PROBATE AND TRUST ADMINISTRATION

When a loved one passes on, the last thing on your mind is how to account for their assets and report your findings to the government. You need space to grieve and seek closure, but unfortunately, the law requires that a final accounting be done within a short period of time. This process can take one of two paths—probate or trust administration—depending upon the type of estate planning documents that were secured in advance. Here is what you should know regarding both scenarios.

PROBATE

Probate is carried out to verify the validity of the decedent's last will and testament, or to aid in the distribution of assets in the event that no estate planning documents are present. Probate is conducted in your state’s probate court and can take anywhere from months to years to fully complete. In order to conclude the process, several key actions must be taken.

The first step of probate is validation of the will. A petition must be filed at the probate court in the deceased person’s last county of residence. At this time, the court will verify the validity of the will given that a copy of the will and the decedent's death certificate are provided. Next, an executor must be appointed. The executor is the person who will gather and guard the decedent's assets, pay debts and taxes, and distribute assets following the terms of his or her will. Following the appointment of an executor is the inventory of the estate. At this time, all assets must be appraised to determine the estate’s total value. Debts and taxes must then be paid before asset distribution may occur. However, it is important to note that estate taxes are not required if the decedent resided in the state of California. Once all other matters have been attended to, the decedent's beneficiaries may receive their inheritances as designated by the will.

TRUST ADMINISTRATION

Trust administration involves many of the same steps as probate but is typically cheaper, quicker and less work simply because there is less involvement with the courts and the state. Therefore, it is also offers more privacy. Still, there are key steps that must be carried out to ensure all loose ends are tied.

Just as in probate, all assets must be appraised to determine their value at the beginning of trust administration. Next, taxes must be paid on the estate if the decedent resided in a state that requires them. In some cases, you may be advised to submit a 706 estate tax form to the IRS. You then must wait to distribute assets to beneficiaries until the IRS has sent a closing letter stating their acceptance of the 706 form. After all previous steps are completed, assets may then be distributed according to the trust.

PREVENTING OBSTACLES IN ASSET DISTRIBUTION

It is important to note that creditors have one year from a person’s death to file claims against his or her estate if no probate is conducted. This is one downfall of a trust agreement. If probate is required, all claims by creditors must be made within four months of its resolution.

In addition, there are some problems that may occur during the probate and trust administration process. Throughout my many years of practicing estate law in the Chula Vista community, I have encountered a few common conundrums. At times, beneficiaries may feel entitled to a larger share of assets than the will or trust provides. They may even believe the deceased was coerced, tricked or unfairly influenced when the document was created. Others may disapprove of the appointed executor and propose that someone he or she believes to be more competent take over. I have also encountered individuals who suspect that their loved one’s will or trust does not conform to legal standards. These are all difficult situations to navigate, but I am here to guide you and your family with my knowledge and experience and resolve any issues that arise along the way.