Probating an Estate: Petition, Creditors, and Distribution

Probating an estate is the court-supervised process of settling a deceased person’s financial affairs: proving the will, appointing someone to act, paying debts and taxes, and distributing what remains to the heirs. Straightforward estates usually close in six months to a year. Disputes, tax complications, or property in multiple states can stretch that to several years. The work falls to a personal representative — the executor named in the will, or an administrator appointed by the court when there is no will — and runs through the probate or surrogate’s court in the county where the deceased person lived.

Does the Estate Need Probate at All

Probate is driven by how assets were titled, not by the size of the estate or whether there was a will. Anything owned solely in the deceased person’s name with no beneficiary designation generally has to pass through probate before it can be legally transferred.

Several categories move outside probate automatically:

Property held in joint tenancy with right of survivorship passes to the surviving co-owner at the moment of death.
Life insurance, retirement accounts, and bank or brokerage accounts with pay-on-death or transfer-on-death designations go directly to the named beneficiary, who typically needs only a death certificate and ID to claim the funds.
Assets held in a properly funded revocable living trust pass under the trust document with no court involvement.
In states that permit them, transfer-on-death deeds send real estate to a named beneficiary without probate.

One trap catches families often: a beneficiary designation overrides the will. If a retirement account still names an ex-spouse and the will leaves everything to the current spouse, the ex-spouse gets the account, and the probate court has no power to fix it.

Small-Estate Shortcuts

Every state offers a simplified procedure for estates below a dollar threshold. These small-estate affidavits or summary administrations let heirs collect property without a full court proceeding. Thresholds vary widely, from as low as $5,000 to as high as $200,000 for personal property, with most states falling between $40,000 and $100,000. The affidavit usually requires a waiting period of 30 to 45 days after death, a sworn statement that the estate is under the threshold, and no competing full-probate filing. Real estate almost always requires at least some court involvement, even when the estate otherwise qualifies.

When There Is No Will

Dying without a will does not avoid probate. The estate still goes through court, but state intestacy law decides who inherits. The usual pattern gives the surviving spouse the largest share — often everything if there are no children or parents — with the remainder flowing to children, then parents, then siblings, and then more distant relatives. Blended families complicate this: in many states a surviving spouse receives a fixed sum plus a percentage, with the rest going to the deceased person’s children from a prior relationship. The court appoints an administrator in place of the executor a will would have named.

Filing the Petition and Getting Appointed

Probate formally begins when someone files a petition with the probate or surrogate’s court in the county where the deceased person lived. Before filing, gather:

A certified copy of the death certificate. Order several — banks, insurers, and government agencies each want their own.
The original will, not a photocopy. Some states require the original be deposited with the court within a set number of days after death, whether or not probate is being opened right away.
A completed petition for probate, which asks for the deceased person’s biographical details, an estimated gross value of the estate, a list of heirs and named beneficiaries with addresses, and the identity of the person seeking appointment.

Filing fees range from roughly $50 for a simple matter to over $1,000 for larger estates, and in some jurisdictions they scale with estate value. Once the court accepts the petition, it issues one of two authorizations. Letters Testamentary confirm an executor named in the will. Letters of Administration appoint someone when there is no will or the named executor cannot serve. Either document is what banks, brokerages, and title companies will demand before releasing control of accounts or allowing property transfers.

Tax ID for the Estate

One of the first practical steps after appointment is applying to the IRS for an employer identification number. The estate needs its own tax ID, separate from the deceased person’s Social Security number, to file returns, open an estate bank account, and handle income the estate generates during administration. The application is free on IRS.gov and the number issues immediately.¹

Fiduciary Bond

Courts often require the representative to post a fiduciary bond, which protects beneficiaries if estate funds are mismanaged. Premiums typically run between 0.5% and 2% of the bond amount annually, paid from the estate. Many wills waive the requirement, and courts generally honor the waiver when beneficiaries consent. Even without a waiver, the court can skip the bond if all beneficiaries agree in writing or if the estate is clearly straightforward.

Notifying Creditors and Interested Parties

After appointment, the representative must give formal notice to anyone with a potential legal interest in the estate. For creditors, most states require publication in a local newspaper for several consecutive weeks. That publication starts a clock, commonly about four months, after which creditors who have not submitted claims lose the right to collect. Known creditors — those the representative is aware of — also get direct written notice and face a comparable deadline. Shortcutting the notice step extends the estate’s exposure to late claims and holds up everything that follows.

Inventorying and Managing Assets

The representative owes a fiduciary duty to the estate, meaning the property must be managed as carefully as if it belonged to someone else. The first large task is compiling a formal inventory of every asset the deceased owned at death: real estate, bank and brokerage accounts, vehicles, business interests, and valuable personal property. The inventory is filed with the court, usually within 60 days to six months of appointment depending on the jurisdiction.

