You get what you pay for. One of the most common questions that we encounter as general practice attorneys is “What can I do to avoid probate?” That certainly is a fair question; but it would seem that the first question ought to be “What is probate?” Once we understand what it is, what it does, and what it costs, then we can make a decision about whether we want to avoid it.
Probate is the process of “proving” a decedent’s Will at the appropriate county office. This is generally accomplished after the funeral and after a death certificate has been obtained. The Will is presented to the clerk and, after proving by the testimony of two witnesses that the Will is genuinely the Will of decedent, the executor takes an oath that he or she will faithfully carry out the instructions in the Will. The process takes generally no more than fifteen minutes. The testimony of two witnesses usually is a matter of little inconvenience. The affidavits of the witnesses can be taken in the beforehand and presented at the time of presenting the Will. Alternatively, the Will can be drawn in such a way that the witness statements are notarized at the time that the Will is signed dispensing with the need to be involved with witnesses at the time of presentation.
The costs charged by the court for the process is not expensive. The fee in Montgomery County for an estate with $300,000 in assets is $175, with the fee increasing by $25 for each additional $100,000 or fraction thereof.
When a person dies, it is necessary to complete several conceptually simple tasks. The assets of the decedent need to be collected, the outstanding debts of the decedent need to be paid, any taxes levied either by the Commonwealth of Pennsylvania or the United States need to be paid, and distribution needs to be made in accordance with the wishes of the decedent if stated in a Will, or in accordance with the statutory scheme of distribution, if there is no Will.
When this process is conducted through the legal system, the first action, after the presentation of the Will, is for the Executor to receive Letters Testamentary, a fancy name for a piece of paper that certifies that the Executor is legally charged with administering the affairs of the estate. Who would want to buy a piece of land from a decedent and not know whether the person signing the deed has the legal ability to act on behalf of the decedent’s estate and convey good title? What bank would want to release funds to somebody coming in off the street and asking for the decedent’s money without some type of proof that the bank is not going to be held liable for wrongfully disposing of this asset? Who would want to trade securities on the direction of a person not legally entitled to do so?
Beside the issues of authority, probate resolves many other issues that unfortunately are all too common in our society. The first of these is the issue of the legitimacy of claims that are presented against the decedent. We have all seen the notices that appear in the classified sections of the newspaper. The first advertisement starts a period of time within which claims may be made and after which the estate can be settled. If claims are not brought forward and if the time has passed, and proper notice is given, then at the end of the probate process, the court can issues an order that bars further claims against the estate and against the Executor.
Creditors are given notice that claims may be made, and they are also given notice that such claims must be presented to the court or they will be barred. Creditors find that it is very effective to present claims in this way and executors find that the system is very effective in weeding out triflers. There generally is some expense in terms of costs and time to collect money from an estate, and generally those creditors with frivolous claims do not proceed.
It is not uncommon that the assets of the decedent are not sufficient to meet the claims that are made against the estate. In this instance, the law provides that distribution be made to certain classes of creditors before going on to later classes. An executor making distribution of scant assets to the benefit of a creditor not entitled to priority runs the risk of being held personally liable for the distribution made in error. For example, medical bills incurred within six months of the date of death have a priority over general unsecured debts. In the event that a credit card bill was paid and there were not enough funds to pay a hospital bill that was incurred within six months of the date of death, the executor could be forced to reimburse the amount not properly paid.
The other unfortunately common area for contention is between heirs of the decedent. It is not unusual for one heir to want to aggrandize himself or herself at the expense of the others. Probate creates a system whereby the executor can proceed with the collection of assets, the payment of debts, and the distribution of monies under the supervision of the court. Any person who feels that the affairs of the decedent were not properly handled, or that the proposed distribution is not appropriate, then has the opportunity to bring his or her complaint to the court for resolution. Again, this is not an area for triflers.
The probate process can be finished in several ways. If the heirs are all in agreement, they can sign documents acknowledging what they have received and agree to release the executor from further liability. This method is used when there is a high degree of confidence that there will be no squabbles among the heirs and that there will be no creditors coming out of the woodwork. While the agreement is binding among the signers, it does not have legal effect on others such as creditors.
If the executor thinks that the heirs may not be in total agreement, or that there may have been claims made by creditors that are thought to be spurious, or that there may be claims that have not yet been asserted, then the executor files a formal accounting with the court and gives notice to all parties in interest. The executor also files a Petition requesting that the court approve the accounting and the actions of the executor and further that the court approve a proposed schedule of distribution. At this point it is put up or shut up time for those who are unhappy with the administration of the decedent’s affairs. They have a limited amount of time to file objections with the court. If the objections are filed, then the judicial process goes forward and a final decision, binding on the parties, is reached; or (and most likely to occur) no objections are filed and a final order is entered by the court that has the effect of terminating all creditors’ claims, and beneficiaries’ claims against the executor, and directing that distribution be made according to the executor’s proposal. Once that distribution is made, the executor is, by judicial decree, relieved of all further liability for the administration of the affairs of the decedent.
With this brief description of the process of Probate, you are better equipped to answer the question “Do I really want to avoid probate?” You get what you pay for. Please consider the attorneys at Wolf, Baldwin & Associates, P.C. when you have need of legal assistance to handle these affairs appropriately. Remember, we strive for "Peace of Mind."
We will be happy to explain your rights as an executor, an administrator, an estate beneficiary, or an estate creditor.
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