What is Probate?
Probate is the court-supervised process of authenticating a last will and testament if the deceased made one. It includes locating and determining the value of the decedent's assets, paying his or her final bills and taxes, and, finally, distributing the remainder of the estate to his or her rightful beneficiaries.
When Is The Probate Process Required?
Each state has specific laws in place to determine what's required there to probate an estate. These laws are included in the estate's "probate codes," as well as laws for "intestate succession" when a decedent dies without a will. In Pennsylvania, the probate code is referred to as the "PEF Code".
Probate is still required to pay the decedent's final bills and distribute his or her estate according to the terms of their Last Will and Testament or if they die without a will under the state’s intestate law. Although the laws governing probate can vary from state to state, the steps involved are generally very similar regardless of whether a will exists.
Authenticating the Last Will and Testament
Most states have laws in place that require that anyone who is in possession of the deceased's will must file it with the probate court as soon as is reasonably possible. In Pennsylvania this the process of probating the Will is done with the Office of the Register of Wills in the county of the decedent’s residence.
A Petition of Letters Testamentary is presented to the Register in order to open probate of the estate. In Pennsylvania, it is necessary to file the death certificate as well, along with the Will and the petition.
If the decedent left a will, the Register will confirm that its validity.
So how does the court decide if a submitted will actually valid? Many include something called "self-proving affidavits." The decedent and the witnesses sign the affidavit at the same time the will is signed and witnessed. Lacking the self-proving affidavit, one or more of the will's witnesses might be required to sign a sworn statement or testify that they watched the decedent sign the will and that the will in question is indeed the one they saw him or sign the document as their Last Will and Testament.
Appointing the Executor or a Personal Representative
An essential provision of every Will is the appointment of an executor, sometimes referred to as the personal representative or administrator. The executor is the individual who will oversee the probate process and to settle the estate.
In the decedent did not leave a will or the individuals appointed under the will cannot serve, the court will appoint an executor - typically her surviving spouse or an adult child.
The appointed executor will receive "letters testamentary" from the court allowing the executor to act and enter into transactions on behalf of the estate.
It might be necessary for the executor to post bond before he or she can accept the letters and act for the estate, although some wills include provisions stating that this isn't necessary. The probate statute in Pennsylvania waives the bond requirement for executors who reside within the Commonwealth. Bond acts as an insurance policy that will kick in to reimburse the estate in the event the executor commits some grievous error—either intentionally or unintentionally—that financially damages the estate, and, by extension, its beneficiaries.
Locating the Decedent's Assets
The executor's first task involves locating and taking possession of all the decedent's assets so he or she can protect them during the probate process.
In the case of real estate, the executor is must take steps ensure that property taxes are paid, insurance is kept current, and any mortgage payments are made so the property isn't lost and doesn't go into foreclosure. The executor might literally take possession of other assets, however, such as collectibles or even vehicles, placing them in a safe location. He or she must also collect statements and other documentation concerning bank and investment accounts, as well as stocks and bonds.
Determining Date of Death Values
Date of death values for the decedent's assets must be determined and this is generally accomplished through account statements and appraisals. Many states require that the executor submit a written report to the court, listing everything the decedent owned along with each asset's value, as well as a notation as to how that value was arrived at. In Pennsylvania, the Inventory of estate assets is generally filed with the court at the end of Estate administration.
Identifying and Notifying Creditors
The decedent's creditors must be identified and notified of her death. Pennsylvania requires that the executor publish notice of the death in a local newspaper to alert creditors that he or she doesn't know about. In Pennsylvania, creditors have one year after receiving the notice to make claims against the estate for any money they're owed. The executor can reject claims if he or she has reason to believe they're not valid. The creditor might then petition the court to have a judge decide whether the claim should be paid.
Paying the Decedent's Debts
Next, those creditor claims are paid. The executor will pay all the decedent's debts and his or her final bills, including those that might have been incurred by his or her final illness, from estate funds.
Preparing and Filing Tax Returns. The executor will file the decedent's final personal income tax returns for the year in which he or she died. The executor must determine if the estate is liable for any estate taxes, and, if so, she'll file these tax returns as well. Any taxes due are paid from estate funds.
This can sometimes require liquidating assets to raise the money. Estate taxes are usually due within nine months of the decedent's date of death.
Distributing the Estate
When all these steps have been completed, the executor can petition the court for permission to distribute what is left of the decedent's assets to the beneficiaries named in the Will. The court’s permission is granted only after the executor has submitted a complete accounting of every financial transaction, he or she's has engaged in throughout the probate process. In the formal accounting, the executor must list and explain each and every expense paid and all income earned by the estate.
Pennsylvania also allows the estate's beneficiaries to collectively waive the formal accounting requirement if they're all in agreement that it's not necessary. This is generally done pursuant to a family settlement agreement. In distributing the estate property, deeds and other transfer documents may be necessary in order to finalize the bequests. If the Will includes bequests to minors, the executor may also be responsible for setting up a trust to accept possession of bequests made to them because minors can't own their own property.
An intestate estate is one where the decedent did not leave a valid will—either he or she never made one or the will is not accepted as valid by the probate court due to an error in the document or because an heir successfully contested it. The most significant difference is that in the absence of a will that makes his or her wishes known, the decedent's property will pass to his or her closest relatives in an order determined by state law. In Pennsylvania the property of someone who dies intestate, with a surviving spouse, no children, but with surviving parents will be distributed as follows: one-half of the estate plus $30,000 to the surviving spouse and the balance to the surviving parents.