Real estate, jewelry, art, and other hard-to-value items generally need professional appraisals. These valuations drive tax liability and each beneficiary’s share, so understating them to save on fees can backfire in an audit and overstating them creates needless tax exposure.

Between inventory and distribution, the representative actively manages the property: maintaining insurance, paying property taxes and mortgage installments on time, collecting debts owed to the estate, and keeping physical property secure. A representative who lets a house decay or an insurance policy lapse can be held personally liable for the loss.

Paying Debts and Taxes

No beneficiary receives anything until debts and taxes are settled. The representative reviews creditor claims, rejects invalid ones, pays legitimate ones in the correct order, and files the required tax returns. Paying out of order — a relative before the IRS, for instance — can leave the representative personally on the hook for the unpaid obligation.

Order of Payment When the Estate Is Short

An estate without enough assets to cover all debts is insolvent, and the representative must follow a strict hierarchy. The exact order varies by state, but the general priority is:

Administrative costs and court fees
Funeral and burial expenses
Debts with federal priority, including federal taxes
Medical expenses from the final illness
State taxes and debts with state-law priority
Remaining unsecured debts

Secured debts like mortgages and car loans are handled separately because they attach to specific property. If the estate keeps the asset, it keeps up the payments; if the asset is sold, the secured creditor is paid from the proceeds first. When the estate is insolvent, beneficiary shares shrink or disappear, and the representative has no authority to favor family members over valid creditors.

Income and Estate Tax Returns

The representative must file the deceased person’s final individual income tax return (Form 1040) for the year of death, along with any prior-year returns that were never filed.¹

If the estate itself earns more than $600 in gross income during administration — from interest, rent, dividends, or asset sales — the representative must also file Form 1041, the estate’s own income tax return.² This catches more estates than people expect; a brokerage account throwing off dividends or a rental collecting rent can cross the threshold easily during the months the estate stays open.

A separate federal estate tax return (Form 706) applies only to wealthy estates. In 2026 the basic exclusion amount is $15,000,000 per person, so estates below that owe no federal estate tax.³ Married couples who elected portability on the first spouse’s return can shield up to $30,000,000 combined. Some states impose their own estate or inheritance taxes at much lower thresholds, sometimes starting around $1,000,000, so the representative should check state law even when there is no federal liability.

To shorten the window during which the IRS can assess additional tax, the representative can file Form 4810 requesting a prompt assessment, cutting the statute of limitations from three years to 18 months.¹

What Can Slow Things Down: Will Contests

Any interested party — typically a family member or a beneficiary under an earlier version of the will — can challenge the will’s validity during probate. Courts do not entertain challenges based on unhappiness with a share. The contestant has to prove specific grounds: lack of mental capacity when the will was signed, undue influence by someone in a position of trust, improper execution under state law, or fraud. Courts begin with a strong presumption that a properly executed will reflects the deceased person’s intentions, and the contestant carries the burden of proof. Even an unsuccessful challenge can tie an estate up for months or years, and the legal fees typically come out of the estate. Many wills include a no-contest clause that disinherits a challenger who loses, though enforcement varies by state.

What Probate Costs

Serving as representative is real work, and the law allows compensation. Some states set executor fees by statute using a tiered percentage of the estate’s value, commonly ranging from about 1.5% to 5%. Others allow “reasonable compensation” based on the time and complexity involved. A representative who is also a beneficiary sometimes waives the fee, because executor compensation is taxable income on the personal return while an inheritance generally is not.

Attorney fees are the other major cost. Probate lawyers bill hourly (commonly $150 to $500 depending on the market), as a flat fee for straightforward estates, or by statutory percentage in states that set attorney compensation by law. Contested matters, business interests, and property in more than one state push fees higher. The estate pays, not the representative personally, but every dollar in professional fees is a dollar that does not reach the beneficiaries.

Final Accounting, Distribution, and Discharge

Before anything is distributed, the representative files a final accounting with the court tracing every dollar: receipts, creditor and tax payments, administration expenses, and the balance available for distribution. Beneficiaries receive a copy and can object. Courts examine these accountings closely, and unexplained items delay approval.

Once the accounting is approved, remaining assets go to the beneficiaries. Real estate transfers by new recorded deeds. Financial accounts are retitled or liquidated and paid out through the banks and brokerages. Distribution follows the will if there is one, and state intestacy law if there is not.

The last step is a petition asking the court to formally discharge the representative. The discharge order ends the representative’s legal liability for the administration; until it is signed, the representative remains exposed to any mismanagement claim that surfaces. The representative can also file IRS Form 5495 to request discharge from personal liability for the deceased person’s taxes, which adds a layer of protection on the federal side.¹

1
Internal Revenue Service. Publication 559 (2025), Survivors, Executors, and Administrators
2
Internal Revenue Service. File an Estate Tax Income Tax Return
3
Office of the Law Revision Counsel. 26 USC 2010 – Unified Credit Against Estate Tax