Three Questions About Probate: Part Two

“He neither drank, smoked, nor rode a bicycle. Living frugally, saving his money, he died early, surrounded by greedy relatives. It was a great lesson to me.”

- John Barrymore

Today we continue our discussion of the three main questions I get from heirs and executors. Question two:

What happens during probate?

I like the way the ABA talks about probate in its book Guide to Wills and Estates, Third Edition. They describe probate as having six main phases. Each of these phases is necessary before the terms of a will are fully carried out. Here is my take on those six phases:

1. Open the Estate: Typically, when an individual dies, that person’s family tracks down a copy of his or her will and seeks the help of an attorney in deciding what the next step should be. If they hire that attorney, he or she will work with the executor to give the will its full effect. This involves filing a probate petition with the district court and giving notice to the creditors of the deceased.
2. Collecting the Estate’s Assets: Once the probate case has been opened, the family begins compiling a list of the deceased person’s assets. The myriad assets and their values are listed in the probate inventory and submitted to the court.
3. Management of Assets: Sometimes a probate occurs at a time when the deceased was scheduled to receive income. Other times, the probate process takes a long time to complete. In these situations, the executor must manage the estate’s assets. If income is received, it should be accounted for and saved or possibly invested.
4. Handling Taxes: An estate is subject to several different types of taxes. The ones most people think of are the “death taxes.” This includes federal estate taxes and state inheritance taxes. Under the new law that was passed in December 2010, the current estate tax is capped at 35% and only applies to individual estates worth over $5 million. Inheritance taxes vary from state to state and often change year to year. These taxes are imposed based on the heirs’ relationship to the deceased. An estate is also subject to income taxes if that estate should receive income before it is closed. In that instance, the executor will need to file an income tax return for the estate to report its income and potentially pay the resulting taxes.
5. Closing the Estate: Finally, after all the necessary notices have been given, the estate can be closed. Completing this phase typically requires filing lots of forms and getting a final order back from the court indicating that all necessary steps have been followed and the executor can distribute the assets. In Iowa, the executor files a final report showing how the property is passing to the heirs.
6. Distributing the Assets: Finally, after all five other phases are completed, the executor may distribute the assets of the deceased to his or her heirs.

Probate involves a lot of steps and requires a certain level of expertise or familiarity with the process to be efficient at it. It is always smart to seek the assistance of an attorney in the event that you are appointed as executor of a loved one’s estate. Contact us by phone or e-mail to see how we can help you through the probate process.

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Lawyer Joke of the Day:

Nugent needed legal advice, so he walked into the office of Gregory, Ellis and Gregory. Nugent sat down at the desk of the senior member of the firm.

"If you're not in really bad trouble, I'll take the case," said Gregory. "If you're in a real jam and want to get out of it, my partner will handle it.

“If, on the other hand, you're not involved and want to get in trouble, my son, who just graduated from law school, will take it!"