FREQUENTLY ASKED QUESTIONS: PROBATE

Serving Clients in Orange City and the Surrounding Area

A. Technically, probate is the process of authenticating the will of a person who has passed away. However, many people – lawyers included – use the word “probate” when referring to estate administration.

A. Estate administration is the process of winding up a deceased person’s final affairs, usually with three main tasks or objectives. First, the personal representative (executor or administrator) collects all of the deceased person’s property and reports to a Court about what the deceased person owned on their date of death. Second, the personal representative pays the deceased person’s remaining debts, if possible. Third, the personal representative distributes any remaining assets to the deceased person’s beneficiaries.

A. The executor is the person who is designated in the will to perform the necessary tasks to complete the probate estate administration.

An administrator is a person – essentially a volunteer – who performs the necessary tasks to complete the administration of the estate of someone who dies without a will.

It’s important to remember that the executor or administrator of an estate has no authority to take any action until the correct Court formally appoints them to that position and they have signed an oath to perform their duties as a court officer and fiduciary to the best of their ability.

A. A fiduciary is a person who has a duty, imposed by law, to act in someone else’s best interest. For example, an executor is a fiduciary to the each of the individual beneficiaries of an estate as well as to the group of beneficiaries as a whole.

A. When there is no will, you have what is called an “intestate estate.” For intestate estates, the beneficiaries are defined by the Iowa Code and are called the “heirs at law.” The easiest way to think about who are your heirs at law is to think about who are your closest blood (or legally adopted) relatives.

A. Court costs are determined based on the size of the estate and how many court orders are needed during the case, among other things. Generally speaking, you can figure that court costs will be $30 for the first $25,000 of value plus $25 for every $25,000 after that. So, for an estate valued at $400,000, the court costs will probably fall in the $400-$500 range.

The attorney fees in an estate administration are usually figured based on the value of the assets in the estate. Because every estate is different, these fees sometimes vary, but the work performed by your probate lawyer usually becomes more complicated as your estate size increases. Therefore, a simple calculation of the fees your lawyer will charge would be $220 plus 2% of the total value of the estate, which is the limit imposed by the Iowa Code.

A. Unfortunately, no. Because a personal representative is supposed to act in a way that protects the interests of others and without bias for any one beneficiary, the Iowa Code requires the personal representative to file a “designation of attorney” which identifies the lawyer they have employed to assist with the administration of the estate.

Think of it this way: do you want to hire an attorney to sort through the Probate Code, the Iowa Inheritance Tax Code and regulations, and the federal estate tax code and regulations, or would you prefer to do it on your own? By requiring that the personal representative designate an attorney to help with the estate administration, the Iowa Code places the risk of getting something wrong on someone who has the experience and expertise to do the work rather than imposing that liability on the personal representative. And that risk is part of the reason probate lawyers’ are determined based on estate value: the bigger the estate, the bigger the risk.

A. Absolutely! In fact, the basic calculation of the personal representative’s fee is identical to the basic calculation of attorney’s fees: $220 plus 2% of the probate estate. The Iowa Code allows personal representatives to be compensated for their work because probate can be a complicated and difficult process. However, fees earned as the personal representative are taxable income, so we often recommend that an executor or administrator not take the fee that they are entitled to if they are also a beneficiary of the estate.

A. The probate estate is the compilation of all of a deceased person’s assets that are subject to estate administration and can be used to pay court costs, administrative expenses, or creditor claims. This does not include property owned in joint tenancy with rights of survivorship or life insurance policies with beneficiary designations other than the deceased person’s estate. Those assets pass to the joint tenant or the designated beneficiary automatically and do not follow the terms of the will (if there is one).

A. The absolute minimum amount of time an estate administration will take is four and a half months. This is because creditors and other interested parties have four months to make their claim starting from the date they receive notice that the estate administration has started. In addition, other deadlines and milestones may be required, including filing of estate and inheritance tax returns which are due within 9 months from the date of death. When real estate must be sold, closing the estate can be further delayed. It is not uncommon for an estate administration to take 12 months or more.

However, on occasion, the creditor claim and taxes due are far less than the total value of the probate estate. When this happens, we sometimes recommend that the executor or administrator make a partial distribution before the estate is closed. These early distributions require additional work by the attorney and the personal representative, but the additional work is often more prudent than allowing the estate funds to sit idle in a checking account.

A. There are several situations where probate can be avoided. First, if your estate is below $25,000 and you do not own real estate, then you may not need to go through any form of estate administration. You should ask your attorney if this is an option for you.

Second, if your estate is between $25,000 and $100,000 or if its value is less than $100,000 and you own real estate, you may be eligible for small estate administration, which is a simplified probate.

Third, you can make sure your assets will not be considered probate assets. There are a variety of ways to do this, but one common method is through the creation of a revocable living trust. Regardless of the method you choose, you should work with an attorney who specializes in estate planning to make sure you know all of the possible outcomes of each strategy.