In order to complete the estate distribution process, an individual’s will must be proved or established in court after death – this is referred to as probate. Specifically, probate is the legal process through which a deceased person’s estate is properly distributed to heirs and designated beneficiaries and any debt owed to creditors is paid off. In general, probate property is distributed according to the deceased person’s last will and testament. There are several steps involved in probate, including the following:
Someone is appointed to administer the estate. The administrator is usually named in the will and is called an executor or personal representative.
The will is proven in court to be valid.
The deceased person’s property is appraised.
Any debts or taxes owed by the deceased are paid.
Remaining property or assets are distributed according to the will (estate distribution). If there is no will, remaining property or assets will be distributed according to state law.
In some cases, probate can turn into a lengthy process, thereby causing delays in estate distribution. Common reasons for delays include those listed below.
Estates with multiple beneficiaries will take longer during the probate process. When an individual or organization is designated as a beneficiary, they will be notified. Therefore, a greater number of beneficiaries will result in a longer notification process. All beneficiaries will need to be notified regarding what is going on during the probate process as well. Furthermore, it could also take longer if there are documents that need to be signed and returned by each beneficiary.
Estate Tax Returns
Estates that are required to file a state or federal estate tax return using IRS Form 706 typically take longer during the distribution process. This is due to the fact that these returns are generally due until 9 months from a deceased person’s death and the IRS generally takes a significant amount of time to process this form. On average, an estate’s Form 706 is not processed until at least three or four months after the tax return has been filed. As such, the probate process will remain at a standstill until the IRS completes all necessary actions. It is possible that the IRS will request additional information or documentation, which will also extend the wait time. Even if the estate is not required to file Form 706 concerning federal estate taxes, it may still be required to file a state estate tax return, which may also delay the probate process and subsequently the estate distribution process.
Rare or Unusual Assets
Estates with assets that are difficult to value, such as rare collectibles or hedge funds, may take longer to probate because of the rare nature of the assets. It is possible that the executor of the estate and the IRS will disagree on the value of the rare asset for estate tax purposes and finding a resolution to this disagreement can take time. These types of assets can also cause the estate to remain open until they are sold, which often takes a significant amount of time as well.
Disagreements Amongst Beneficiaries
Estate distribution can also be delayed when beneficiaries do not get along. In this case, beneficiaries may hire their own attorneys and proceed to dispute the estate distribution process. If the will is contested, it can take years for the validity of it to be sorted out and established.