Part 3: Guiding Clients Through the Probate Process (it gets a bit confusing!)
So far, we’ve discussed the importance of having a Power of Attorney, Health Care Proxy, and Living Will. We’ve also discussed the planning considerations involving Wills and Trusts. These are proactive measures that should not be put on the backburner. Today, we will talk about what happens after someone passes away, covering the probate process and why having the right estate plan in place can help ease the burden on a decedent’s loved ones who may be tasked with settling the estate.
We will start with a common misconception surrounding probate - many people believe that if they have a will, they will be able to avoid probate. This is not true. As we covered in Part 2 of this series, assets that: have beneficiaries designated, are co-owned, or are held in a trust will avoid probate. Some of you may have assets that do not fall into one of these categories. If that is the case, the court will look to a person’s will to determine how that asset should be distributed. However, a court must do its due diligence. This is where the probate process comes in.
Where there's a Will - there's Probate
Probate is the legal process that an executor/ personal representative must go through with the court to validate the decedent’s will. This includes making sure that it is truly the decedent’s last will and testament, paying any debts that were owed by the estate, and distributing any remaining assets.
Part 2 of this series set out strategies for avoiding probate or minimizing the assets that will have to be subject to this process. Mainly, keeping the beneficiary designations up to date on your non-probate assets. This is a point that cannot be emphasized enough. Probate generally takes between 6-12 months, sometimes longer, depending on the complexity of the decedent’s estate.
The process starts with the reading of the decedent’s Last Will and Testament to determine who is named as the executor of the estate. In this early stage, the executor still does not have any authority to act, other than to take on the responsibility of beginning the process if they choose to do so. While it is not a requirement to work with an attorney during the probate process, it is highly advisable to retain an experienced estate planning and administration attorney who is well-versed in the process, nuances and court proceedings. Navigating it alone, can create more issues for the individual, and lengthen the process.
After the executor has been named, they must then work to attain the authority to settle the decedent’s estate.
It starts by filing paperwork with the surrogate court. There are surrogate courts in each county, and each have their own rules and ways of doing things. At this stage, the executor should begin to work with an attorney to make sure all of the necessary paperwork will be sent to the court. This includes the following:
The original will – Most courts require the original will, and do not accept a copy. It is important to know where the original will is located. If it is not in your possession, it is possible that the attorney who drafted your legal documents retained it for safe-keeping. If it has been a while, you should reach out to the attorney. It is important to make sure you know where the original is at all times.
Certified copy of the death certificate
Funeral bill and receipt if it has been paid – Someone who pays for funeral expenses is entitled to reimbursement from the estate assets. Petition for Letters, and Waivers – A petition for either letters testamentary or letters of administration include details of the decedent, along with information about their heirs, assets, and potential debts. The petition is necessary for the court to be able to provide the letters to the executor or administrator of the estate. Waivers are forms that may need to be signed by individuals who could be entitled to receive these letters. Waivers are meant to make sure the letters being issued, are issued to one single individual, being the executor or administrator, so they can begin to settle the estate.
Affidavits relating to the closest living relatives/ distributees of the decedent – These affidavits consist of a family tree that goes as far as to show the distributees of the decedent, along with an affidavit of heirship that states certain information about the decedent such as where they lived, who their spouse was, if they had any children, etc. Both of these forms need to be signed by a dis-interested person. (a person close to the decedent who is not in the line of distribution) Not every county surrogate court requires these forms, but it is the practice of our firm to provide them. It does not cost the client additional money to do so, and it only provides more information to support the petition being submitted.
Once we have accumulated all of these documents, and they have been signed by the necessary parties, we will submit them to the court. From there, it is somewhat of a waiting game. We wait for the court to issue the letters testamentary - this is what gives the executor the authority from the court. It signals that the court has validated the will, and recognizes the person named in the will as the executor. These letters give the executor the authority to act on behalf of the estate. Notice will then be sent to all heirs, beneficiaries, and creditors of the estate to make them aware that letters have been issued, and an estate proceeding has commenced.
