The death of a family member or someone else close to you is usually followed by a period of grief, confusion, and a variety of other heightened emotions. Someone, however, must handle the legal and practical implications of your loved one’s death. If you have been designated as that person, you probably do not know where to begin or exactly what needs to be done unless you have been in the same position in the past. That lack of experience, coupled with your heightened emotional state, can lead to mistakes during the probate process. In an effort to help you avoid making those mistakes, the probate attorneys at the Northern California Center for Estate Planning & Elder Law explain the top five Executor mistakes.
What Is Probate?
Before focusing on common mistakes, it may be beneficial to learn a bit about the probate process and why it is required. When an individual dies, he or she leaves behind assets. Those assets make up the decedent’s estate. Probate is the term given to the legal process that eventually transfers those estate assets to the intended beneficiaries and/or heirs of the estate. Probate also serves other functions, including:
- Authenticating the decedent’s Last Will and Testament if one was left behind
- Identifying, locating, securing, and valuing estate assets
- Locating legal heirs of the estate if the decedent died intestate, or without a valid Will
- Allowing creditors the opportunity to file claims against the estate
- Litigating any challenges to the Will or estate
- Ensuring the taxes owed by the estate are paid
Top 5 Executor Mistakes
As a first-time Executor, it is very easy to make a mistake. Unfortunately, mistakes made during the probate of an estate can be costly, both in terms of time and money. With that in mind, knowing about the following common mistakes may help you to avoid making them:
- Failing to consult/retain professionals to help. If you have never before served as an Executor it is not wise to try and probate an estate without the assistance of an experienced and qualified probate attorney. The probate process often requires at least a basic knowledge of legal and financial concepts that the average person does not have. Hiring an experienced and qualified probate attorney, an accountant, and other professionals can be the key to avoiding damaging errors.
- Improperly categorizing assets. Not all assets are considered probate assets. Non-probate assets bypass the probate process altogether and, therefore, may be distributed to beneficiaries immediately after the decedent’s death. Trust assets, certain types of jointly held property, and proceeds of a life insurance policy are just a few examples of non-probate assets. Improperly categorizing assets can prevent the distribution of assets as well as extend the time it takes to probate the estate.
- Failing to recognize that the estate qualifies for small estate administration. Most states, including California, offer a small estate administration alternative to formal probate for estates that qualify. If the estate qualifies for small estate administration it will save both time and money; however, you must recognize fairly quickly that the estate may be eligible for this option for the estate – and beneficiaries – to benefit from avoiding formal probate.
- Errors calculating federal gift and estate taxes. Every estate is potentially subject to federal gift and estate taxes. In addition, some states also impose an estate tax, though California is not one of them. You should make an initial determination at the beginning of the probate process whether the estate is likely to owe gift and estate taxes so you know how to handle claims against the estate down the road because claims are paid in order of priority if the estate lacks sufficient assets to pay all claims. As you may well imagine, taxes are a high priority claim.
- Failing to communicate with beneficiaries/heirs of the estate. While this is not a legal error, it can be a huge mistake. Sometimes it can even lead to unnecessary litigation. Remember, beneficiaries/heirs are also dealing with heightened emotions and they are dependent on you to let them know what is going on with the estate. This is yet another reason to retain the services of a probate attorney because your attorney can act as your conduit of information with the beneficiaries/heirs as well as creditors.
Contact Probate Attorneys
Please download our FREE estate planning checklist. If you have additional questions or concerns regarding probate or the duties of an Executor, contact us at the Northern California Center for Estate Planning & Elder Law today by calling (916)-437-3500 or by filling out our online contact form.