What is Probate?
When a person dies, their debts need to be paid and their remaining assets distributed to others. Probate is the legal process through which this is accomplished. As probate typically requires significant knowledge of a large mix of highly complex legal issues (federal and state taxation, real estate, estate planning, competency, employee benefits, insurance, business operations, etc.), seasoned lawyers are typically retained by surviving family members to petition the court to begin the probate process.
What Happens During Probate?
The court first appoints a personal representative of the estate who takes an oath to administer the estate pursuant to the laws of the State of Nevada. The court then issues to that personal representative "letters" which is essentially a document granting that person the authority to act for and in behalf of the name of the deceased. After that authority is granted, the personal representative conducts an inventory of all of the assets. If there is real property, the personal representative sells the property. Later, a notice to all the creditors of the estate is published for two to three months. After all the assets are liquidated, creditors and administrative costs are paid, including all outstanding taxes, then the remaining funds are distributed to "heirs" who are persons either designated by statute or by a last will and testament of the deceased to receive property. Once the property is distributed, the personal representative is discharged by the court.
Sound simple enough?
In truth, probate is sufficiently complicated that in today's world, the personal representative has become more of a figure-head and the lawyers do most of the day-to-day work. This has grown out of necessity. It can take a layman several years to work through the process on his or her own, whereas an experienced attorney can cut that time in half.
Did you say almost?
The statute that governs probate makes the legal process longer than most would hope. It is not uncommon for a typical probate to last over a year. Often times delays are caused when the unexpected happens, there are disputes with heirs or creditors, or a tax liability requires dealings with the IRS. Despite being lengthy, probate is a very important process as it is one of only a few ways to cut off creditors and the IRS from any type of collection actions against the heirs or surviving family members, including spouses.
How Much Does All this Cost?
Probate is similar to selling a house and paying a real estate agent a commission. The principal difference is that most real estate agents don't have doctorate degrees. Most attorneys charge a flat 5% of the gross value of the estate. Where complex tax issues or litigation exist, the attorney will add an hourly rate when addressing those areas specifically. Larger estates (over $1.5 million) are typically charged less than 5% of gross, depending upon what work needs to be done. In addition, hard costs such as costs of filing and publication of notices in newspapers are charged to the estate. Lawyers must get approval for their fees from the court. This is a safeguard to the public that the fees charged will be reasonable and customary for the industry.
Does the Personal Representative Receive Compensation?
Yes. The probate statute sets forth a compensation formula based upon the size of the estate. Additional compensation may be requested if there were any complex issues out of the normal that had to be addressed, e.g., taxes, maintenance, etc. |
