In Wisconsin and other states, probate is the legal procedure through which a person’s assets are transferred after their death. The process is supervised by a court of law and designed to protect anyone with a legal interest in the deceased person’s estate. Probate is used to distribute a decedent’s assets not only to beneficiaries, but also to creditors and taxing authorities.
Any Wisconsin estate that exceeds $50,000 in value must go through the probate process unless the property is subject to certain exemptions. Some exemptions include assets that are titled jointly with another individual, life insurance proceeds, and any retirement funds where a beneficiary other than the deceased person’s estate was chosen. Additionally, assets placed in a revocable living trust are not subject to the probate process.
The probate process is usually handled by a personal representative (also called an executor) selected in advance by the decedent. If no personal representative was chosen, the court will generally appoint a relative, financial institution, or trust company to fulfill the role. In Wisconsin, a personal representative will normally identify all of the assets of the person who died, manage those assets throughout the probate process, pay any outstanding debts, taxes or estate expenses, make any distributions that are required by state law, and distribute any remaining assets to the decedent’s heirs or designees.
In Wisconsin, the probate process may be either formal or informal. If the way in which an estate will be distributed is contested, a formal probate process must be used. If an estate goes through formal probate, the decedent’s personal representative must be represented by an attorney. When an estate is probated in an informal manner, however, it is also a good idea for a personal representative to consult with a Wisconsin estate planning lawyer. It is also advisable to have an attorney attend any informal probate hearings.
Generally, any probate costs are paid for by the estate. Costs must also be approved by a court if the assets are distributed through a formal probate process. State and federal income taxes and any required estate taxes will also be paid from a decedent’s estate. In 2012, up to $5 million in assets are exempt from the federal estate tax. That number is scheduled to be reduced to $1 million in 2013. Currently, the State of Wisconsin does not collect an estate tax. Additionally, assets passing to a surviving spouse will normally be exempt from estate tax.
Although Wisconsin law requires that probate be completed within 18 months, a court may choose to grant an extension. On average, probate in Wisconsin takes no less than six months. The probate process must allow time for creditors to be notified, file required income tax returns, and resolve any disputes. Creditors must file any claims against the estate within four months of notification. Once the four-month period has passed, creditors are prohibited from making claims against the estate.
Funeral costs have priority in settling a probate case. Then come taxing authorities, secured creditors and unsecured creditors who have made a claim. Finally, the beneficiaries get to have what is left. Careful advance planning including use of living trusts may reduce or eliminate the need for your loved ones to wait for the probate process to conclude. For more information on the probate process or creating a living trust, contact an experienced Wisconsin probate and trust administration lawyer.