Probate, or estate administration, is the legal process of administering a person's property after they have died. It involves validating the deceased's will (or appointing an administrator if they died without leaving a will) and distributing their assets to beneficiaries under the supervision of the court.
If you have been asked to act as an executor, it can be hard to know where to start. In this guide, we’ll break down the probate process into a series of clear milestones and take a closer look at some of the steps along the way, from managing debts and assets to preparing for court. We’ll also address some of the most common challenges and explore alternative options.
Probate is a legal process that is governed by different regulations depending on the state or province. Probate generally breaks down into the following steps:
One of the main duties of an executor is to manage the financial affairs of the estate throughout the probate process.
This process begins with identifying and valuing all of the deceased’s assets. These might include traditional assets such as real estate property, investment portfolios, valuables, and cash savings, as well as new asset types such as cryptocurrencies. Everything will need to be accurately appraised to understand the estate's overall value, and you might need specialist help—for example, to determine the market value of a piece of antique jewelry or commercial property.
Many of these assets will also have to be actively managed. If the estate includes property, you’ll need to make sure that it is properly maintained and that rents are paid; similarly, you’ll need to keep an eye on the performance of any investment portfolios and make any necessary adjustments.
As well as managing the estate’s assets, you will also have to settle its debts, such as any bank loans and unpaid bills. Executors have a duty to put out a notice to potential creditors, who will then have a set amount of time to make a claim. If the estate does not have sufficient funds, debts will be paid in order of priority depending on the jurisdiction.
Finally, you’ll need to file a tax return and settle the estate’s taxes, as well as any income tax owed by the decedent, before distributing the remainder of the estate to the beneficiaries.
While the term “probate” is used to describe estate administration as a whole, it also refers to a specific part of the process: the validation of the deceased’s will and the authorization of an executor, or administrator, to manage the estate.
Probate, in this context, comes at the beginning of the process. If you’ve been named executor, you’ll need to file documents with the probate court, including the death certificate and the deceased’s last will and testament.
It’s important to note that the will won’t be considered legal until it has been proven valid in court. Equally, you won’t be able to start acting on behalf of the estate until you have been officially appointed as executor. In Canada, you’ll need to wait for probate to be granted, and in the US you’ll be issued with letters testamentary as authorization.
If there is no will, either because the deceased died without leaving a will or because the will was deemed to be invalid, then this is known as dying intestate. If this happens, the court will appoint an administrator to manage the estate, with assets being distributed according to the state’s probate laws.
The wider estate administration process might also include court proceedings at the end when you close the estate. You’ll submit a final accounting to the court, giving details of the estate’s financial activities and the final distributions to beneficiaries. Once this has been approved, the court will release you from your duties and close probate.
The executor is responsible for seeing the probate process through from beginning to end—from initiating the process and managing debts and assets to making the final distributions and submitting the final accounting. In doing so, they have an overarching responsibility to ensure the wishes of the deceased are carried out in accordance with the will, and that they always act in the best interests of the beneficiaries.
Depending on the terms of the will and the complexity of the estate, there might be a considerable amount of decision-making involved. For example, the executor may decide to sell off some of the estate’s assets to pay a debt or to rebalance investments to improve the financial performance of the estate. Any decisions should always be governed by these guiding principles.
Estates can be complicated, and family relationships even more so. With grief and stress added into the mix, challenges, and disputes can easily arise during the probate process.
Some of the most common issues include:
Many of these challenges can be addressed at the estate planning stage, and having a will that can easily be validated in court is half the battle. Failing that, however, there is a lot that executors can do to make the probate process run more smoothly. Keeping meticulous records can help reassure beneficiaries and the courts that you are managing the estate’s financial affairs properly. It’s also good practice to foster transparency and establish good communication with beneficiaries and other stakeholders to head off any potential disputes before they arise, such as by sending regular financial reports.
Probate can be a lengthy process. It’s also expensive, with court fees and administration costs eating into the final value of the estate. Then there’s the question of privacy: probate court proceedings are all a matter of public record. It’s no wonder that individuals and executors often choose to avoid probate if it’s at all possible.
Not every estate requires probate. Small estates, for example, might be exempt, with the threshold depending on the jurisdiction. If the total value of an estate falls below a certain level, alternative options such as an affidavit or a sworn written statement can be explored. Similarly, simple estates where all the assets pass directly to the surviving spouse may be able to avoid probate in some jurisdictions.
Many types of assets are not included in probate. These include assets jointly owned with a right of survivorship, retirement plans, medical savings accounts and life insurance policies. It’s worth considering establishing a trust as part of your estate plan, as assets held in trust will also bypass probate.
While probate certainly presents a few challenges, you can make everything go more smoothly by adopting the guidelines for best practices, such as maintaining excellent records and establishing good communication with beneficiaries.
Adopting best practices can reap rewards professionally as well, and law firms are increasingly turning to technology to help streamline their operations. Specifically designed for trust and estates professionals, Estateably is a one-stop solution that automates administrative tasks associated with probate and estate administration, from accounting to instant report generation.
Why not book a free demo or reach out to find out how Estateably can help power up your practice?
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