Probate Process from Start to Finish and it is not as easy as you might think. The probate process varies from state to state, but from start to finish it generally takes six to nine months. If heirs get along, then the probate process will usually be quicker. However, the second that the family starts fighting the cost goes up and the probate process takes longer.
What is probate and what is the process look like? Well, by the end of today's video, you'll have a better idea. So first let me start by having to disclosure. These videos are for informational and educational purposes only. You really need to talk with an attorney in the location that you are on the proper probate procedures.
And the second thing that I talked about in two videos ago, is that most people think that if they have a last will and testament, a probate is not required. And that in most cases, that is absolutely not true.
A probate is still required to transfer assets, such as real property and bank accounts and any other financial accounts. So even though you have a will that says, "Everything goes to Sally or Johnny," there has to be an actual probate to make those transfers happen.
Let's get into what the probate process is. And guys it's a long one. And it also depends on what state you're located in. I'm gonna talk about just generally the probate procedure here in Oklahoma.
A probate usually starts in Oklahoma with the filing of a Petition for Probate. So it's basically a lawsuit that you're filing with the court, telling the court that somebody has passed away. A loved one has passed away on this date and you or somebody else wants to be the personal representative or the executor of that estate. And third, you also ask the court to determine who the heirs of the deceased person are. So that's really the first thing that happens; is we file a petition for probate.
Now, here in Oklahoma, we have to wait at least 30 days, before we can have a hearing. So it's scheduled at least 30 days into the future. So along with that petition for probate, we also file a notice of hearing the petition. And the judge usually signs an order, ordering that we give notice of hearing the petition.
Do you get all that? So a probate starts with three documents, the petition for probate, an order for a hearing, and the notice of when that hearing is gonna be. So, like I said, the hearing is usually at least 30 days into the future, and it depends on the judge's schedule and that can vary from the court.
At the hearing, the personal representative appears before the judge and if everything looks good and nobody shows up to object to anything, then the personal representative is usually given what's called Letters of Administration. Those are the magic papers that you always hear about in the movies on TV. And it's usually followed by dramatic music, like, "I've got the letters of administration."
So those letters of administration really are magical because they allow the personal representative to have access to bank accounts, to financial accounts, to get into bank deposit boxes, all kinds of things; retirement accounts to deal with state agencies and different things. So those really are magical papers to get those letters of administration.
On that same day when letters of administration are ordered by the judge and given to the personal representative, it's usually a good idea, at least here in Oklahoma, to file what's called Notice to Creditors. Notice to creditors, tell creditors that they have 60 days to come forward, if they have a claim against the estate. And we also publish this in the newspaper so that not only do we file it with the court, but we publish it in the newspaper.
And if we know of any known creditors, we will send them by certified mail, a copy of that notice to creditors. During that 60 day period, not really a lot happens because we're really waiting to see whether or not there are any creditors of the estate.
Now, if there's real estate involved, what we will usually do is ask the court for permission to sell the real estate. And that's usually because the heirs, they really don't want to own their parents' house with their brothers and sisters, right? Because if you do, then all of a sudden you all have to share in insurance taxes, utilities, somebody has to manage the property.
If one of the heirs moves into the property, I can tell you that's always a headache because there's always hard feelings with the other heirs of, "Why do they get to live there for free?" I always think that the best course of action is to sell the real estate. So to do that, there's a couple ways and I won't get into in this video, but generally if everybody consents, if all the heirs consent to sell the real estate, then the person we'll go to the judge and have an application to sell the property, the judge will usually sign it pretty quickly, and then the personal representative can sell the property.
If they sell the property, the proceeds are put into the estate bank account, which brings up another point. So as part of that process when we open an estate bank account, we have to get from the IRS, what's called an EIN number, which is an Employment Identification Number, I think that's what the acronym stands for. But basically it is stating to the world that they're a separate entity now exists, the estate of your loved one.
An estate of the deceased person, right? And so the bank needs this to open the bank account. During that 60 day period for notice to creditors, we try to sell the property, we try to find out what other assets there are, bank accounts, retirement accounts, and we try to cash in all of that money and get it into cash and put it all into the estate bank account.
Once the 60 days has run, then you need to look to see what creditor claims have actually come in and been filed with the court. If there are some that have been filed then we need to evaluate them and decide if they're legitimate claims against the estate. And if they are, guess what? The personal representative just can't pay them. The personal representative has to ask the court for permission to pay the creditor claims. Once a permission is granted, we get a signed order from the judge, we file it with the court and then we can pay the creditor. Now we're still not done with the creditors.
