PROBATE – Definition and Commonly Asked Questions

Probate with a Will: Wills are not effective for any purpose until “admitted to probate.” Even if a will states that the court should have no intervention, it still requires a court procedure called probate. Probate is a legal procedure for settling the affairs of an individual who has died (the “decedent”) and for transferring the decedent’s property to the beneficiaries or heirs. Probate is a court-supervised process is used to validate a will, to appoint a executor aka “Personal Representative,” to administer the estate, and to determine the proper beneficial owners of the estate. Probate also provides a procedure for limiting the time in which creditors may file claims against the estate in order to collect on debts that the decedent owed at the time of his or her death. Certain “small estates” (under $100,000 in value and consisting of no real property) may qualify for very simplified proceedings.

When an individual dies owning assets that do not pass automatically (such as a community property agreement, a trust agreement, or a beneficiary designation on an insurance policy or individual retirement account) or automatically by law (such as through joint tenancy with right of survivorship), those assets are subject to formal probate proceedings.

Probate without a Will: Through the court process, heirs at law – lineal descendents, family members and sometimes creditors are notified of the death and the proposed action. They can use the court venue for raising claims against the estate. When people die without a will the court will decide how much discretion to give to the Personal Representative (or Administrator). Often the court will impose a bond and/or restrictions against their powers and authority. When someone dies without a will, it still may result in a fairly simple proceeding, but more requirements and notices are necessary.

If the decedent died without a valid will it is called dying “intestate.” The court will appoint an “administrator” for the decedent’s estate. Essentially, the duties of an administrator are the same as those of a personal representative, but are often restricted.

Probate Proceedings: Probate proceedings are intended to provide a mechanism for the orderly transfer of a decedent’s property while protecting those who might have an interest in the property, including heirs, beneficiaries, creditors, and taxing authorities. Generally, the laws of Washington govern the proceedings; however, individual county superior court systems may have additional procedures designed to streamline the process in your local area.

The probate process is necessary to:

  • • Collect and protect the decedent’s property.
  • • Identify any wills and/or documents of intent (trust or property agreements)
  • • Identify the beneficiaries, estate creditors, and any other individuals or entities that may be entitled to assets of the estate or have     claims against the estate.
  • • Inventory the estate, often times obtaining professional valuations
  • • Pay all debts, expenses, valid claims – often requiring an “estate bank account” with a new Tax Identification Number.
  • • Set up trusts or other accounts for incapacitated beneficiaries.
  • • File and pay necessary taxes.
  • • Distribute the property of the estate properly, according to the will and according to statutes.
  • • Close the probate through the court.

Description of Probate Proceedings: In the state of Washington, most probate proceedings commence when a petition to probate a will is filed with the court. If the decedent died without a will, a petition for letters of administration is filed. Many probates are relatively simple and need little direct court involvement. Generally, the process requires the preparation and filing of legal documents and may necessitate one or more court hearings.

The procedure usually begins with the appointment of an individual as personal representative to collect, manage, and settle a decedent’s estate. A decedent who dies “testate” (with a valid will) is likely to have designated a personal representative (sometimes called the “executor”) in his or her will. Unless good cause is shown, the court will issue “letters testamentary” to the individual designated by the decedent. Letters testamentary provide third parties with legal notice of the individual’s appointment as personal representative.

The personal representative or administrator, often with the assistance of a lawyer, is responsible for the proper handling and settlement of the decedent’s estate. However the PR should not take certain action under some situations and may be held accountable if he or she makes imprudent decisions or cause waste to the estate.

A PR should not, for example, do many things, including the following:

  • • Comingle personal assets with his or her own;
  • • Distribute the estate early without ascertaining and holding enough funds to pay creditors;
  • • Self-deal, breach fiduciary duties or act in ways contrary to the best interest of the beneficiaries and estate;
  • • Delay the administration unnecessarily.

A PR should not, for example, do many things, including the following:

      • • Comingle personal assets with his or her own;
      • • Distribute the estate early without ascertaining and holding enough funds to pay creditors;
      • • Self-deal, breach fiduciary duties or act in ways contrary to the best interest of the beneficiaries and estate;
      • • Delay the administration unnecessarily.

The personal representative should:

      • • Act in a “fiduciary” capacity toward all beneficiaries. This is the highest standard and all action taken should be with prudence and caution.
      • • Notify heirs and creditors of the probate proceedings.
      • • Take possession of, inventory, and preserve the decedent’s probate assets.
      • • Determine the fair market value of estate assets through an appraisal or other suitable means.
      • • Determine the names, ages, residences, and relationship of all beneficiaries and heirs.
      • • Collect all income, such as rents, interest, or dividends, as well as debts owed to the decedent.
      • • Represent the estate in any challenges to the will and complete any pending lawsuits in which the decedent had an interest.
      • • Prepare any necessary tax returns and pay all state or federal estate and income taxes.
      • • Pay the valid claims of creditors.
      • • Sell property when necessary to raise funds to settle claims and pay administration expenses and taxes.
      • • Transfer title to real property and certain personal property (such as stocks and bonds) to those entitled to receive it.
      • • Distribute the remaining assets to the designated beneficiaries or heirs.
      • • File a Completion of Probate Pleadings with the court to notify the court and third parties that the administration of the decedent’s estate is complete.

