Probate & Trust Administration

What is Probate?

Probate is the court supervised process of administering a decedent’s estate. In brief, the purpose of probate is to appoint someone to handle the decedent’s affairs, ensure that the decedent’s final expenses and debts get paid, and transfer the assets comprising the decedent’s “probate estate” to the decedent’s beneficiaries.

A decedent’s “probate estate” generally includes all property owned by the decedent except those assets: (a) owned jointly with another person; (b) properly titled to or held by a trust; or (c) that pass directly (outside of probate) by operation of a “beneficiary designation” or “payable on death designation.”

The steps of, and the amount of time and expense it takes to complete, a probate proceeding vary based on many factors (for example, the decedent’s county of residence, the size of the estate, whether the decedent left a valid Will, etc.) However, the probate process begins by filing the decedent’s Will (if any) and other required paperwork with the probate court in the county in which decedent lived.

Once the court receives all of the paperwork and documentation needed to begin the probate, the court appoints a personal representative of the estate (sometimes referred to as an “executor”). Typically, the court will appoint the person nominated to serve as the personal representative in the decedent’s Will. If there is no Will, then someone else (usually a family member) must be appointed. The person ultimately appointed to serve as personal representative is responsible for:

(1) Notifying the decedent’s family, beneficiaries, and creditors of the probate proceeding;
(2) Identifying, collecting, and filing with the court an inventory of all property comprising the probate estate;
(3) Resolving any claims against the estate;
(4) Filing the decedent’s final individual income tax returns (if necessary), the fiduciary income tax returns for the estate, and the estate tax return (if necessary);
(5) Distributing the probate assets to the individual(s) or institution(s) named in the Will as beneficiaries of the estate, or if there is no Will, according to Wisconsin’s laws of intestate succession;
(6) Preparing and providing the court with a detailed account of all assets and income received by the estate, all debts, claims, and taxes paid by the estate, and all assets distributed from the estate.

When the personal representative completes these and any other required tasks, the probate proceeding terminates. On average, this takes between eight and twelve months from the date the probate began. However, complex or contested probates can take two years or more.

There are also monetary costs associated with the probate process, examples of which are: (a) court fees; (b) attorney and tax preparer fees; and (c) expenses associated with maintaining or selling estate assets (e.g., the decedent’s home or other real estate) during the course of the probate process.

For these and other reasons, many of our clients elect to take advantage of estate planning techniques that will allow their estates to pass outside of probate.

Trust Administration

Individuals that elect to use a Will as their estate planning vehicle are ensuring that their estate will be administered through a probate proceeding. Conversely, trust-based estate planning offers clients the opportunity to avoid the need for their estate to pass through probate.

A properly executed and funded trust allows a decedent’s assets to pass at death to beneficiaries in the manner specified in the trust instrument itself (often much as would a Will), but the process of administering a trust typically has some or all of the following advantages as compared to an estate administered through probate:

1. Trust administrations are usually conducted independent of the court supervision inherent in the probate process.
2. Trust administrations are usually not constrained by the statutory deadlines / time periods applicable in probate and are therefore often significantly easier and less expensive to complete.
3. No notice to creditors must be published in the local legal publication, thereby making it more difficult for creditors to pursue claims against trust assets.

Nonetheless, certain aspects of the administration of a trust (for example, deciding whether to fund the bypass provisions of a married couple’s living trust after the death of one spouse, preparing and filing the federal and state fiduciary tax returns for a trust, etc.) are often complicated and difficult for a decedent’s family to handle without the assistance of an attorney. Therefore, anyone serving as the trustee of a trust (especially immediately following the death of the person(s) who created the trust) should consult with an attorney to ensure the trust administration is handled properly and in the most cost and tax efficient manner possible.