What Occurs To Property During the Probate Process?
The Last will and testament of a deceased person are generally placed in probate for a period, while the process of authenticating it is supervised by the courts. During this period, all assets are located, and the value of those assets is determined. From there, the court will pay all final bills and any taxes owed by the deceased. Any remaining estate is then distributed to the beneficiaries as stated in the will.
Is The Probate Process A Requirement?
The laws of probate vary from state to state, each having their specific laws to determine when probate is required. In Colorado there are 3 levels of probate:
- Small Estates: When the deceased’s estate (those with or without wills) is worth $70,000 or less and owns no real property (house or land), then the heirs may collect assets by signing a Small Estate affidavit, allowing them to avoid probate court altogether.
- Informal Probate: Generally if an estate is worth more than $70,000 it will go through the informal probate proceedings. This is the case when there is a clear, authenticated will, no contest over the will and a personal representative has already been clearly identified. During the informal probate process in Colorado, forms are filed and approved by the court, but there is no court supervision over the distribution of the estate.
- Formal Probate: In Colorado and many other states formal probate is a court proceeding; a judge must approve actions taken by the personal representative such as distributing assets or selling real estate. This process is most common when there are disputes over the will.
Authentication of the Last Will and Testament
There are laws set in Colorado and most states requiring the person in possession of the deceased’s last will to file it with the state’s probate court as soon as possible. At this time, that person can file a petition for the probate to be opened, which may require the death certificate to be presented along with last will. While this process sounds intimidating, most state courts have forms that make it easy.
How Does The Court Determine A Will Is Valid?
Many courts include “self-proving affidavits” which is established that witnesses signed an affidavit simultaneously with the deceased of the will being signed and that signature was witnessed. This provides the courts with enough evidence the will is valid.
Determining Values Upon Death
The decease’s assets value must be determined at the time of their death. This is typically done by way of house appraisals and financial statements. Each state has different laws and procedures, with some assigning the appraisers and others allowing the executor to choose an appraiser.
Depending on the law, a state may require a written report be submitted to the court by the executor. That report should list everything owned by the decedent and the value of each item and how the value was determined.
The Decease’s Debts Are Paid
The next step is for the executor to pay all creditor claims and outstanding debts. This includes all final bills accumulated prior to the deceased’s passing.
The Deceased’s Tax Returns
The executor is responsible to file the final tax return on behalf of the deceased and pay any estate taxes from the estate funds. This often requires assets of the deceased to be liquidated such as land, investment properties or primary residences. Each state will have a time limit this is to be completed, usually a 9-month period. Estate taxes needing to be paid are another reason people choose to sell a home during the probate process.