a complicated and contentious history. The attorney hired by the estate represents the executor, and not the beneficiaries. If there is a fight regarding the estate, the beneficiaries will need to hire their own attorneys to represent their interests. A lot of money can be spent in attorney’s fees, and it is these types of estates that would have been well served by careful estate planning during the deceased’s lifetime.