When someone passes away, their estate must be handled through a legal process known as probate. This court-supervised process involves validating the will of the deceased, identifying their assets, paying their debts, and distributing ownership of their estate to the appropriate heirs. Although state probate laws vary, the process is very similar across the country and lawyers typically do most of the work. It's important to understand what probate entails, whether you're drafting your will or if you're an executor or beneficiary.
To get practical guidance with estate planning, it's best to consult with a financial advisor in your area. As an executor of the estate, your role is to guide your loved one's estate (i.e. the money and assets they left behind) through this process. During probate, the court will determine if the will is valid and appoint an executor.
They will also locate and value the assets, pay the deceased's debts out of the estate, and distribute the residue to the beneficiaries and heirs of the deceased. Certain accounts such as 401(k) plans, individual retirement accounts (IRAs), and pensions with listed beneficiaries don't need to go through probate. Seeking a financial advisor for guidance on estate planning can also protect your property from inheritance and taxes. In general, if a deceased person's debts exceed their assets, probate does not necessarily begin and alternative measures can be taken. The laws of several states indicate that assets with a value less than a certain amount can be transferred to heirs without going through probate. Not all states require probate proceedings but most will be prosecuted through the courts. A properly drafted will in many states can eliminate some of the steps that would otherwise be required in probate proceedings. California is one of the states that not only allows compensation for the executor but addresses it directly in the probate code.