Once they're paid, then we have to get a release from the creditor saying that they release the estate of the claim that they made. That's very important because you don't want that same creditor to come back a year or two or whatever it is later on and say that they have a claim against the estate and then the heirs have to pay it out of their own pocket because they didn't do the process correctly.
Okay. So we've got the creditor claims paid out. And I should also say during that 60 day period, we also are having to inventory and kind of appraise all of the property in the estate. And we're kind of doing it already because we were finding the bank accounts, right? We're finding the real estate, we're finding the retirement accounts and we're kind of putting everything into one bank account.
The law requires it within two months of the personal representative being appointed a inventory and appraisement of the estate has to be made. There are certain ways you can do this where you can get waivers from the heirs because appraisals are expensive.
They can be very expensive whether they're for a car or for a house, it can cost several thousands of dollars. Sometimes heirs will just decide to waive appraisement. And there's also another way to do it, where the personal representative can actually certify to the best of their knowledge that these assets are approximately this value.
So it's a very difficult process but it's one that really does need to be get done within two months of the personal representative being appointed. Okay. So, we have got an inventory and appraisement done, we've paid creditor, what's next? Well at this point, hopefully all of the money is in one bank account and there's really nothing out there that's kind of straggling.
But if there is, we usually wait a little bit to get those small things done because I can tell you it's better to get things done during the probate than wait until it's over. Because sometimes if you wait till it's over, like let's say that you found a retirement account that nobody knew about, well, if that happens, then you have to reopen the probate and that's just more money and cost and time to the estate.
Let's assume that did not happen for our example here, and we've got the creditors paid, we've done the inventory and we're basically ready to close everything out. Now, what we need to file, is a Final Account. It's a written statement of everything that is in the estate and basically what we started with and what we've ended with and we're all the money is; this bank account hopefully, right?
We filed that final account with the court, we give the judge a copy, we set it for hearing. And again the hearing must be at least 30 days into the future. We also give notice to all the heirs by a mailing a certified copy and we also have to publish it in the newspaper as well.
Then we have a final hearing and if everything goes well, then and only then, is the probate kind of over? So what happens is the judge issues an order saying basically that this is... There's four heirs, and based on either the will or the laws of intestate succession, the estate should be divided between these four heirs equally, 25% each.
So remember that bank account that we had, so if there's a $100,000, each heir gets $25,000, right? And then the judge also says, "If there are any attorney fees for us or any cost to the estate, those need to be paid prior to the distribution, to the heirs."
So let's say for an example the probate that the cost attorney fees and expenses to the estate or $6,000. And let's say that there's also a funeral costs of another $4,000. Well, that's $10,000 that is usually taken completely off of the top, before we make a distribution to the individual heirs.
So if there's a hundred thousand dollars, we would take the $10,000, we'd pay the attorney fees, the costs, the expenses, the funeral costs and end up with a $90,000, and then the personal representative would issue a cheque to each of the four heirs for their share, their 25% interest of $90,000. Now we're not done there.
We're still not done because what we usually do as well, is we have each of the heirs sign an acknowledgement that they've actually received their inheritance or their share of the estate. We file each one of those acknowledgements with the court. And at that point, hopefully everything's been paid.
The estate bank account has zero money and the personal representative is finally done. So how long did this all take? Well, usually six to nine months. If you just calculate out the days when we first started it, the petition, we had to wait 30 days, right?
So if we get it exactly on 30 days, and we filed the notice to creditors, we have another 60 days. So now we're at three months. And if everything goes exactly right and we can file the final account on the same day, then that's another 30 days if we're lucky.
And so we're looking at four months, if everything goes perfectly. Guys, it never does. I can tell you that four months to get a probate done is extremely rare. I don't think I've actually ever seen it happen. So normally you're looking at six, nine months to get the probate done from start to finish, and it just depends on how complex it is and whether or not the heirs are fighting.
If the heirs start to fight, forget about it. It's going to cost you a ton of money, a ton of time, possibly nine months to over a year. We've literally had them last a couple of years when everybody's fighting because we have to have hearing after hearing. So hopefully that won't happen in your case. So that's how an Oklahoma probate goes from start to finish.
There is something called a summary probate which I've talked about in other videos like this one up here and you can go back and look at that one, but for a regular probate, that's the procedure. And again, it varies from state to state, just depending on where you live.
I know I've thrown a lot at you today, so that's why we've prepared our free guide on Estate Planning. I'll put a link to it in the description below and in the comments section below that, so that you can download it and get started in the right direction. And to help you out even more, watch this video up here and this video up here. If you enjoy this video, then it guys please smash that subscribe button and click on the like button and also click on that little bell, so you'll get notified every time we post a new video. Have a great day and an awesome week. And as always, thanks for watching.