The Court in a Probate: All probate proceedings are subject to the jurisdiction and supervision of the superior courts of Washington. However, if the decedent owned property in another state, that state’s courts may have jurisdiction over that property and the personal representative, aka “PR” may need to open an ancillary probate in all states where the decedent died owning property.
The personal representative may select the location of a Washington probate for purposes of convenience or other reasons; however, if a notice to creditors is going to be filed, the notice should be filed in the county where the decedent lived. In Washington, a PR is required to provide creditors notice of the probate of an estate. The form of notice that may be published in a newspaper or delivered, by mail or by hand, to a decedent’s creditors. If the notice is given, creditors must file their claims against the estate within a relatively short period of time. If any creditor does not file his or her claim within the time period mandated by Washington law, the creditor will be forever barred from making claims against the estate. Whether or not to file a notice to creditors is an important point to discuss with the probate lawyer.

The customary work of the personal representative (such as paying bills, settling uncontested claims, selling estate assets where appropriate, preparing tax returns, and paying taxes) is generally accomplished without intervention by the court. The court’s involvement is required when disputes arise or uncertainty exists as to the proper meaning of a document or the identity of a person entitled to share in the estate.

Time Required to Settle an Estate: It is difficult to precisely predict the time required to settle an estate, because each situation is unique. The time required is affected by the existence or non-existence of a will; the size, value, or complexity of the estate; or other special issues, for example, will contests.

The initial step of petitioning for admission of the will to probate usually occurs immediately following a death. The personal representative then notifies the beneficiaries named in the will and other heirs of his or her appointment and the initiation of the probate proceedings. The personal representative also may file a notice to creditors. In some cases, the estate may be required to file one or both state and federal estate tax returns. If estate taxes are due, they usually must be paid no later than nine months after the date of death.

Although the personal representative may make partial distributions of estate assets to beneficiaries before the estate is formally closed, final distribution should not occur until after the end of the creditors’ claim period. In most cases, the creditors’ claim period will be four months. If estate taxes are owed, the personal representative should not make final distribution until he or she has received notice from the Internal Revenue Service and Washington Department of Revenue that the returns will be accepted as filed and no additional tax charged. The necessity of the sale of property to pay claims, taxes, or expenses or to make final distribution to the estate beneficiaries may complicate and prolong final settlement.

Taxes: Estates may be subject to both income and estate taxes, depending on the type and value of assets includable in the decedent’s “gross estate.” The gross estate generally includes both probate and non-probate assets; many people don’t realize that avoiding probate will not affect whether or not income or estate taxes will be due. In Washington, two types of estate taxes may apply: federal estate taxes and Washington state estate taxes. The amount of tax payable to the IRS is based on the value of assets in the gross estate and is calculated using graduated rates. This graduated tax is levied on the net taxable estate after allowing certain deductions and exemptions. Washington estate tax is due only if taxes are due to the federal government. The two different tax systems and the ongoing changes in both federal and state tax law are complicating factors in estate planning and probate, which require careful drafting, analysis, and administration by a skilled attorney to protect your estate from unnecessary tax burdens.

An estate is a separate tax-paying entity. In addition to filing estate tax returns, it may be necessary to file a federal fiduciary income tax return to report estate income and pay federal income taxes due. The tax is applied on income and expenses generated from assets of the estate; it is similar to the federal personal income tax. The obligation to prepare and file tax returns and pay appropriate tax liabilities may exist even if none of a decedent’s estate passes through probate. Non-probate assets, such as property owned as joint tenants with right of survivorship, life insurance proceeds, and certain types of transfers prior to death, may be subject to both state and federal taxation.

Because a large body of law has evolved with regard to the taxes described above, extreme care should be exercised by a personal representative when computing taxes and preparing returns.

Fees and Costs: Probate costs can vary, ranging from a few hundred to several thousand dollars or more. Fees and expenses are influenced by the complexity of an estate’s administration, including such factors as the type of assets, claims by creditors, and the need to file tax returns. Contests and disputes can be very expensive and are often paid from estate funds, but most probate statutes provide discretion to the judge/commission in probate litigation.

Both the personal representative and his or her lawyer are entitled to reasonable compensation for their services; their fees may require approval of the probate court. Common considerations in determining fees are an estate’s complexity and the type and amount of work involved. A personal representative may elect not to be compensated for services rendered in the administration of the estate. This issue should be discussed by the personal representative and the attorney at the initiation of the estate administration.

When Is Probate Necessary?: Probate is always necessary when someone dies owning real property in his or her name alone. It is also required when someone dies owning accounts over the statutory limit for “small estates.” That limit changes periodically. Please contact me for current limits. Probate proceedings are not necessary for all estates. Various factors, including the value, nature, and titling of assets, will determine whether or not probate is required and what type of probate proceeding is necessary.

In some cases, after an individual dies, informal methods may be used to transfer property without court proceedings. An affidavit procedure, for example, provides swift and informal transfer of certain “small estates” (as defined by state law). Proceeds of life insurance policies and certain retirement benefits may be paid directly to beneficiaries, thereby avoiding probate. If assets are owned with another individual as joint tenants with right of survivorship, the surviving joint tenant may take sole title to the assets without probate proceedings.

If a decedent had a will and probate is not necessary for one or more of the reasons identified in the preceding paragraph, all that is required by law is that the decedent’s will be filed with the superior court of the county in which the decedent was residing at the time of his or her death. The court will charge a small filing fee.

What to Do When Someone Dies:

The surviving spouse or a close relative of the decedent should contact a lawyer. The lawyer will determine if probate is required, explain any necessary procedures, and serve to guide and help the personal representative through the process.

An individual in possession of a decedent’s will must either file the will with the appropriate court or deliver the will to the decedent’s personal representative or lawyer within 30 days of being notified of the death. If the person named as personal representative has custody of the will, he or she should give it to the lawyer during the initial consultation.

Attending to the details of a probate proceeding may be a complex, time-consuming task, and it may be necessary for relatives or others to face this task during a time of grief and trauma. A lawyer can help shoulder this burden by providing timely professional advice and professional assistance in handling probate proceedings.