What is Probate and why do I need it?

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“Probate,” in its most basic sense, is the process of dealing with the assets and debts of a decedent, known as the “Estate.”  The Estate will owe certain taxes to the state, and rarely the federal government, commonly referred to as “estate taxes” or “inheritance taxes,” and it will be responsible for paying the debts of the decedent and all costs of administering the Estate.  After all taxes and debts are paid, probate will conclude with passing any remaining assets to the heirs of the decedent.

If someone close to you has passed away, you may be in need of a team of probate lawyers State College PA can rely on.

Who are the “heirs”?    The heirs are the people or entities who receive the assets of the decedent, but the identity of the heirs will depend on whether or not there was a valid will.

When a person dies with a valid will, (known as “testate”), that document identifies who the decedent wants to inherit the assets and those persons are the “heirs”.  An heir can be family, friends, charities, a trust or even the pets of the decedent. If a person dies without a Will, (known as “intestate”), the distribution of the decedent’s property, after paying all debts and taxes, will be determined by the laws of the state in which the person died.  These laws vary from state to state but generally name the most likely heirs: spouse, children, parents, siblings, and if none of these people survive the decedent, other relatives.

Probate also allows the representative if the estate, known as either an executor or administrator, to sign legal documents on behalf of the decedent such the title to vehicles and the deed to the home, to withdraw monies from bank accounts, and to direct investment accounts.

Probate is crucial for other reasons that may not be apparent, one of the most important is so that the assets can pass free and clear of any liens, particularly on real estate such as the decedent’s home.  In some states, if a person receives medical assistance benefits, the amount will be an automatic lien on the decedent’s real property upon death. It is not necessary for the lien to be recorded to be effective.  This is also true for inheritance taxes on the assets. If the taxes are not paid, the asset will have an automatic lien and can impact future owners if this is not addressed correctly during probate.

And finally, the taxes must be timely paid so that the estate does not incur unnecessary penalties and interest costs.  In some states, there is a discount offered for prompt tax payments, allowing for more of the value of the estate to be transferred to the heirs.  For these reasons, it is important to contact a probate attorney in your state for proper guidance.

 

Thanks to our friends and contributors from De Boef Lucchessi, Professional Corporation for their insight into finding an attorney.