Despite having a bad reputation, the probate process is a reality that many families must deal with and can work well for some small estates.
Here’s what people currently preparing their estate plans should know about avoiding probate and what heirs need to know as they navigate the probate process after losing a loved one.
But what exactly is a probate?
The term “probate” describes the legal process wherein the authenticity and validity of a Will is established. It involves the administration of a deceased’s Will or the estate of a deceased person without a will. The executor designated by the deceased in the Will, or an administrator (in cases where there is no will), is authorized by the court to oversee the probate process after an asset owner passes away.
This entails gathering the deceased’s assets to pay off any outstanding debts from their estate and transferring the remaining property to heirs and beneficiaries.
Before beginning, the executor must apply for a Grant of Probate, a legal document granting them the right to manage the deceased’s estate. Probate is over once all debts and taxes have been settled and all inheritances have been distributed.
Contrary to what many vendors offer living trusts and other goods, most probate proceedings are neither costly nor drawn out.
The role of the executor or personal representative
In most cases, a will name a court-approved executor or legal representative, who will be in charge of identifying and managing all of the deceased’s assets. The Internal Revenue Code mandates that the executor determine the estate’s estimated worth using either the decedent’s date of death value or an alternative valuation date (IRC).
The probate court in the location where the decedent resided at the time of death is responsible for overseeing the administration of most assets subject to probate.
The executor is responsible for using the estate’s funds to settle any debts and taxes the deceased owes. Usually, creditors have a finite window of opportunity (about one year) from the date of death to assert any claims against the heir for money owed to them. Claims that the executor denies can be challenged in court, where a probate judge will determine whether the claim is warranted.
The executor is also responsible for submitting the final individual income tax returns on the decedent’s behalf. He or she can then ask the court for permission to distribute what is left of the estate to the beneficiaries after debts have been settled.
When is probate required?
A deceased person’s estate would go through probate if they didn’t plan it properly. That said, having a strong estate plan in place makes the process much more straightforward—or maybe even completely avoidable.
If there is no Will or Trust, the court will appoint a representative to ensure the right beneficiaries get the right titles and possessions from your estate. The duties of an Executor in the event there is no will would be carried out by this Personal Representative.
You can completely avoid probate or at least decrease its burden and hassle by establishing a Trust. Your Trust will avoid probate for any assets you place in it, making your loved ones’ lives easier after your death.
Which assets are liable for probate?
All your possessions will go through a probate court if you don’t have a will. The following will always go through the procedure regardless of your estate planning status.
- Any inheritance in which the beneficiary outlives the donor: If you don’t revise your Will after the death of a named beneficiary, the courts will decide how to distribute this portion of your assets.
- Untitled property: Untitled property is everything you own that lacks legal documentation. Appliances, clothing, furniture, and other everyday household items could be included in this category. You can avoid probate if your Will specifically mentions these goods and outlines your preferences.
- Investment property owned by partners: A probate court will become involved to help decide how your share is passed down when properties are titled as “tenants in common” and there are no specific instructions in a Will. Remember that the procedure is streamlined if your Will express your objectives clearly.
- Property with a single owner’s title: Property with a single owner’s title must go through probate to establish ownership. The phrases “POD” (payable on death) or “TOD” (transfer on death) can be added to the title or deed in various states to prevent this.
What assets do not require a probate court hearing?
Property transferred following state trust law, property title law, and contract law does not go through the probate procedure. This can include the following:
• Named beneficiary retirement accounts.
• Life insurance plans that specify beneficiaries.
• Annuities that have designated beneficiaries.
• Accounts that are payable upon death.
• Accounts with a transfer upon death.
• Real estate with survivorship rights held under joint tenancy.
• Real estate under entire occupancy.
• All trust assets.
Is the probate procedure usually carried out exactly as stated in a will?
A probate court will likely follow a Will depending on whether the Will is contested or not. A will that is being contested indicates that someone has a good reason to think it is invalid and shouldn’t be followed.
If you think the person who wrote the Will may have been inappropriately influenced and gave beneficiaries assets, they wouldn’t have received them. You may want to contest the Will. A will may also be challenged if the person who wrote it didn’t have the mental capacity to do so at the time or if it fails to follow the rules applied in the state where it was written.
