Disadvantages of Death Probate

Death Probate is the court process of distributing and managing an estate after your death. Even if you have a written will, it must go through the probate process. Debts need to be paid, and assets need to be distributed to your designees. The court takes care of these tasks for you. Simple as it sounds, Death Probate is a tedious and lengthy process that can tie up assets for months, and consume the value of your estate in court and attorney fees.

There are five basic steps that every estate goes through in Death Probate.

1. File the Petition
Before the probate process can begin, someone must formally file a written petition to the probate court and pay the filing fee. If you have no Living Trust, the court will then approve or appoint someone from your family to be your personal representative, more formally known as your will’s “Executor” or “Administrator.” Because the probate court’s paperwork and filing procedures can be so complex, most personal representatives find it necessary to hire an attorney even when it is not legally required.

2. Publish Notice to Creditors
This step of the probate process can take months to complete. First, every debt you owe must be documented. The court then notifies the deceased’s creditors by mail and by placing an ad in the local newspapers. This gives creditors an opportunity to file a claim for payment with the court. The probate court decides how long this portion of the proceedings will be left open for creditors to file claims. In most states, this period lasts several months. Death is not an escape from financial obligations.

3. Appraisal and Inventory of All Assets
While the notice to creditors is being published, every asset in an estate must be listed and appraised. During this phase, assets are usually “frozen,” meaning they can’t be sold or distributed to heirs without written permission from the court. This includes everything from real estate and investments to furniture, antiques, jewelry and more. Formal written appraisals can be costly and the estate must pay them out of pocket.

4. Distribution of Payments on Debts, Claims and Taxes
After the court has approved creditors’ claims, it gives approval for the estate to pay the claims. On top of creditors’ claims, death taxes must also be paid, if applicable. The estate proceedings must stay open until all liabilities are paid. But sometimes wills are “contested,” which means that anyone (usually heirs who feel slighted by the will) can file a lawsuit with the probate court to try and gain access to what’s left of the assets. These contests not only prolong proceedings for months or years, but have been known to tear families apart.

5. Final Distribution and Closing of Estate
Once any contesting lawsuits are settled, the court officially orders the estate’s Executor to pay all remaining debts, claims, taxes, attorney’s fees, personal representative compensation, and other expenses. If the estate doesn’t have enough liquidity to pay these expenses, the court will order that the estate be subject to a public auction or estate sale to raise the cash. If this is done in a depressed economic climate, the estate’s assets may bring in less than they might have under more favorable circumstances. Whatever is left after all debts are paid will finally be distributed to beneficiaries (if there is a will) or to whom the court designates as heirs (if there is no will). Then the probate court can finally close the case.