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With the world around us changing more and more every day,
now is a good time to reevaluate your estate planning. Perhaps that statement
sounds a bit strange to you. But consider the changes you have experienced
since you last thought about what’s going to happen after you are gone. Maybe
you have obtained a divorce, remarried, or given birth to a child. Perhaps you
have purchased a new house, sold stocks, taken a new job, or started your own
business. Whatever has changed in your life, you should examine your estate
plan to ensure that you are controlling what happens to your property
after death and that the state won’t make those decisions for you.
What is Probate?
Probate is the process by which a state court will collect,
evaluate, and distribute your estate after your death. Generally speaking, any
property you own, whether land (real property) or things like furniture and bank
accounts (personal property), will become part of your estate at death.
How Long Does Probate Take?
Due to time limits set by statute and court rules, the
probate of a will can often take several months or more.
Keep in mind that during the probate process, if any
real property remains in the estate then mortgage payments, property taxes, and
homeowner’s insurance must be maintained. If not maintained, the mortgage
holder or tax organization may further complicate the distribution of your
estate, adding additional cost and time to probate.
How Much Does Probate Cost?
In large part, probate costs are
determined by the total assessed value of your estate and the compensation for
the personal representative and attorney for the personal representative. The
greater the value of your estate, the higher the filing fees and statutory
compensation. Probate can get quite expensive as the statutory compensation for
the personal representative and attorney for the personal representative are
calculated using the same formula.
Before the property in your
estate can be distributed, the court must determine its value for tax purposes.
The probate referee appraises the property in your estate. Then, the taxes on
your estate must be paid. Most wills contain a provision instructing your
personal representative how to allocate the taxes. Generally, there are two
ways of making this allocation: 1) the personal representative pays the taxes
directly from your estate so that each beneficiary receives your gift without
having to pay the taxes on it, or 2) each beneficiary under your will must pay
the taxes on his or her gift based on the fair market value of the gift.
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