Additionally, a Will can be challenged in its entirety or only a specific component. The probate judge weighs the available evidence before ruling on the validity of the Will, regardless of whether the entire Will or just a piece is in dispute. The process of contesting a will is similar to any other lawsuit. But if a Will is not contested, the probate court wouldn’t ask for proof of whether the Will needs to be followed.
How does the probate process work?
Whether the deceased left a Will dramatically affects how the probate procedure ensues in court. The main distinction is that when a will is missing, the court will choose a Personal Representative to manage the disposal of the possessions. The probate processes typically involves the following.
1. Death Certificate
The court will be notified of the deceased’s passing and given a copy of the death certificate by someone, typically the executor or attorney, to begin the probate procedure.
2. Validate the Will
The court must certify that the Will was duly signed and dated in line with the law before it can be used as legal documentation.
3. Choose a person to manage the probate.
A judge will have to formally appoint the person named as executor in situations when there is a Will (only in very rare cases would the court overturn the deceased’s choice). Following that, the executor supervises the procedure and settles the estate.
The judge will name a Personal Representative if there is no Will to fill this position. A personal representative performs the same duties as an executor.
4. Submit a Bond
By putting up a bond, beneficiaries are shielded from any mistakes that a personal representative or executor might make throughout the probate procedure. Bonds may be costly, but the estate will cover the expense.
In some areas, bonds are not usually required if your executor or personal representative is also a beneficiary of the estate. The deceased can also ask for the bond to be waved in the Will.
5. Inform creditors and beneficiaries
Most executors or personal representatives will likely tackle this as their largest responsibility. It entails locating any potential beneficiaries and notifying any potential creditors of the deceased’s passing. The Executor or Personal Representative will also have to get in touch with creditors to use the money in the estate to pay off the deceased’s debts.
Remember that in situations where a Will exists, most, if not all, beneficiaries will be identified, making notifying them usually easier. On the other hand, locating creditors can be more time-consuming and complicated, whether or not a Will is present.
6. Establish the asset/property value
An assessment must be done before an estate’s worth can be calculated. This will reflect all the deceased owned at the time of his or her passing.
The process involves gathering and inventorying all the deceased’s personal, household, and real estate belongings to determine their value and to get an estimate of the total estate’s assets value.
A professional appraiser could be required on occasion, especially with bigger estates.
7. Pay the deceased’s funeral expenses and debts in full.
Normally, a deceased’s estate is used to cover funeral costs. After this is settled, the estate will take care of paying any outstanding obligations he or she may have had at the time of death, filing and paying taxes, and covering any medical expenses.
This procedure requires close attention because there is a chance that debtors will later pursue beneficiaries to recover any outstanding bills.
8. Distribute remaining assets.
Any assets that are left over after all debts have been paid will be distributed to the right beneficiaries. The Personal Representative or Executor will then transfer deeds and titles into the name of the appropriate beneficiary as directed by the Will or the court.
How to bypass probate
Depending on your personal situation, there are several ways to avoid the probate process. First, go to your banker about this matter and outline your financial goals and heirs. Ask them to set up your account(s) so that your wishes can be carried out without the need for legal intervention.
Any reputable bank would set up such plans and would be pleased to do so as a free client service to maintain the privilege of having your money in their accounts. It only requires a phone call, a visit, and an afternoon or so of gathering signatures.
The next step is to get your property legally registered in your heir’s name. Your lawyer can handle this on your behalf. At the very least, it should be possible to accomplish that with a short trip to the courts in your county.
Frequently asked questions about probate
How long does probate take?
Probate can take various lengths of time. The typical time to complete the probate procedure may be less than a year when there are no complications, and the estates are minor. It could take six to nine months if everything goes off without a hitch and no one raises any objections,
In extreme circumstances, probate may potentially take years to settle an estate. One of the best ways to guarantee a timely, simple probate is to have a proper and effective estate plan.
How much does probate cost?
The cost of probate is affected by a number of variables, including whether you have a Will, the size of your estate, and your residence at the time of your passing.
Costs to anticipate include probate attorney fees, your executor’s compensation, court fees, probate bond, and creditor notification costs.
What should one bring to the first hearing for a will?
The petitioner, who is typically also the estate executor, should be ready to submit specific paperwork to the court. This might include the last Will, an official copy of the death record, a list of the legal heirs of the deceased person’s name and residence, and a list of recognized creditors.