As mentioned, in Part 2, the will now becomes public for creditor to make a claim against, and for individuals to contest. This is drastically different from a trust, which remains private.
The executor will then be able to obtain a tax ID number for the estate. Once the estate has this number, the executor will open a bank account in the name of the estate. The executor will accumulate all of the probate assets of the estate and will have them valued/ appraised.
Once the executor has complied all of the assets of the estate, they then must pay any outstanding debts and taxes owed by the estate. If there is not enough cash in the estate, then assets may need to be sold and liquidated to pay the remaining balance. Creditors have a 7-month window to be able to file a claim against an estate. This 7-month window begins at the moment the letters have been issued to the executor. Any claim filed after the 7-month window, may still be valid, but not against the estate, against the heirs, or people who received assets from the estate. And while the claim can still be valid against the heirs, it is far less likely that the creditors would be able to recover any money owed.
After all of the debts and taxes have been paid, an inventory will be completed by the executor and sent to the court. Once the inventory is approved, the remaining assets in the estate can be distributed according to the provisions of the will. The executor is responsible for making sure all of the heirs receive what they were entitled to under the will.
Finally, the executor will perform an accounting of the assets. This details out the initial inventory that was done, along with the records that should have been kept by the executor, and includes the proof that all of the debts have been paid and all of the assets have been distributed. The attorney will then petition the court to discharge the executor of their duties and close the estate.
Every step along the way that we just covered requires surrogate court involvement. Part of the many reasons why the process is so time consuming. If the decedent passes away with a small enough estate of probate assets ($50,000 or less), the executor can ask the court for an expedited probate process, called a small estate administration proceeding. This process gives the executor much more autonomy to be able to go through the exact process we just covered. However, since the court is not as involved, the timeframe to closing out the estate is drastically reduced.
Passing on without a Will
The process we just covered applied to an individual who passed away with a will, where an executor was clearly defined, as well as the distribution of assets after death. If someone passes without a will, the major difference lies in the individual who is appointed to settle the estate, and how the assets are distributed. The person who is responsible for settling the estate of a decedent who passes on without a will is known as the administrator. The same process applies. The court will require the petition, and other supporting documents as outlined previously, to be submitted on behalf of the estate, except for a will. Once the court approves the petition, they will issue letters of administration to the administrator. These letters, like the letters testamentary for the executor, give the administrator the authority to act on behalf of the estate. They allow the administrator to gather the assets of the decedent, pay off any debts owed, and distribute the remaining assets accordingly.
The assets that remain after the administrator pays off any debts and expenses owed by the estate, will then be distributed according to state law since there is no will that is present to dictate where those assets should go. In New York State, this distribution will depend on who is the closest living relatives of the decedent. The following distribution would take affect, if the decedent was survived by:
A spouse, but no children: The spouse will inherit everything
Children, but no spouse: The children will inherit everything equally
A spouse and children: The spouse will inherit the first $50,000 of the estate plus ½ of the remaining balance of the estate, the children will inherit the remaining ½ of the estate equally
Parents, but no spouse or children: The parents will inherit everything
Siblings, but no spouse, children or parents: The siblings will inherit everything equally
This is one of the many reasons to develop an estate plan. Passing on without a will leaves the distribution of your probate assets up to state law. Creating a will allows you to expressly state who should receive any of your probate assets after death.
So now we’ve covered setting up advanced directives, naming beneficiaries on financial accounts, creating a will and/or a trust, and the process to settling a loved one’s estate. These are the high-level basics that go into the estate planning and estate administration process.
If you have further questions, please feel free to contact us here at DeAngelus Goralczyk, PLLC - we would be happy to talk to you about any of your estate planning and administration needs.
Written by David Troiano
 A distributee is a person who is in line to inherit assets from the decedent if there is no will.