Probate – Who Gets What When?

In this episode, John Ross and Lisa Shoalmire discuss the probate process – the legal process by which your heirs and beneficiaries are determined making sure the right people end up with your assets left behind.

Episode Transcript
John
Welcome to another addition of Aging Insight Television. I'm your host, John Ross here with my co-host Lisa Shoalmire, and we are elder law attorneys here in the Ark-La-Tex. And what we do is we help people navigate through disability, through old age, we try to address their biggest concerns. Issues like avoiding nursing home care, avoiding becoming a burden on your friends and family, and avoiding going broke in the process. That's what elder law is, that's what elder law attorneys do. And we know that you can navigate through this maze on your own terms the way you want to with knowledge. And that's what this program is all about is bringing you the kind of knowledge, frankly answering the questions that people ask us all the time. And I will tell you probably one of the most common questions I get relates to probate. And really, the question boils down to this. They'll say, "John, do I have to probate?" To probate or not to probate?
Lisa
That's right. Yes, the question that every day, "Do I have to probate Mom's will, my husband's will? They're now deceased, do I have to probate that will?" Or "I've heard it's a expensive, long process. Do I have to do it?"
John
What is probate? What's the purpose?
Lisa
And before we can answer the question of to an individual person, do they have to probate the will? Well, probate is a legal process that basically does two things. Probate, first of all, deals with the creditor issues that may be involved with the deceased person's debts. So creditors have an opportunity to present claims and get paid. And the heirs have an opportunity to clear the slate, if you will, of those creditors through the probate process. So, point number one of a probate process is to deal with creditors. The second real point of a probate process is to pass assets from the deceased and pass them down to the heirs and beneficiaries with what I call a clean title. And so really those are the two main purposes of the probate process.
John
Yeah, and I can sum all of that up real quick. Probate is figuring out who gets your stuff when you're gone. That's really it. And yet, a lot of times people will say, they'll say, "Well, John, I've got two kids. These are my only two kids, and they're great kids. And so when I die, doesn't everything just go to my two kids?" Well, you know what? If you die without a will, most likely the law would say that everything would go to your two kids. If you have a will, that will probably says, "Well, everything goes to your two kids." And so the question of, "Well, John, does everything just go to my two kids?" That is true. The problem is nobody else knows that. Think about your house, for example. You die, your house passes to your two kids. But when those two kids try to sell the house, the buyer, he doesn't know, that buyer doesn't know how many kids you had. And your kids might stand there and say, "Well, yeah, but we're the only two kids." But that buyer doesn't know that. And before that buyer writes a big check to buy that house, he wants to be really sure who the true owners are. And that is probate.
Lisa
That's right. So that's passing that clean title. And so the way we accomplish figuring out who gets your stuff when you die is through this legal process called probate. And first of all, there is a time limit to actually going through a probate process if there is a will involved and you want that will to be presented to the court and considered the legal document which passes the assets of that deceased person's estate. In Texas, we have four years from the date of death of the deceased to present that will to the court and ask that the court "admit that will to probate." And all that means is that the court looks at the will, takes the appropriate testimony about the validity of the will and the capacity of the testator at the time the will was written. And then the court basically signs an order that says, "Yes, this appears to be the last wishes of the testator and we're going to legally sanction it and bless it," if you will. And the Arkansas side for our viewing area, we have five years from the date of death to offer a will for probate.
John
Right, and a lot of times people seem kind of surprised by this. They're like, "Well John, I didn't know you had to probate a will. I thought you just had to have the will in place." Well, if you think about it, you've probably heard that that will needs to be signed, witnessed by certain types of witnesses, may be notarized. You've heard about all of these things. Well, all of those things are true. You've gotta make a valid will. It's the judge though that determines whether all of those conditions were met. Whether that will was signed, whether that will was witnessed properly. All of that sort of thing is done by the judge and that really is step one of probate if you have a will. Now if you don't have a will, it's kind of the same thing, except now instead of you having a will, you've got the will that the state legislature has provided for you. That's what's called intestate succession, the law says who's gonna get your stuff when you die. But again, nobody knows who your people are.
Lisa
Right.
John
So you've got to show up at that courthouse so that there can be a determination of heirs. And so that way we know who the heirs are and again, that is step one of the probate process. But there's lots of steps, aren't there?
Lisa
Yeah, there are a lot of steps.
John
There are a few more steps. So, step one is getting into the courthouse but there's a lot more steps and we're gonna cover those when we come back from this break, so stick around.
Lisa
Welcome back to Aging Insights. I'm Lisa Shoalmire and I'm here with my co-host John Ross. And today we're talking about the probate process, which is the legal process by which your heirs and beneficiaries are determined and we pass the asset that you leave behind as part of your legacy, and we make sure that those assets get into the hands of the people that you want to have them. So that's all what the probate process is about. And before our break, we were talking about how if you have a will and it appears valid, it's not legally enforced until a judge says that that will has met all of the requirements for the state in which you live and therefore is a valid will.
