Envision this scenario that you may have seen depicted in a movie or on a television drama. There is a funeral, and the dearly departed is buried in the cemetery. The grieving family then convenes at someone’s home. There is food, and there are liquid refreshments. Subtly certain people are called aside, and they are ushered into a study.
Someone sits at the desk and these particular family members gather around. This individual is the executor of the estate. He pulls out a last will. He reads the last will that contains the final wishes of the decedent. It is assumed that the executor will then write everybody a check, and the matter will be closed.
This type of scene is nothing but fiction. When someone passes away using a last will to direct asset transfers the will must be admitted to the probate court. Nobody is going to receive an inheritance until the court has probated and closed the estate.
If the executor just passed out money immediately where would that leave creditors that are owed money by the person that passed away? What if there was something about the will that seemed fishy, how could someone contest the will if there was no supervision? Probate provides this type of supervision.
During probate the executor will in fact pay valid final debts on behalf of the estate. It is unlikely that the only property will be liquid. Therefore, the executor is going to have to arrange for the liquidation of property that comprises the estate so it can be distributed in accordance with the wishes of the decedent.
Probate is not necessarily a bad thing in and of itself depending on your perspective. However, there are some drawbacks that come along with the process. One of them is the fact that it can take a lot of time for probate to run its course. As we mentioned previously, the people who are going to be receiving inheritances must wait until the estate has been probated before they will receive their distributions.
They say that patience is a virtue, but there are instances where individuals desperately need their inheritances in a timely manner because they depended on the decedent for support.
In addition to the waiting game that comes along with probate the process can be expensive because the executor will usually engage the services of a number of different professional entities. There are court costs as well, and executor is entitled to a fee. All of these expenses can add up to reduce the value of the estate by a noticeable margin.
There are ways that you can arrange for asset transfers outside of probate. We will discuss these strategies in future blog posts.