Estate Planning In North Dakota

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Probate

“Probate” is the legal procedure for settling an estate when someone dies owning property, that is, assuring creditors are paid and the remaining property is distributed among heirs identify in the will or according to state law if there is no will.

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The probate process

“Probate” is the legal procedure for settling an estate when someone dies owning property in North Dakota. The property could include real property (such as land) as well as tangible and intangible personal property (such as a car or a bank account, respectively). When a person dies, in legal terms, he or she becomes known as the “decedent.” Probate requires a determination of what property the decedent owned and its value; what debts the decedent owed; and the distribution, or assigning the ownership, of the decedent’s property to its new rightful owners. Federal and state estate taxes also must be determined, and these must be paid even if no probate procedure is required. The United States federal estate tax is discussed in another section.

Property is subject to probate only if the new owner is not recognized by the law upon proof of the death of the prior owner or co-tenant. For example, life insurance proceeds, Individual Retirement Accounts (IRAs), U.S. savings bonds and similar property bypass probate because a beneficiary usually is named. Property held in living trusts does not go through probate, but the trustee follows a similar process without court supervision to distribute the property to the new owner. Joint tenancies with right of survivorship usually avoid probate as well. Other property that does not have a legally recognized successor is subject to the probate process.

Notice of death must be given to creditors to allow them to make claims against the estate for debts the decedent owed them. Additionally, the court may approve an estate being administered as a “simplified estate;” this avoids direct court supervision of the personal representative. In a simplified estate, the court’s role primarily is to open and close the probate process.

If a decedent had no outstanding debts, or any debts are assumed and paid by other people, and the decedent had no interest in property subject to the probate process, no probate proceeding is required.The probate process includes the following steps:

1. Petition for probate of the will or for administration of the estate

2. Appointment of a personal representative

3. Notice to creditors

4. Assembly, inventory and appraisal of property

5. Classification and payment of demands against the estate (such as debts of the decedent and liens against his or her property)

6. Determination of homestead rights and family allowances

7. Management (and sale, if necessary) of property

8. Payment of state and federal taxes

9. Accounting to the court and distribution of property

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Probate costs and fees

A number of costs are involved in estate settlement, including any taxes that may become payable. The court is authorized to allow these costs as claims against the estate; that is, to use property from the estate to pay these taxes. Fees paid to the personal representative and attorney are major costs associated with probate. North Dakota law allows for “reasonable” compensation to the personal representative and the attorney for services provided. The issue of cost should be discussed by the personal representative and attorney at the beginning of estate administration and a reasonable fee agreed upon. Often, fees are based on an hourly rate, but sometimes a fl at rate can be charged. The court makes the fi nal determination of what are “reasonable” fees. Some other fees to be paid include accounting and appraisal fees and various court costs, such as filling fees and publication costs.

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The personal representative

An estate must have a “personal representative,” who is a person who carries out the plan for the settlement of the estate. An individual, a bank with trust authority or a trust company can serve as personal representatives. The court determines whether a proposed personal representative is legally competent to serve in the position. A personal representative can be named in the decedent’s will or trust, and after a determination of legal competency, the court will appoint that person as the personal representative. If no one is named as a personal representative in the will, the court will name one. Because the settlement of a decedent’s estate involves continual contact with the court and various legal rights and responsibilities must be determined, personal representative should hire an attorney for assistance. The personal representative generally chooses the attorney, although a person can state a preference for a particular attorney to help in administration of the estate in his or her will or trust

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