Lisa
And we also talked about that there's actually a time limit to present that will. And finally, we talked about the fact that every single one of us walking around, we have a will. Now, you may be thinking to yourself, "Well, I've never signed one. I've never written one out or gone to an attorney." Well, each state's legislatures have written a will for every individual that's out there. When you go to an attorney, or write out something that you consider to be your will, that is your opportunity to make choices other than the choices that the state legislature has already made for you. I always like to empower my friends and neighbors in the community and let them know that doing a will and making those choices is a way for you to be empowered.
John
That's right. Really, we've talked about the first step is getting in front of the court. Whether it's to admit that will so that the judge can take a look at it, or if you don't have a will, for your heirs to be determined, who your family is and who will receive what. But this is really just step one. Step two is we've gotta get somebody appointed by the court to run everything. Who's gonna gather up all of your stuff and make sure it goes to your heirs or the people in your will? If you have a will, the person you name in that will as an executor is the person who will be in charge. If you don't have a will, it's the same type of person except they call it an administrator.
Lisa
And then the court chooses who that person is.
John
And the court chooses who that person is. And so you can pick yourself in a will or the court can pick somebody, but the second step is getting that executor or administrator appointed, and their job then is to go out and gather up all of your stuff and figure out what you have and where it's at.
Lisa
Right. Their job comes down to going out and gathering up your assets, and then now the court is gonna be depending on that executor or that administrator to follow the rest of the steps in the probate process on behalf of your estate. So not only is that person going to gather up and protect your assets and make an inventory of those assets and submit those to the court, that person is also going to be responsible for gathering up information about your creditors and your debts and making sure that the proper legal notice is sent and given to those creditors. And that's a big job and we wanna make sure it's done correctly so by the time we get to the end of the estate and your heirs and beneficiaries receive the assets, that we don't have any surprise creditors out there.
John
That's right. So step one, get in front of the court, figure out who the heirs are, either by will or otherwise. Step two, get that executor appointed. Step three, that executor needs to publish notice in the newspaper to any of your creditors that might be out there. And that way those creditors will have an opportunity to come and file a claim against the estate and say, "Hey, this guy owed me some money and I think I ought to get paid." And there's a timeframe that that has to be done. The next thing the executor has to do is file an inventory with the court, and this is where they gather up all of your assets, they look and see what it is that you have and then they make a list. And on that list they show what you have and what it's worth, and they file all of that with the court. And so after a period of time, we now know who your heirs are, what your assets are and what your debts are. And from that point then that executor or that administrator can pay those debts and distribute the rest of the assets. Now, that sounds relatively simple.
John
Often times people will say, "Well, John, is this something that I can just do myself?" One, it may sound simple, it's not. The probate code is quite thick and it's quite difficult to navigate. But the other side of this is if you're that administrator or executor, you're actually representing all of the interests of those beneficiaries, those heirs and all of those different people. And if you're representing other people in front of a court, you have to have a law license. And so you actually are prohibited from representing yourself in a probate case, unless of course, you have a law license. This is something that even if you thought you could do it yourself, the courts are actually going to require you to have legal representation because otherwise, you're committing what's called the unauthorized practice of law which is actually a crime. And so the courts won't let you commit a crime in their presence. So it sounds simple, it's not. And you're gonna need some help along the way anyway.
Lisa
Well, I know it sounds a little self-serving when we say that you have to have a lawyer to go through the probate process. But really, there are so many I's to dot and T's to cross. Frankly, you want to rely on someone else's expertise to guide you through that process because it's already a big job that you're taking on, so might as well lean on someone else who's been there before.
John
Well, and if that doesn't convince you, let me throw this little piece out. If you're that executor or that administrator and you mess up, there's ways that you personally could be held liable for certain actions that you have taken as the executor and administrator. We've even seen people go to jail because they didn't do the right thing acting as that executor or administrator. Now, that case was pretty bad case, there was theft and stuff going on. But my point is, is that it's easy to get in trouble even sometimes not realizing that you're doing something that's wrong. This is essentially the probate process but I guess we really haven't answered the question. We've talked about what probate is, but the question was to probate or not to probate?
Lisa
Well, John, I guess that's our cliffhanger question, so we'll take our next break and then we'll come back and talk about different situations where you do need to probate and then some situations where the answer to that question is no, you do not have to probate. So stick with us.
Lisa
