Probate in the United States
In some states, after a person residing in that state has died without a valid will or trust, his or her property immediately becomes the property of the spouse, if any, without the need for probate. (This is the case in states that recognize a married couple's property as community property or as tenancy by the entireties.) However, in cases where the surviving spouse does not automatically succeed to the decedent's property, then it is usually necessary to "probate the estate", whether or not the decedent had a valid will. A court having jurisdiction of the decedent's estate (often called a "probate court") supervises probate, in order to ensure the decedent's property is distributed according to the direction of his will and the laws of the state.
The will usually names an executor, a person tasked with carrying out the instructions laid out in the will. The executor's most common task is the marshalling of the decedent's assets throughout the probate process. If there is no will, or if the will does not name an executor, then the probate or other court having jurisdiction of the decedent's estate can appoint one. Traditionally, the representative of an intestate estate is called an administrator. The representative of a testate estate who is someone other than the executor named in the will is an administrator with the will annexed, or administrator c.t.a. (from the Latin cum testamento annexo.)
Steps of probate
Some of the decedent's property may never enter probate because it passes to another person contractually, such as an insurance policy or bank account that names a beneficiary or is owned as "payable on death", and property (usually, again, a bank account) legally held as "jointly owned with right of survivorship". Property held in a living trust also avoids probate. In these cases, the executor provides documentation to the court, and the property is prevented from entering probate.
The first task of the executor after opening the probate case with the court is to inventory and collect the decedent's property.
Next, the executor pays any debts and taxes that must be paid.
Finally, the executor distributes the remaining property to the decedent's beneficiaries, either as instructed in the will, or per the intestacy laws of the state.
Throughout this process there may be disputes. Anyone may make a claim on the estate, either by petitioning the executor or the court. If the claim is rejected, the claimant may file a lawsuit to attempt to prove the claim and collect money. Any dispute generally causes the court to treat the probate more formally, and it may reach the point where the court must approve every transfer of every piece of property.
Avoiding probate
Probate generally lasts several months, occasionally over a year before all the property can be distributed, and incur substantial court and attorney costs. One of the many ways to avoid probate is to execute a living trust. This is a separate entity to which a person transfers ownership of his real property (house, etc.,) from himself to a trust which he controls and can revise at any time (except in the case of an irrevocable trust.) Upon death, the persons named as beneficiaries in the trust acquire ownership of it and, therefore, the property the trust owns. As probate is a public process, a living trust has the added advantage of preserving the privacy of the deceased and his heirs as well as avoiding some estate tax.
Life insurance, savings accounts, and joint tenancies with the right of survivorship are some of the other ways people use to avoid probate.
It must be noted that avoiding probate does not necessarily mean estate taxes have also been avoided, as the laws imposing the federal estate tax have been modified to include within the definition of the person's taxable estate, property held in a living trust, life insurance, "payable on death" financial instruments, and most other property which is transferred from a dead person to a living person in consequence of the death. Inter vivos trusts can reduce estate taxes if they are properly structured, but that is not related to the avoidance of probate. Generally, to avoid an estate/inheritance tax, a person must give it away irrevocably or leave it to a qualified charity. However the use of credit shelter trusts (also called AB trusts) can allow a married couple to preserve both unified credits, allowing up to twice the total estate to pass to heirs without estate tax. This may reduce or eliminate the total tax the couple would have otherwise paid.
Administration of an estate (on death)
Where a person dies leaving a will appointing an executor, and that executor validly disposes of the property of the deceased within England and Wales, then the estate will go to probate. However, if no will is left, or the will is invalid or incomplete in some way, then administrators must be appointed. They perform a similar role to the executor of a will but, where there are no instructions in a will, the administrators must distribute the estate of the deceased according to the rules laid down by statute and the common law.
Certain property falls outside the estate for administration purposes, the most common example probably being houses jointly owned that pass by survivorship on the first death of a couple into the sole name of the survivor. Other examples include discretionary death benefits from pension funds, accounts with certain financial institutions subject to a nomination and the proceeds of life insurance policies which have been written into trust. Trust property will also frequently fall outside of the estate but this will depend on the terms of the trust.
Since the Land Transfer Act of 1897, the administrator acts as the personal representative of the deceased in relation to land and other property. Consequently, when the estate under administration consists wholly or mainly of land, the court will grant administration to the heir to the exclusion of the next of kin. In the absence of any heir or next of kin, the Crown has the right to property (other than land) as bona vacantia, and to the land by virtue of the historic land rights of the Crown (and the Duchy of Cornwall and Duchy of Lancashire in their respective areas). If a creditor claims and obtains a Grant of Administration, the court compels him or her to enter into a bond with two sureties that he or she will not prefer his or her own debt to those of other creditors.
Letter of administration: Upon the death of a person intestate, or leaving a will without appointing executors, or when the executors appointed by the will cannot or will not act, the Probate Division of the High Court of Justice or the local District Probate Registry will appoint an administrator who performs similar duties to an executor. The court does this by granting letters of administration to the person so entitled. Grants of administration may be either general or limited. A general grant occurs where the deceased has died intestate. The order in which the court will make general grants of letters follows the sequence:
The husband or widow as the case may be, the next of kin, the crown, a creditor or stranger.
Where, under the rules for distribution of estates without a will (the Intestacy Rules), a child under 18 would inherit or a life interest would arise, then the Court or District Probate Registry would normally appoint a minimum of two administrators. On some estates, even under an intestacy, it is not clear who are the next-of-kin, and probate research may be required to find the entitled beneficiaries.
The more important cases of grants of special letters of administration include the following:
Administration cum testamento annexo, where the deceased has left a will but has appointed no executor to it, or the executor appointed has died or refuses to act. In this case the court will make the grant to the person, usually the residuary legatee, with the largest beneficial interest in the estate.
The process of probate in Hong Kong can be straightforward depending on where your property is situated, where you are domiciled and any other Wills that you may have. If you own property in another country then the property must go through the probate process of the country where it is situated.
Hong Kong will happily use a grant of probate issued in the UK, Sri Lanka, Singapore, New Zealand and some of the states in Australia. For any other country Hong Kong will require the Will, or a certified copy, before allowing the probate process to start. For expatriates this can often slow down the probate process and could lead to delays in appointing the temporary guardians.
A person’s domicile of origin can have a huge impact when writing a Will as people from different countries, and in the case of Australia different states, may require different advice and often more than one Will to cater for all of their requirements.
The states of New South Wales, Queensland and Western Australia use a different judicial process which will not recognise a Will which is administered through Hong Kong probate. In such a situation, the Will would have to be taken to the appropriate state and approved through the probate system before the executors could begin carrying out the instructions in the Will.
When considering the appointment of temporary guardians for children this could result in time consuming delays for your executors being able to carry out the appropriate appointments. In order to avoid such situations from occurring, it is often better to have a Hong Kong Will and a separate Will for assets held in other countries.