Probate usually involves one of two things: (1) authenticating the last will and testament of the deceased, or (2) establishing how the estate will be distributed according to the laws of the state if the deceased did not have a will. Not only is probate a slow and costly process – taking anywhere from a year to eighteen months depending on the complexity of the estate – but it also poses serious problems for those involved if not handled properly.
Part I of this two-part series took a deeper dive into the probate process and covered five common problems that can occur. In this article, you will learn about five more things that can go wrong during probate and tips for how to avoid them.
#1 Failing to promptly (and properly) secure estate assets.
The personal representative of the estate must take control of assets as soon as possible to ensure that they are protected. This is especially critical for real estate, which must be properly insured, secured against break-ins if vacant, and protected against loss for nonpayment of taxes and mortgages. If the personal representative is not in the same city or state as the property, this can become a challenge, especially if curb appeal suffers and squatters take over. However, a good realtor that understands one’s probate needs can help maintain the property by using people in their network.
The personal representative must also take exclusive control of an estate’s cash by consolidating existing accounts into an estate account. No one other than the personal representative should have access to the estate account, including ATM and debit cards tied to the account.
#2 Assets cannot be found.
In some cases, there may be assets that should be a part of the probated estate, but they cannot be located for whatever reason. When this happens, the personal representative of the estate will need to go searching for all of the assets that must eventually be transferred to the decedent’s heirs, causing serious delays. This problem can be avoided entirely if the person who is creating the estate plan and last will and testament provides instructions for where the assets can be located.
#3 Distributing assets too soon.
Personal representatives have the authority to approve creditor claims, pay creditors, and distribute assets to intended beneficiaries. Sometimes, however, an estate does not have sufficient assets to pay all of the claims and honor the gifts in the will. When that is the case, creditors must be prioritized according to the laws of the state, and the assets must be distributed according to that priority. If the personal representative fails to follow the law and distribute assets accordingly, they can be held personally liable.
#4 Not keeping accurate accounting records.
The most important job of the personal representative is to take control of and diligently account for all of the assets in the estate. Personal representatives must keep accurate records of everything they do so that when it comes time to pay taxes, make distributions to the heirs, and submit a final accounting to the court, they are not left scrambling to track down necessary information and records. The more detail-oriented the personal representative is, the smoother the whole estate administration process will be.
When preparing the final accounting report to submit to the court, many personal representatives fail to use proper schedules and to adequately describe receipts and disbursements. They sometimes also lump entries instead of itemizing them, making it difficult for the court to follow the report, as well as fail to correctly show carrying and market values, gains, losses, dividends, and interest payments for investments. This can be a major problem, as all of the numbers in the report must align and make sense when it comes time to settle the estate. If they don’t, there will likely be objections from the heirs to the estate and, in some cases, maybe even the judge.
#5 Failing to hire competent counsel.
Probate can be a complicated and draining process, especially when dealing with the loss of a loved one. Trying to do everything on your own during this time of mourning is an excellent way to get yourself into a lot of trouble. Hiring an experienced estate attorney will not only ensure that the administrative process is completed in a timely and appropriate manner, but it will also protect you from making big mistakes that could cost you, the estate, and the beneficiaries.
You may think you’re saving a few dollars by taking a DIY approach to probate, but you could actually be breaching your fiduciary obligations or opening yourself up to personal liability if you aren’t sure what you are doing. Remember, you can save yourself a lot of time, trouble, and grief by getting sound advice right from the start.
To recap, Parts I and II of this series covered ten things that can go wrong during probate and provided tips for how to avoid them. Remember, if you are starting the probate process and already find yourself overwhelmed, overworked, and just plain over it, you don’t need to go through it alone. Consulting with a professional can make the probate process more manageable and will ensure that potential problems are addressed and avoided early and efficiently.