When you pass away and leave behind an estate, someone is left to take charge of your estate and settle your financial affairs. The executor will take your estate through probate, a public, court-supervised process that winds up your affairs after your death. It takes place in the state where you were living at the time of your death and may involve other states if real estate is involved. The process can seem overwhelming, but we’ve put together a few basics to keep in mind.

How does probate start?

If your estate is subject to probate, the executor begins the process by filing an application—known as a petition—for the probate of your will. An attorney usually assists with the filings, whether the executor is an individual or a trust company. The petitioner brings it to the probate court along with your will. Usually, the petitioner will file an application for the appointment of an executor at the same time. The court first rules on the validity of the will. Assuming the will meets all of your state's legal requirements, the court will then rule on the application for an executor. If the executor meets your state's requirements and is otherwise fit to serve, the court generally approves the application.

What's an executor?

The executor is the person/organization whom you choose to handle the settlement of your estate. Often, the executor is a spouse or a close family member, but you may want to name a professional executor, such as a bank or attorney. You'll want to choose someone whom you trust will be able to carry out your wishes as stated in the will. The executor has a fiduciary duty—that is, a heightened responsibility to be honest, impartial and financially responsible.

The executor's duties may include:

• Finding and collecting assets, including outstanding debts owed to you
• Inventorying and appraising your assets
• Giving notice to your creditors and ensuring debts are paid (e.g., credit card companies, banks, retail stores)
• Filing an estate tax return (if required) and paying any estate taxes
• Distributing your assets according to your will and the law
• Providing a detailed report of how the estate was settled to the court and all interested parties

The probate court supervises and oversees the entire process. Some states allow a less formal process if the estate is small and there are no complicated issues to resolve. In those states allowing informal probate, the court may be involved only indirectly. This may speed up the probate process, which can take years if it’s a complicated situation or there is discord among the beneficiaries.

What if you don't name an executor?

If you don't name an executor in your will, or if the executor can't serve for some reason, the court will appoint an administrator to settle your estate according to the terms of your will. If you die without a will, the court will also appoint an administrator to settle your estate. This administrator will follow a special set of laws, known as intestacy laws, that are made for such situations.

Is all of your property subject to probate?

It depends on the type of asset or how an asset is titled. For example, many married couples own property and financial accounts jointly with rights of survivorship. Property owned in this manner bypasses probate entirely and passes by "operation of law." That is, at death, the property passes directly to the joint owner regardless of the terms of the will and without going through probate. Other assets that may bypass probate include:

• Investments and bank accounts set up to pass automatically to a named person at death (payable on death)
• Life insurance policies with a named beneficiary (someone other than the estate)
• Retirement plans with a named beneficiary
• Other property owned jointly with rights of survivorship
• Assets titled in the name of a trust.

Acting as an executor can be complicated. Add the grieving process on top of the legalities, and things can be overlooked or mishandled. The experienced team at Busey Wealth Management can provide you with dependable advice and solutions tailored to your unique situation. To learn more about our approach, visit busey.com/wealth-management.  

This is not intended to provide legal, tax or accounting advice. Any statement contained in this communication concerning U.S. tax matters is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties imposed on the relevant taxpayer. Clients should obtain their own independent tax advice based on their particular circumstances.

This material is provided for educational purposes only and should not be construed as investment advice or an offer or solicitation to buy or sell securities.

This presentation is for general information purposes only. It does not take into account the particular investment objectives, restrictions, tax and financial situation or other needs of any specific client.