Although the world of legal information and misinformation is considerable, it is generally understood that a last will and testament is the device used to distribute property after death. However, the why, how and when are less familiar.
During an individual’s lifetime, he or she has the right to give property to any person of his or her choosing. If he also has given that power to an agent, such as granting a power of attorney, that agent may be able to give property away as well. However, upon the death of the individual, neither he nor the power of attorney agent can transfer property.
Property that is owned by the individual, without an attached beneficiary designation, must be distributed by a court order.
Unlike a power of attorney, which usually can be used by agents immediately, a will is valid upon signing but cannot actually be used until a probate case has been opened at the local District Court.
A probate proceeding refers to the specific type of case used to distribute property after someone dies. If the individual had a valid will, the probate proceeding will be considered a “testate” case and an executor will be appointed to follow the instructions within the individual’s will.
If the individual decedent (the person who died) did not have a will, the probate is an “intestate” proceeding and the court will appoint an administrator to follow the laws that are in place when a will is absent.
A probate proceeding is necessary to ensure property owned solely by the decedent passes in the correct order and to the correct individuals.
After opening a probate case in District Court, the court will appoint the fiduciary and, depending on the size of the estate, may send a notice to the newspaper so creditors can file claims against the estate.
The fiduciary, either the executor or the administrator, will gather the decedent’s property as well as the claims submitted by creditors. The fiduciary will ensure claims are valid and have been submitted within the proper timeframe. The fiduciary also will take any necessary steps to clean out the decedent’s home, sort the personal property and possibly work to sell the house and furnishings.
The work of an executor or administrator can be significant, depending on the amount of property the decedent owned and how organized the decedent left his or her estate. Decedents with clearly organized files or an up-to-date estate binder can make the fiduciary’s job easier and more efficient. However, estate fiduciaries with little information may need to spend considerable time contacting financial institutions to search for accounts owned by the decedent.
Although the executor or administrator’s job can be exhausting, they are entitled to a fiduciary fee for their work, which is typically a percentage the estate.
Ultimately, the probate case ends when the property has been gathered, creditor claims have been satisfied and beneficiaries have received their distributions.
For cases that include property outside of Kentucky, a similar probate case must be opened in each state where the real property is located. Matters that include multiple states can be time consuming and costly as each state has its own set of probate rules that must be followed.
With good planning, the financial and time costs of probate can be mitigated. While probate will be the default remedy in most cases, it does not have to be. Like any other planning option, the decision of whether to use the probate process as a means of distribution of assets should be determined by the individual during his lifetime, not simply left to chance.