What’s probate? Probate is a legal process that allows the court to distribute assets and property after a person dies. Probate is usually initiated by the executor of an estate or attorney. A probate court confirms the will of the deceased, appoints executors to distribute the estate among beneficiaries and to pay any taxes or […]

What’s probate?

Probate is a legal process that allows the court to distribute assets and property after a person dies. Probate is usually initiated by the executor of an estate or attorney. A probate court confirms the will of the deceased, appoints executors to distribute the estate among beneficiaries and to pay any taxes or debts.

Probate is not always easy, but many people wish to avoid it. While the reasons for probate can be varied, there are some common complaints.

  • It’s not always easy. Sometimes, it can take many years for a probate judge to complete an estate.

  • It can be expensive. These fees can quickly add up and can rise if the process drags along.

  • It’s public. The proceedings in probate court are public records.

What is probate?

While laws and procedures can vary between states, the probate process is largely determined by whether the deceased had a will.

Probate with an Will

This is how probate often begins if the deceased had a will.

  1. The probate court receives the will and certified copies of the death certificate from a representative of the estate. To verify that the will is valid, the court validates it. This is easier if the will contains a self-proving statement affidavit, which is a sworn declaration signed by the author and witnesses. It legally validates the validity of the will. If the will does not include a self-proving statement, it can be authenticated by either a new sworn declaration signed by a witness, or live testimony from the witness.

  2. The court names an executor or personal representative to the estate. The will usually names an executor or personal representatives. The probate court judge then appoints them. If these instructions are not included in the will, the probate judge will appoint someone (usually a family member) as executor or personal representative.

  3. The court issues letters of testamentary to the executor/personal representative. These are usually given in conjunction with a death certifiation. They serve as proof that executors have permission to manage the assets of the deceased.

Probate without will

A will is not necessary if the person who died has “intestate”

  1. The court will hold an administrative proceeding in this instance to decide how the estate will be divided. The court will appoint an administrator to manage the estate.

  2. The instructions of the probate judge regarding how to distribute assets and property are followed by the estate administrator

Probate steps without or with a will

After these steps have been completed, probate usually moves on to the next step:

  1. You must post a probate bail. The court may require that the executor of the estate or the personal representative of the estate post a probate (also known as a fiduciary) bond. This bond guarantees that the executor/personal representative will adhere to the terms of the will and state laws. Family members of the deceased may file a claim against the bond if the executor/representative fails to comply with state laws. Probate bonds protect the executor in the case of an estate dispute.

  2. Notify creditors and beneficiaries. Notify creditors and beneficiaries. Creditors are limited in time to respond to the estate and file claims. A creditor cannot file a claim if it misses the deadline.

  3. Assess assets and property. The executor/representative must determine the fair market value of all probate assets. The executor will usually hire an appraiser to determine the property value. However, this may also include drafting an inventory for all personal property that will be subject to probate. This can be tedious.

  4. Pay outstanding debts. Funeral expenses and taxes are the most common expenses that the estate pays. The executor then has to pay any outstanding debts to creditors that have filed a claim within the required time frame. If necessary, the executor can also handle disputes regarding claims against the estate.

  5. Distribute assets to beneficiaries. If there are assets left, the executor or representative will distribute them to beneficiaries according to the will. Some beneficiaries may be required to pay inheritance taxes.

  6. Close the estate. The executor/personal representative will file a final accounting with probate court. This report lists all assets, liabilities paid, and distributions to beneficiaries. The court may release the executor and personal representative from their duties if the report is in good standing.

How can you avoid probate

  • A small estate. Most states have an exemption level for probate. This allows for at least a faster process for small estates. Sometimes, what is considered small can actually be very large. Consider transferring assets to loved ones and family members before you pass away. This strategy could also reduce or eliminate future federal estate taxes.

  • A living trust can be established. Trust property is not considered part of your estate upon your death. The trust property is managed by a trustee and the trustee has the responsibility to distribute it according to the trust agreement. Learn more about living trusts. )

  • Make bank and other accounts payable upon your death. This will allow you to directly transfer the funds to your beneficiary without having to go through probate. These transfers may also be allowed in some states.

  • You can own property together. This allows you to transfer the asset without probate. These assets can be held in a variety of ways, including joint tenancy with the right of survivorship and tenancy by its entirety.

What happens to probate? What goes through probate?

Property or assets that are not in the deceased’s name must be probated. This includes bank accounts or brokerage accounts, real property, and vehicles.

A transfer-on-death (TOD) is a way to avoid probate in many cases. It can be done on bank accounts, brokerage accounts, and real estate. Assets will then be transferred to the TOD beneficiary.

Joint ownership of bank accounts, brokerage accounts, and real estate is possible through joint tenants with survivorship rights, also known as JTWROS. The remaining assets of an account are transferred to the owner(s) who are still alive upon the death of the owner.

There are other examples of property that doesn’t go through probate:

  • All gifts or distributions made by the deceased while they were alive.

  • Property that is held in trust. It will be divided according to its terms.

Owners of life insurance policies and retirement accounts must ensure that their beneficiaries are up-to-date. Without a beneficiary listed, policies may need to be probated.

Questions frequently asked

What is the time frame for probate?

If everything is in order and there are no problems, probate can take nine months to one year to settle an estate. Complex estates may take many years to resolve and pass probate.

What is the cost of probate?

The amount of probate expenses will vary depending on the complexity of the estate. However, generally fees and expenses may be between 3% to 5% of the estate’s value. These are some of the most common expenses associated with settling an estate.

  • Probate bonds are typically 0.5% of the total value of the bond. This is often determined by the estate’s size. An executor might be required by a probate judge to obtain a probate bond worth $500,000. The bond would cost you approximately $2,500 (500,000 x 0.5% = $2,500). The executor will not be liable if something happens during probate. However, the heirs of the deceased can file a claim against bond to make them liable if it does.

  • The court charges filing fees for opening the probate process, providing documents and closing the estate. They can vary from $35 to several hundred dollars depending on the state or court.

  • Personal representative and attorney fees are usually a percentage of an estate. Many states have strict guidelines about the maximum amount that executors or attorneys can charge. Many times, the fees will be waived by family members who have been appointed executors or personal representative. However, they are not required to.

  • For expenses incurred during probate proceedings, executors or personal representatives are reimbursed for reimbursement fees. If an executor had to pay fees to an appraiser in order to value property, they will be reimbursed.

Is probate the exact same in all states?

State laws can vary in terms of what happens to your estate if you die without a Will. Your estate will be settled by community property laws if you’re a resident in Arizona, California Idaho, Louisiana or New Mexico. Residents of Alaska, South Dakota and Florida can opt in to community-property laws.

Under community property laws, both spouses are equal owners of all property acquired during marriage. If you have no children and are married, your assets will be divided among your spouse. Other situations will see probate courts decide how your estate will be divided using state inheritance rules.

The estate distribution hierarchy starts with your spouse in most cases. If you are not married, your assets will pass to your family in a certain order. This includes your surviving children first, then other relatives depending on how close they are to you.