OceanFirst Financial Corporation
09/20/2024 | Press release | Archived content
How Much Do You Know About Probate
September 20, 2024
Probate is the legal process of settling an estate and distributing assets to beneficiaries. A spring 2024 survey done by Trust & Will, a legal forms provider, revealed some misconceptions and a need for some education.
How long does probate take? Probate can take months, or it can take years, depending upon the complexity of the estate. The average time, according to the report, is 20 months. The survey respondents expected a shorter timeline, such as four to six months (15%) or ten to twelve months (12%). Some 37% were unsure.
What does probate cost? Less than $1,000, according to 10% of survey respondents. More than $10,000, said 4% of those surveyed. The majority, 56%, simply had no idea what the cost of probate might be. The cost of probate will vary with the complexity and size of the estate, but it is generally thought to run from 3% to 7% of the estate's value.
Is probate hard? In the survey report, 17% of respondents expected probate to be somewhat or very easy, while 52% expected a somewhat or very difficult experience.
To shorten the probate process, to make it easier and to reduce expenses, one needs to have a plan. In some cases, executing a will provides sufficient guidance for the estate settlement process. For larger estates, the addition of trusts may be helpful.
Steps in estate settlement
Winding up the financial affairs of any individual's lifetime is not a simple, linear process. Many tasks overlap or occur simultaneously. That raises the question: Who has the needed skill set, the systems, the personnel and the time required to handle the job of estate settlement promptly and efficiently?
• Inventory. It's the rare individual who leaves a complete inventory of all of his or her financial assets and interests. Some assets are easy to find-bank and brokerage accounts with their regular statements, for example. Life insurance policies and retirement plan interests can prove more difficult to find. Interests in real property and closely held businesses can be the most problematic.
• Asset management. Investments must be monitored and income collected. Insurance must be purchased or maintained. Property taxes will need to be paid. Appraisals may be needed for collections, jewelry or other hard-to-value assets.
• Debt collection. Money owed by the decedent at death must be paid by the executor, after the legitimacy of the debt is confirmed. Similarly, the executor must make diligent efforts to collect all funds owed to the decedent. Tact will be needed when the debtor is a family member.
• Raise cash. Estate management requires cash for paying expenses and taxes. But most estates consist primarily of property. That means the executor will have to decide what to sell and when to sell it to meet the estate's cash needs. This is where strong investment planning skills can pay off. Funds should be raised without parting with the assets best suited for future family needs.
• Pay income taxes. The executor will have to file the decedent's final income tax return and fiduciary income tax returns for the estate itself.
• Pay death taxes. This year federal estate taxes are due on taxable estates larger than $13.61million. An estate tax return will be needed for estates of this size, even if no tax will be due because of the marital or charitable deductions. Smaller estates will also need to file a return if there is a surviving spouse, in order to preserve the deceased spouse's unused federal estate tax exemption. Some states have much lower thresholds for filing state inheritance or estate tax returns. A state tax return may be required for each state in which the decedent owned property.
• Distributions. Delivering the estate assets to beneficiaries, or to trusts for their benefit, is among the easier and more pleasant duties that the executor must discharge.
• Accounting. The executor's final task is to account for all money and property that has been received and disbursed. Therefore, accurate and detailed records must be kept from the beginning of the process.
• Report. The executor must file the accounting with the probate court for final approval.
We are ready to serve you
Whom should you choose to settle your estate? We have the skills, the experience and the knowledge to properly handle the job of estate settlement. We are available, and we are impartial. We understand the nature of fiduciary responsibilities, and we know how to discharge them. And for all this, our fee for settling an estate is generally comparable to what an inexperienced individual would receive. In some cases, our experience will help to reduce estate shrinkage, increasing the amount available for beneficiaries.
Would you like to learn more? Please call on us for more details about our estate settlement service.
Core advantages that we bring to the job of estate settlement
When an estate includes very unusual assets, selecting a family confidant with special expertise in such assets for estate management can be a wise choice. However, even more mundane assets, such as real estate or securities portfolios, also require significant expertise for proper management. That is the talent that a corporate fiduciary, such as us, brings to the table.
Here are the basic benefits that a corporate fiduciary provides in estate settlement:
• We treat estate and trust administration as a full-time job.
• We have facilities and systems for asset management that individuals lack.
• Estate assets and trust funds in our care are doubly protected, by both internal audits and regulatory oversight by state or federal officials.
• We have an unlimited life, while an individual may die, become incompetent or just disappear.
• We bring long experience and group judgment to the job of investment management.
• We will treat all beneficiaries impartially, and most beneficiaries will appreciate that.
• We can withstand pressure when a wayward beneficiary asks for more from a trust than was intended, while an individual trustee might give in to requests for "more."