Welcome back to today's final segment of Aging Insight. And we kind of left you with a question hanging out there before our last break. And that question is when it comes to wills and dealing with assets and things at someone's death, do you have to probate the will or not? And so John, why don't you tell us about some of those situations and what the answer can be?
John
Well, the first thing to realize in all of this is that yes, probate is necessary in many cases, but only if there's assets that are part of your probate estate. And that little two-word phrase, probate estate, it means something very specific. Essentially in plain English, what probate estate means is those assets that don't automatically pass to somebody some other way. For example, the classic example is if I name somebody as a beneficiary on a life insurance policy, they're the named beneficiary on that contract. And so when I die, all they have to do is show a death certificate and a driver's license to that insurance company and they're gonna get a check. That insurance policy was not part of my estate. And if it's not part of my estate, then if that was the only asset I had in the whole world, there would be no need to probate my estate because the only asset I had passed automatically. But there's lots of examples of non-probate assets.
Lisa
Well, sure there are. One of the other common examples that we see frequently are joint owners with right of survivorship on bank accounts. Another very common asset that passes without a probate process is a pay on death designation perhaps on a certificate of deposit or on an investment account. So you can see the common thread here is that these assets typically have a written contract or account agreement or beneficiary designation that tells the person or entity that holds the asset such as the bank or your investment advisor what to do with those assets at your death. And those assets are governed by those contracts and account agreements, not by your will. Those assets do not require a probate process.
John
Right. There's certainly lots of situations where assets pass automatically. But that's not necessarily always the case and sometimes it's not all that clear. One of the things people will say to me a lot, Lisa, is they'll say, "Well, I never had to probate my dad's estate."
Lisa
Yes.
John
But as we get to looking at it and we realize that dad had three kids and dad's property is still in dad's name, and dad had three kids but one of those kids has now died also and they had three kids. And so you're right, there was never a probate done, but what we have is a confusing piece of real estate that's owned one-third by one person, one-third by another, and the other one-third is owned in ninths by other people. And so it gets real confusing. And the problem is, is that if you don't get in there and clean that up by using the probate process, over time your rights and your interests in those properties can really get confusing and it can actually end up costing more to clean that up later than in many cases than even what the property's worth itself.
Lisa
Right. And we've seen that a number of times and when we hear, "Well, I didn't have to probate my dad's estate," a lot of times maybe that's because all the children had sort of an agreement, an informal agreement among themselves and nobody really raised a ruckus about it. But you know what? The more generations that pass, the more likely that families kind of drift apart, cousins don't know each other. And the next thing you know, we have people who are really strangers to one another that are asserting ownership interest in property and now it has to be sorted out. And often it has to be sorted out because we've had families that they have found natural gas and minerals on property, and now we've got oil companies coming in trying to figure out who they're supposed to contract with, and it can be a real mess to clean up. And like you said John, the more years that go by, most families get larger with more and more cousins and grandchildren and great-grandchildren, and a lot of times we lose track of them. And so it becomes very expensive to fix the title.
John
That's right. And of course, one other thing to keep in mind here is that, again, if you don't probate a will within a certain time frame, which in Texas is four years and Arkansas is five years, then after that period it's as if that person died without a will at all, alright? Now, this can be such a surprise for somebody who didn't realize that what the intestacy laws say. For example, in Arkansas, if you die without a will, as a general rule your spouse does not inherit from you. Actually, your children inherit from you. And a lot of people think, "Well, I've been married for 50 years, so everything's gonna go to my spouse." That's not the way it goes.
John
Well, if you have a will that says that you leave everything to your spouse, great. But if that spouse doesn't probate that will after your death, after a period of time that will goes away and state law takes over, and now those assets are passing down to the kids and maybe that's not what you would have wanted. So, even if you're one of these folks out there that say, "Well, somebody died some time ago and we didn't need to probate the will." Are you sure about that? Because you want to be real positive, because once those time limits go by, you can't un-ring the bell, so to speak.
Lisa
Well, and generally speaking, if someone's passed away, after you get past the initial grief and business that has to be done at that time, it's worthwhile use of your time to take an hour or two and make an appointment with an attorney that does probate work and just ask those questions. There may be a free consult or it may be a minimal charge, but your peace of mind on what to do with those assets is really invaluable.
John
Absolutely. So, as we've said so many times before, get good advice out there. Know the difference between these things. And of course, if you have questions you can always reach out to us every Saturday at noon on 107.1 where the Aging Insight Radio Show is live taking your calls. So you can always call us there. You can find us on the internet, on Facebook, at aginginsight.com, all kinds of places. Look for us, get good information. We'll see you next time.
Lisa
Bye-bye.

Leave a Comment

Your email address will not be published. Required fields are marked *

Aging Insight is brought to you in part by: