Even if you plan your estate thoroughly and well in advance, loved ones may still need to endure the probate process after you pass away.
Personal representatives (executors) named in wills in the U.S. generally need to probate a will to ensure that they have legal authorization to distribute the assets according to the wishes of the testator.
But what is probate? What does the process entail, how long does it take, and can it be avoided?
What is Probate?
Probate is a legal procedure that an estate must usually go through after the testator (maker of the will) passes away.
Most wills name a personal representative or executor and the beneficiaries of any assets remaining. The executor is charged with overseeing the final wishes of the testator, which includes distributing or transferring assets to the rightful heirs and paying all outstanding debts and taxes.
A court’s approval is generally required before this process can start—to satisfy the court that the will is valid and the personal representative has the proper authority to proceed.
To initiate the probate process, the personal representative (often with the assistance of a probate lawyer) locates and submits the original will and lists and values the assets with supporting documentation to the court.
Most financial institutions and land offices require a grant of probate before they will authorize the transfers of any property of the deceased. The grant of probate also protects the personal representative from legal claims against his or her actions (though it does not necessarily prevent legal action per se).
Once the will is authenticated by the court, the grant of probate authorizes the personal representative to legally start distributing property once any taxes and debts are paid.
If there is no will, a person is said to have died intestate. The court will decide who to appoint as administrator to handle the distribution of the remaining assets in the estate.
How Long Does the Process Take?
While the probate process may differ from state to state, one thing is common to all states: the probate process is rarely quick and delays are common.
The time it takes will depend on the local jurisdiction and caseload in the court that handles the probate process.
Generally speaking, you can expect to wait at least two months for the probate process to pass through the courts—but it can often take many months longer. In extreme cases, it can take up to two years.
After the petition to open probate has been filed with the county court, the executor must give notice to all the heirs and any creditors for the deceased to let them know that the person has died. An inventory of all the assets and estimates of their worth must be made and the estate bills must be paid.
Heirs and beneficiaries usually have to wait for probate to conclude before assets can be transferred and they can receive their inheritance.
Is Probate Always Necessary?
Probate is necessary for the majority of estates in the U.S. As a general rule, the larger the estate, the more likely it is that probate is necessary unless certain steps have been taken by the testator well in advance of their death.
Some small estates may not require probate. If the deceased’s remaining property is valued below a certain amount defined by your state, assets may be distributed to beneficiaries without going to probate court. In Nebraska, for instance, the threshold is $50,000 or less. To assess whether an estate requires probate, you will need to determine what the limit is in your state. Then, total up the value of the “individual” property in the estate, including bank accounts, investment accounts, business interests, real estate, personal possessions, etc.
For estates above the threshold, a comprehensive estate plan can often help you make the probate process a formality or allow certain assets to avoid the probate process entirely.
Sometimes, estates can avoid probate entirely with careful estate planning. This is usually accomplished by creating trusts, allowing the transfer of assets during your lifetime for distribution after you die. Assets placed in trusts bypass the probate process.
Certain assets like life insurance policies with a designated beneficiary, retirement accounts, and certain assets registered in a “transfer on death” form are not subject to probate. The provisions made with the financial institution involved usually override any provisions made in a will.
Other assets held jointly with the “right of survivorship” also avoid the probate process. Ownership of the asset transfers immediately to the surviving owner(s) after a co-owner’s death.
Check with a qualified estate planning lawyer if you are unsure if a particular asset will avoid probate.
How Can I Avoid Probate?
Before we consider how to avoid probate in more detail, it is important to note that avoiding probate is not always the best idea for a personal representative.
If there are concerns over creditor claims or beneficiary disputes for a particular estate, probate can help protect the personal representative from legal action.
If your estate is above the state threshold for avoiding probate, the surest way to ensure that assets are distributed to intended beneficiaries as quickly as possible without probate is to consider one of the following:
Give away your assets while you’re alive: reducing the value of your estate while you’re alive by gifting assets may have tax advantages as well as avoiding probate.
Establish a living trust: if you transfer property to a living trust, the trustee you appoint controls the property and must distribute it under the terms of the trust agreement.
Make accounts payable on death: depending on the state in which you reside, certain bank accounts and property can be made “payable on death” meaning that they go directly to your designated beneficiary without probate.
Make property jointly owned: upon your death, it will be transferred to the co-owner(s) without probate.
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