One of the secondary goals you may wish to incorporate into your comprehensive estate plan is probate avoidance. Of course, you will want to know why you should focus on avoiding probate before deciding to make that one of your estate planning goals. That, in turn, requires a better understanding of the overall estate administration process. Although every estate is just as unique as the owner of the estate, estate administration typically follows the same basic steps for all estates, making it possible to provide an overview of the process that may help you better understand why so many people choose to include tools and strategies in the their estate plan aimed at avoiding the process. For specific information about how to ensure that your estate administration goes as smoothly as possible after you are gone be sure to consult with your North Dakota estate planning attorney.
What Is Estate Administration and Why Is It Necessary?
Everyone lease behind an “estate” when they die. Some estates are minimal, consisting of nothing but personal property, while others are extremely valuable and include numerous complex assets. Regardless of the size and/or value of your estate, anything that you own at the time of your death, or that you have an ownership interest in when you die, is considered part of your estate. Common estate assets include, but are not limited to, things such as:
- Real estate
- Financial accounts
- Household furnishings
- Retirement accounts
- Proceeds of life insurance policies
- Jewelry and other personal items
All of the assets you leave behind will eventually need to be legally transferred to their new legal owners, either pursuant to the terms of your Last Will and Testament or the North Dakota laws of intestate succession if you die intestate, or without a Will. Before that can happen though, the assets that make up your estate need to be identified, located, and valued. In addition, creditors of your estate need an opportunity to file claims against your estate to ensure they will be paid before your estate assets are disbursed. Finally, Uncle Sam wants to make sure any taxes owed by you and/or your estate are paid before assets are transferred to the new owners. All of these objectives are part of the estate administration process, also known as “probate.”
What Happens During the Administration of an Estate?
Before the process of administering your estate can begin, some preliminary matters must be addressed in order to decide which direction the probate of your estate will take. The most important of those are whether your estate is a testate or intestate estate and whether or not formal probate will be required. A testate estate is one in which the decedent left behind a valid Will while an intestate estate is one in which no Will was left behind. If a Will was executed by the decedent, the terms of that Will, along with any other estate planning documents, shall be used to determine how the estate assets will be handled and to whom they are to be transferred. If the estate is intestate, the North Dakota intestate succession laws will be used to decide what happens to the estate assets left behind by the decedent. In addition, the overall value of the estate is important in determining whether an alternative to formal administration can be used or not. If an alternative is available, it will typically help speed up the probate process and reduce the overall cost of the estate administration.
If formal estate administration is required, the following steps will typically need to be taken:
- Opening probate, including submission of the decedent’s Last Will and Testament to the court and asking to be officially appointed to administer the estate by the Executor named in the Will.
- Identifying, locating, and securing all assets owned by the decedent at the time of death.
- Obtaining a date of death value for all estate assets.
- Notifying creditors that probate has begun.
- Reviewing creditor claims and paying those that are approved.
- Defending any challenges to the estate, such as a Will contest.
- Preparing and paying any taxes due from the estate.
- Facilitating the legal transfer of the remaining estate assets to the intended beneficiaries and/or legal heirs of the estate.
Even a relatively modest estate can take over a year to make it through the estate administration process which is one reason why people frequently choose to include probate avoiance techniques in their overall estate plan.
For more information, please join us for one of our upcoming free seminars. If you have additional questions about estate administration in the State of North Dakota please contact the experienced estate planning attorneys at German Law Group by calling 701-738-0060 to schedule an appointment.