Probate is a term that strikes fear and dread in the hearts of many, but probate is just a court process designed to facilitate the transfer of assets from a decedent's name to the beneficiaries (under the will) or heirs (if there is no will), while giving creditors the opportunity to make a claim against those assets.
Some assets may pass outside the probate process. Assets that carry a beneficiary designation, such as life insurance policies, retirement accounts, and annuities pass to the named beneficiaries directly, outside of the probate process. Property that is titled with another person as joint tenants with rights of survivorship such as real estate and bank accounts will also not pass through probate, as long as there is a surviving joint tenant. Property that is titled in a revocable trust will also not pass through probate. Probate governs assets of a decedent that are not owned or payable in this fashion.
When an individual dies with a will, it is the person named in the will as executor who must file documents with the court to begin the probate process, in the state in which the decedent was resident. Despite what some people believe to be true, just because a person has a will does not mean that the probate process is avoided. The advantage of having a will is that you can designate who serves as executor and how you would like your assets to be distributed.
There are some restrictions on a person's freedom to dispose of his or her assets under a will. First, if there is a spouse, then the spouse is entitled to a certain share of the estate, call the spousal share. For example, if there are surviving children of the decedent, the spousal share is one-third of the estate. If the decedent leaves less than the spousal share to the spouse, then the spouse can elect to take the spousal share instead of what is provided in the Will. This is true, as long as there is no prenuptial agreement in which the spouse waives the right to elect the spousal share. In addition, while a person does not need to leave assets to his or her children, a person does need to indicate that he or she has not forgotten his or her children by naming them and indicating that the person is intentionally leaving the child or children out of the will. If a child is not named in the will, that child is entitled to the same share of the estate that he or she would be entitled to under the intestacy statute because the law presumes that the individual forgot about that child.
When an individual dies without a will, a person's property passes under the laws of intestacy. In New Hampshire, the title of the person administering the estate of an individual without a will is the administrator, rather than the executor. The intestacy law provides for the disposition of a person's assets depending of the decedent's family composition. For example, under the intestacy law, if there is a spouse and children of the decedent and that spouse, the spouse gets the first $250,000 of assets and then the balance is split between the spouse and children. If there is no spouse, but there are children, then the assets are distributed among the children. If there is no spouse or children, but there are parents, then the assets pass to the parents, etc. Assets do not go to the state unless no heirs can be located. As discussed above, having a will allows you to deviate from these provisions.
To begin the probate process in New Hampshire, a court form called a Petition for Estate Administration must be filed with the court along with the original will, if there is one, a death certificate and a court form listing the heirs and named beneficiaries under the will, again if there is one.
Once the judge receives and reviews the Petition for Estate Administration, the judge will set the bond, if one is required. If the assets of the estate are less than $25,000, the judge will order a personal surety bond, which is a document signed by the executor or administrator promising to repay the estate using his or her own assets if a mistake or theft occurs. If the assets are greater than $25,000, the judge will order a corporate surety bond, which is an insurance policy paid for with assets in the estate and is designed to make the estate whole if the executor or administrator makes a mistake or steals from the estate.
The court will then issue a letter of appointment, which allows the executor or administrator legal authority to handle the assets of the estate. Within 90 days of the date on which the executor or administrator is appointed, an inventory of all of the probate assets needs to be filed with the court. This is a list of the assets owned by the decedent in his or her name individually at the time of death. The value listed on the inventory is the fair market value as of the date of death value.
Creditors have six months to file a claim against the estate. If a creditor files a claim against the estate and that claim is not paid by the executor or administrator, then the creditor has the next six months to bring a law suit against the estate. If creditors do not make a claim or file suit within this time frame, the claims are barred. Creditors must be paid before any assets are distributed to beneficiaries or heirs.
Once the six month creditor claim period has expired, if all creditors have been paid, it is possible for the executor or administrator to share an informal accounting with the beneficiaries. If the beneficiaries accept the informal accounting, then a Motion for Summary Administration may be filed with Assents of the beneficiaries or heirs to close the estate. If the beneficiaries or heirs do not accept the informal accounting, then the executor or administrator must file a formal accounting using the format required by the court and the judge must approve the accounting before the estate can be closed and the assets distributed.
If a person owns real estate in a state other than the state in which they are resident at the time of death, then another form of probate is required called ancillary probate. This is a second probate in the jurisdiction in which the real estate is located. If a decedent owned real estate in several states, it is possible to have probate occur in several states.
If you are interested in creating an estate plan designed to avoid the probate process we are happy to assist you. While it is better to avoid the probate process when and if possible, sometimes probate cannot be avoided. If you or a loved one needs to get an estate through the probate process, we would be happy to help you with that as well.