The legal term probate refers to the formal court process in which a person’s assets are to be distributed upon their death, according to their will. The probate process involves a series of filings and hearings which are presided over by a probate judge.
Important stages in the probate process include:
- Proving that the decedent’s will is legal and valid;
- Identifying and appraising estate assets;
- Managing the payment of any debts or taxes owed by the estate; and
- Distributing property as defined by either the will or state law.
The probate process generally begins with a petition in the local probate court. The executor, or person who handles the estate, will be appointed by the court if the will did not name an executor. A notice of the hearing will be sent to any named beneficiaries, which informs them of the date, time, and location of the hearing. This notice may also be published in the county newspaper in which the petition was filed.
The next step would be that any creditors of the estate are to be notified. This allows the creditors to make any claims that they may have against assets in the estate.
From there, the executor will take a complete inventory of the assets of the estate. It is important to note that prior to any assets being distributed to any beneficiaries, all expenses associated with the probate process must be paid from the estate. Some examples of these expenses may include, but not be limited to:
- Burial and/or funeral expenses;
- Awards made to the surviving spouse and/or child;
- Debt owed to the federal government;
- Funds owed to employees of the deceased; and
- Debt owed to any city or county.
After all expenses of the estate have been paid, and all creditor claims have been settled, assets may then be distributed to the named beneficiaries. The executor will petition the court for the distribution of the assets according to the will, if one exists; if no will exists, the estate will be distributed according to state law. Once the court grants the petition, the executor will:
- Create a new deed for real property;
- Transfer any stocks or other funds;
- Liquidate any assets as necessary; and
- Resolve any remaining loose ends.
It is important to note that the probate process differs from state to state. Most states have adopted the Uniform Probate Code (“UPC”), which intends to streamline the probate process by making probate administration simpler and less expensive. States that have utilized the UPC generally have done so in order to standardize the probate process across state lines.
Some states allow for a more simple probate process for smaller estates, which is generally an estate that has a total property value of less than $100,000. However, what is considered to be a small estate depends on state law; additionally, your specific state may allow you to skip the entire probate process if your estate meets certain requirements.
How Can I Avoid The Probate Process?
There are many reasons why you may wish to avoid the probate process, which will be discussed further below. Some estate distribution alternatives to probate generally include:
- Joint Tenancy: This is a type of property ownership in which two or more people own part of a single piece of property. When one joint tenant dies, the remaining joint tenants inherit the decedent’s share of the property, as opposed to the decedent’s heirs inheriting the share. Joint tenancy is generally associated with the legal co-ownership of a home, car, or bank account.
- An example of this would be how most of these items held in joint tenancy are associated with marriage. The property’s co-owner automatically receives full ownership of the asset, without having to first go through the probate process in order to pass the title on. It is important to note that there are specific conditions that must be met in order for joint tenancy to exist, and not all states recognize such an arrangement;
- Life Insurance Policies: There are certain circumstances in which life insurance policies may circumvent the probate process. An example of this would be a life insurance policy in which a person pays a premium each year and names a beneficiary. The named beneficiary automatically receives the life insurance policy benefits and payout when the policyholder dies, thereby eliminating the need for the probate process; and
- Trusts: Legal trusts involve transferring the legal title of an asset from the owner to a trustee, or, a neutral third party. When the estate owner dies, the named trustee is legally bound to distribute the decedent’s property according to the terms of the trust, generally to a named beneficiary. There are several different types of trust which are intended for different purposes.
What Are The Pros And Cons Associated With Avoiding Probate?
The defining advantage to avoiding probate would cost. Probate costs generally include attorney’s fees which can be costly, especially if the decedent owns property that is located in a different state. This is due to the fact that probate proceedings would be required in both states; however, it should be noted that a trust would likely correct this problem.
Trusts can also be tailored to meet specific requests, which is not necessarily true of the probate process and could be considered a probate con. Because the execution of a trust is much less formal than that of a will, the terms of a trust can easily be changed in order to better suit the needs of the estate.
Another advantage to avoiding the probate process is that the process can be complicated and time consuming. The probate process can take up to several years to completely resolve all matters related to the decedent’s estate. As such, avoiding the process can help resolve matters more quickly and efficiently.
An additional advantage to avoiding the probate process would be privacy. Wills and probate proceedings are matters of public record. As such, if you would prefer to keep your affairs private so that people who are not involved do not know how your estate was distributed, you will need to distribute your estate through a trust or some other estate planning mechanism.
There are some notable disadvantages to avoiding probate that you should consider. Generally speaking, it costs more to create and fund a trust than it does to create a will. However, as previously mentioned, it could save money long term by avoiding paying probate costs out of the estate.
Additionally, in order to completely avoid the probate process, you must carefully place all new assets that you obtain into the trust. Otherwise, probate may still be necessary in order to appropriately distribute assets not placed in trust. Finally, taxes can be somewhat higher for the first years after your death if the estate is distributed through a trust, as opposed to being distributed through a will and the probate process.
Do I Need An Attorney For Probate?
If you are estate planning and are considering setting up your estate to avoid the probate process, or have any questions regarding probate, you should consult with an experienced and local probate attorney.
A local lawyer will be best suited to helping you understand your state’s specific probate laws, and what your best legal options are under those laws. If you are not the decedent but are experiencing issues associated with probate, your attorney can also represent you in court, as needed.