Amy & Dan Smith's Planning for Life: Explaining the Process of Probate

The term “Probate” derives from the Latin Probatio meaning “proof.” The term came to be applied specifically to proof of wills. In common practice, when a person dies, the proponent of a will takes it to court (usually a probate clerk) and “proves the will”; that is, the proponent submits the will as the true and authentic last will and testament of the deceased person (the “decedent”). In addition, a death certificate or an obituary notice must be produced and a “list of heirs,” which consists of the names and addresses of the people who would take an estate if the decedent died without a will.

The term “probate” now is commonly used to refer to the process of administration of a decedent’s estate whether he/she died with or without a will. If there was no will, the decedent is said to have died “intestate,” in which case the estate will pass to the “heirs at law.” Each state by statute lists the order of family members who will take the estate of a person dying without a will.

Once an estate is opened, a person is “qualified”; that is, he, she or they is/are appointed to settle the estate. If there is a will, he is “executing” the will. The person is given a Certificate of Qualification by the clerk that proves his authority to act on behalf of the estate. Traditionally, the person who administers an estate with a will is called an “executor,” and the person appointed to administer an estate where there is no will is called an “administrator.” The term “personal representative” (the “PR”) is becoming more common as a generic name for both an executor and an administrator.

The PR is sworn in and must give a “bond” for the performance of his duties. A bond is simply a person’s word reduced to writing. In some cases a “surety” may be required. That is, an independent insurance carrier must guarantee the performance of the PR’s duties. This will entail an annual premium payment until the estate is fully settled.

A probate tax is imposed on estates in excess of $15,000. The state rate is 10¢ per $100 of value and the county can add a third to that. So, for example, an estate of $15,500 would be taxed at $15.50 (state) plus $5.17 (local) for a total of $20.67. A common misconception is that avoiding probate avoids estate tax. No so.

The personal representative is required to provide a notice to certain people who may be affected by the probate of the estate and must prepare and file with the commissioner of accounts an inventory of assets in the estate and annual accountings for the estate until it is fully settled.

Probate consists of collecting all the assets of the estate, paying all the debts, and disbursing the balance of assets, and may be concluded in a matter of months. If there are delays in the process, typically they are caused by events outside of probate, such as disputes among heirs.

Probate is easily avoided as, for example, by the titling of assets “joint with survivorship,” by beneficiary designations, by adding “pay on death” or “transfer on death” designations to accounts, and by living trusts.

From Amy and Dan Smith's Planning for Life column appearing monthly in the Blue Ridge Leader, Loudoun County, VA.

The foregoing article contains general legal information only and is not intended to convey legal advice. For legal advice regarding estate planning, the reader should contact his/her lawyer.

Daniel D.  Smith is a partner in the law firm of Smith & Pugh, PLC, 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176 (703-777-6084, www.smithpugh.com).

Amy V. Smith Wealth Management, LLC is an independent firm. Amy V. Smith, CFP, CIMA offers securities through Raymond James Financial Services, Inc., member FINRA/SIPC. Her office is located at 161 Fort Evans Road, NE, Suite 345, Leesburg, VA 20176. (703-669-5022, www.amysmithwealthmanagement.com) Any opinions are those of Amy and Dan Smith and not necessarily those of Raymond James. Raymond James does not guarantee that the foregoing material is accurate or complete and does not provide legal advice. Dan Smith is not affiliated with Raymond James.