Probate: Probate specifically refers to the Court procedure by which a Will is proved to be valid or invalid, however more generally refers to the legal process where the Estate of a Decedent is administered. Generally, the Probate process involves collecting the assets of the Estate, liquidating liabilities, paying necessary taxes and distributing property to heirs. These activities are carried out by the Executor (Personal Representative in Arizona). Probate can be a time-consuming, expensive and public process which involves extensive procedure and knowledge of technical laws and statutes.
Estate Taxes: The Federal Estate Tax is a transfer tax which is levied by the Internal Revenue Service on the passing of assets of a decedent to his or her beneficiaries. Current law indicates that the estate tax is repealed for the tax year 2010 but is set to return in 2011 with an exemption of $1,000,000 per person. In 2009, the exemption was $3,500,000 with taxes assessed at 45% on all assets above this amount. While there may not be an estate tax owed in 2010, Congress modified the allowance for a step up in basis for assets owned at death, from 100% of all assets to $1,300,000 on “certain assets” ($3,000,000 to the surviving spouse). Careful planning is needed to insure that the exemptions granted by current tax laws are fully utilized.
Probate
Estate Taxes